Wills

Home / Blog / Archive by category "Wills"
What Happens To My Joint Trust If I Get Divorced?

What Happens To My Joint Trust If I Get Divorced?

 

 

What Happens To My Joint Trust If I Get A Divorce?

What Happens To My Joint Trust If I Get Divorced?

              Going through a divorce can be an extremely painful, stressful and seemingly unending process.  It affects so many different aspects of your life.  This article discusses just one of the effects, which is your estate planning, including your living trust, will and power of attorney documents.

What happens to my estate plan when I get divorced?

This is a great question and one that a qualified estate planning lawyer Dardenne Prairie can assist you with.  In Missouri, a divorce essentially treats any distributions intended for your ex-spouse as void.  In other words,  you have a will, it says that when you pass everything goes to your ex-spouse, but upon finalization of the divorce, that provision for your now ex-spouse is treated as if they have predeceased you and therefore the distribution would pass to your contingent beneficiaries, which would usually be your children.

What happens if I have assets that will avoid probate, such as a life insurance policy?

The Missouri law treating the ex-spouse as a voided beneficiary only covers assets in probate.  If you had a life insurance policy that left your soon to be ex-spouse as the primary beneficiary, you would need to change that after divorce, because if you pass away, your ex-spouse would inherit.  This happens all the time, unfortunately, and that’s why it’s important to have a game plan to review your estate plan (or establish one) after your divorce is final.

The second thing to note is that any distribution to your ex-spouse upon your passing is only void if the divorce is final.  If you expect your divorce to be extended for a period of time, it’s important to meet with an estate planning attorney to make changes anyway.  Under Missouri law, you can adjust your estate plan to cut out your soon to be ex-spouse.  You can’t completely cut them out (unless you have a prenuptial agreement or postnuptial agreement), but you can ensure that they will not inherit everything, which would be the case if you did nothing and passed before your divorce was finalized.

What happens if I have a trust and am getting divorced?

That depends on the type of joint trust you have.  An irrevocable trust attorney O’Fallon, Missouri  can explain in more detail, but the terms of this type of trust cannot be changed after the trust is created, regardless of divorce.  This type of joint trust, however, is usually created by spouses to benefit their children.

If, on the other hand, you have a revocable joint trust, both spouses can retain control over the assets.  Of course, this assumes you would want to do that.  Most of the time, spouses want to dissolve their trust and distribute assets as agreed in their marital settlement agreement.  From there, you can take the safest step and create a new estate plan with your own trust, a new will and new powers of attorney.  You’d probably want to do that anyway, since your now ex-spouse is usually listed as your principal in your healthcare power of attorney and durable power of attorney documents.

Do you really want your ex-spouse making healthcare calls for you at the end of life?  Me neither.

As you can see, the best practice, at a minimum, when you are going through a divorce is to sit down and review your estate plan with an experienced estate planning attorney.

 

 

Do You Have To Change Your Estate Plan If You Move Out Of State?

Do You Have To Change Your Estate Plan If You Move Out Of State?

DO YOU HAVE TO CHANGE YOUR ESTATE PLAN IF YOU MOVE OUT OF STATE?

A common question from clients that move away from Missouri is do they need to change their estate planning that I completed for them.

The answer is probably.  Here’s why:

Each state has different laws with respect to estate taxes, trusts and many have adopted different statutes with respect to probate and inheritance generally.

Here’s an example:

I used to practice law in New Jersey, which had, at least at that time, a statute that required some beneficiaries from wills and trusts, usually farther than an immediate family member like a cousin or an uncle, to pay inheritance tax on anything received from a relative’s estate.

Attorneys draft estate plans to take to the most advantage out of weakly drafted statutes or to utilize breaks in the law.  And so we drafted wills and trusts in New Jersey that not only had provisions for that very specific inheritance law but took advantage of it where possible.

Different laws among states is not the only reason why you should amend or change your estate plan if you move away from Missouri.

Another issue is the perception by some that out of state documents are a problem.  Banks are a really good example of what I would call a “skittish acceptor” of legal documents.  Having dealt with banks (and faced repeated non-issues made into issues by them) as a probate lawyer St Peters, I can tell you that there is the way things are and the way banks what things to be.

One of the biggest problems with banks is that they no longer train their employees well enough.  As a result, any legal documents are often met with an immediate call to the “legal department”, which is almost always in another state and, as a rule, routinely denies the validity of a document.  This is often just because the bank employee couldn’t properly explain the issue to the legal department and since the default answer at legal is “no”, you might end up in a difficult situation where you have a perfectly acceptable legal document that you cannot utilize because of the bank.

