Estate

Home / Archive by category "Estate"
Probate Shortcuts: The Spousal Refusal of Letters…

Probate Shortcuts: The Spousal Refusal of Letters…

Missouri Probate Shortcuts: The Spousal Refusal of Letters…

Missouri law offers several probate shortcuts, depending on the circumstances of the client.  One of the most common and indeed, one of the best shortcuts is the spousal refusal of letters.  

Missouri law offers a probate shortcut for a person who has lost a spouse and discovers that titled property was in only the named of their deceased spouse.  As a recent example, I had a client whose husband sadly passed away.  She found out after he passed that he had a small bank account in his name alone and there was no beneficiary named on the account.  The value of the account was approximately $4,500.00.  

Because this client had no minor children, we were able to utilize a streamlined probate process in Missouri called an Application for Refusal of Letters By Surviving Spouse.  This application is authorized under Missouri Statute Section 473.0090.   

The advantage to this process is the simplicity, how quick it is and the lower costs both to have an attorney handle this for you and to file.

In the above example, our firm obtained the approximate balance on the bank account, the account number, and the details of the surviving spouse, including her full name, address and contact information.  We also obtained the Death Certificate of the husband.  With this information available, we completed the Application for Refusal of Letters by Surviving Spouse on behalf of the widow and received an order awarding the proceeds of the account to the widow within about a week.  The client then took the order to the bank, who cut her a check for the account balance and closed out the account.  

The filing fee was approximately $53.  Our firm’s fee is a flat rate of $375 or 10% of the value of the asset that needs to be probated, whichever is higher.  If the amount is especially small, we will often work out a special price for the client given the circumstances.

This statute was created for the accidental property left only in the name of a later passing spouse, so that the surviving spouse does not have to open a full blown probate, which requires at least six months to open and close, published notice to creditors and an inventory to be filed, along with other filed documents.

One important detail:  Under the operating statute, Section 473.0090, the limit to the amount that can be awarded to the surviving spouse under the spousal refusal of letters process cannot be more than the cost of one year of maintenance of that spouse.  Every county treats this amount differently and has different procedures for proving whether an amount does or does not exceed one year of maintenance.  This is just another reason why it’s best to consult with an experienced probate attorney to have this task completed for you.   St. Charles County has a limit of money that can be passed via this process.  Other counties do not.   My experience has been that smaller counties are more lax about the limit than larger counties.  

The bottomline, however, is that the spousal refusal of letters is one terrific shortcut to an ordinary, time consuming and much more expensive probate in Missouri.  

 

Prince Has Died: What About His Estate?

Prince Has Died: What About His Estate?

Purple Rain

PRINCE HAS DIED:  WHAT ABOUT HIS ESTATE?

As we all know by now, legendary musician Prince unexpectedly passed away recently at 58.  While the circumstances of his death are unclear, what is also unclear is who will get his estate, whether he had a will or a trust set up and the particulars of who will be in charge of what has been estimated to be a $300 million estate.

Most celebrities are surrounded by a team of professionals looking out for their best interests.  In the case of legal matters, Prince undoubtedly had a trusted lawyer to assist him with legal matters.  Part of the advice I would have given Prince some time ago would be to get his affairs in order, to get an estate plan.  That would have been an easy recommendation considering his age, wealth and the fact that he was not married.

Since he died living in