So what am I saying?  Well, you could run into a problem at a bank and since you won’t find out until it’s maybe too later to fix the problem, it’s always the safer practice to update your estate when you move.

By the way, that process is relatively simple.  If you have a Missouri living trust, you’ll need to change the “governing law” provision in your trust document.  It will be Missouri and need to be changed to whatever state you have moved to.  Note that this is a relatively simple change because you’re simply amending your trust to change that one provision, not re-writing the whole thing.

Since you might be moving closer to other loved ones who might now be closer than they were before, it might make sense to add them as power of attorney, healthcare proxies, executors and trustees.

A qualified and experience estate planning lawyer where you move to can review your Missouri plan and help you pinpoint other changes, if any.

Disinheriting A Child From Your Will…

Disinheriting A Child From Your Will…

DISINHERITING A CHILD FROM YOUR WILL

               A common misconception in estate planning is that you cannot disinherit a child from your will.  This is not true.  Unlike a spouse, who must receive at least part of your estate absent a prenuptial agreement, a child has not such protection.

There are many reasons why children are disinherited including estrangement, fear of waste, alcohol / gambling / drug addiction, lack of support from the child, abuse by the child, criminal history and prior financial support.  I once had a client disinherit their son because he robbed him.

If you are thinking about disinheriting a child from your will, there are a few considerations to think about.

The Disinheritance Must Be Clear In Your Last Will and Testament

The inheritance attorney Wentzville, Missouri will draft the document so it makes it clear at the beginning that you list your children by name, including the disinherited child.  Then in the estate distribution language portion of the document, it must be made clear that you wish to disinherit the child by name.

Make Sure Your Beneficiary Designations Are Also Changed

Often people will have a transfer on death beneficiary designation on an asset like a car.  Remember that if you left, for example, a car equally to your son and daughter, then decided to disinherit the daughter, the car is controlled by the beneficiary designation, i.e. you’d also have to remove daughter from the beneficiary designation for the car.  The simple fact that you changed the will is not sufficient.

Consider Using A Trust Instead

Often people wish to disinherit a child because they are a spendthrift and it’s assumed that any money left in a will would end up being wasted by the problem child if they were to inherit.  In such a case, a trust should be considered because you can leave money to the problem child in the trust, to be managed by another party after you pass away.  A spendthrift trust attorney St. Peters, Missouri can provide further details, but the trust can be set up so that the problem child only receives money if they avoid drug and alcohol problems, graduate from college or stay out of trouble.  This “stick and carrot” approach can be win-win for your wishes and the child and should be considered in such circumstances.

Disinheritance Is Sometimes A Practical Reality

In cases where a person has a child that they never had a relationship with, it’s important that the child be mentioned in the person’s will and still disinherited, especially in the case where the person has a new family with children that he does have a relationship with and who he or she really wants to inherit from them.

Disinheriting a child from your will is a difficult thing to do, but often necessary.  You do have options.  Consider alternative options and remember…it’s your money.

You Don’t Need To Cite The Reason For Disinheritance

In most cases I recommend that a client not explain in the document why a child is being disinherited.  I have had clients insist that the information be included, but again I believe the best practice is to not do so.

Common Estate Planning Terms in Wills and Trusts….

Common Estate Planning Terms in Wills and Trusts….

Common Estate Planning Terms in Wills and Trusts

Estate planning is an area of the law with plenty of legalese. The placement of certain in documents like Missouri wills and especially special needs trusts attorney St.Common Estate Planning Terms in Wills and Trusts
Estate planning is an area of the law with plenty of legalese. The placement of certain in documents like Missouri wills and especially special needs trusts attorney St. Peters, Missouri can make a huge difference in the document.

Here are some commonly used estate planning terms in wills and trusts.

Wills

Testator / Testatrix: The person creating the will. Formally, a male creating a will is a testator, whereas a female is referred to as a testatrix.

Executor: The person or persons named in a will who will administer the estate when the testator dies. The person in charge. In Missouri and other states, an executor is called a personal representative.

Beneficiary: The person(s) named in a will that the testator wants to inherit their property. In a trust, this person is also referred to as a beneficiary.

Heir: The persons who will receive your property if you do not have a will in place when you die. Dying without a will is called “dying intestate” and each state, including Missouri has a list of heirs that receive your property when you die intestate and in what order. For example, in Missouri, many people don’t know that if a spouse passes away and does not have a will, all non-joint property owned by the deceased spouse goes partially to the children, if any, and partly to the surviving spouse. All receiving property are referred to as heirs.

Bequest: A specific item listed in a will, other than real estate, to be distributed at death as a gift. Example: “I give all of my silver coins to Joe.” The bequest is only the silver coins, not any others and Joe is the beneficiary of the item.

Devise: Real estate given at death, received by a devisee. Example: “I give my 10 acre farm to Joe.” The testator has devised the farm to Joe, the devisee.

Bequeath: Means that the testator is giving property to someone other than a person. Example: “I give my book collection to the St. Charles County Library.”

Bond: A policy that requires the executor to insure the estate, usually for the value of the estate. The idea is that if the executor runs off with the money, the heirs / beneficiaries are protected by the bond in place. A testator can state that no bond is required in their will.

Real Property: Land of any acreage and/or a home. Also includes anything affixed to the property. Example: Joe has a 10 acre farm, which includes his home. He also has a pole barn which is attached to the land. All are examples of real property.

Tangible Personal Property: Any property that you can actually touch. Example: Loose cash is personal property. Cash in a bank account is not personal property.

Intangible Property: Any property that you cannot touch. Example: Mutual funds that you hold in an account are intangible property.

Titled Property: Property that may or may not be tangible that has a registration. Example: A bank account. It is titled in your name, has an account and you get statements every month in the mail. Also an insurance policy because it has a policy number, a named insured and beneficiary.

Revocable Trusts

Grantor: The person creating the trust. Also referred to as a Settlor or Trustor.

Trustee: An individual or individuals listed in the trust to administer the trust for the grantor. The grantor and trustee are often the same person.

Beneficiary: Same as with a will, a person listed to receive assets in a trust.

Estate Tax: A tax levied either by the federal government and some states when a person passes away. The estate tax is much less of an issue because the estate tax exemptions are much higher than they used to be.

Estate Tax Exemption: An amount of money that a person is allowed to have when they pass away that does not result in federal estate tax being levied. In 2018, for a person this amount is approximately $11 million dollars. Any amount above that, without proper planning in place, is subject to taxation.

No-Contest Clause: A provision in a trust (or a will) that states that if a beneficiary to the trust contests their inheritance, they risk losing that inheritance if they file a lawsuit. These provisions vary greatly, but are enforced by courts and are a good way to ensure that beneficiaries don’t litigate your estate when you pass away.

These are just some of the terms that you would come across in a will or trust lawyer O’Fallon, MO. Creating documents with an estate planning lawyer is just part of the process. The real important part is understanding how they work and what the terms mean. Don’t get discouraged, we are all masters of our own knowledge and what’s natural to you would be unnatural to your attorney!

 

Per Stirpes vs. Per Capita Distribution…

Per Stirpes vs. Per Capita Distribution…

Per Stirpes vs. Per Capita Distribution in a Will

                One of the obvious benefits of having a will is you get to name the beneficiaries of your estate.  When I sit down as an estate planning lawyer St. Peters to meet people, they almost always have an idea of who is going to be their beneficiaries.

However, one thing that they often struggle to decide is how to divide their estate if one or more of their beneficiaries die before they do.

There are two options.  The first is called “per stirpes” distribution and it means that if a beneficiary predeceases, their share goes to their survivors equally.  The other option is called “per capita” distribution and it means that if a named beneficiary predeceases their share is then split only between the other name beneficiaries.

Let’s look at an example:

Sam and Sally have three children, Samuel, Sarah and Samantha.  They each create wills that leave everything to the other spouse and then to the children in equal 1/3 shares, per stirpes. Sam passes away and then Sarah passes away five years later.  Five years after that Sally dies.  Her will controls the distribution of her estate and because she chose per stirpes distribution, Samuel will get 1/3, Samantha will get 1/3 and Sarah’s two children, will each split Sarah’s 1/3 share and each will get 1/6.

With a per capita distribution scheme, under the same example Sarah’s 1/3 would be split between her brother Samuel and sister Samantha.  Sarah’s children would therefore receive nothing and Samuel and Samantha would each split the estate, ½ each.

You can see how the slightest change in one word (“stirpes” or “capita”) can result in a big change.  Therefore, when I counsel clients I discuss these different options thoroughly and ask about their relationship with grandchildren, the health of their children and any potential problems that could develop within the family (which we want to avoid) if one scheme is chosen over the others.

There’s not really a right or wrong way to choose which distribution you want in your will or living trust.  Based on my years of practice, I would say per stirpes is the choice of 90% of clients over per capita.  Most people think that’s the fairest way and are concerned about beneficiaries getting more due to someone else’s death.

On the other hand, per capita can be a better choice if we’re worried about a distribution to grandchildren going to an unpopular daughter or son-in-law.  That can happen when the distribution is made to the grandchild but taken improperly or used unnecessarily by their mother or father.  That’s something to consider if you find yourself with an in-law that you don’t like.

In the end, careful consideration of all circumstances and preferences has to be examined and peace of mind is ultimately the goal with any estate plan.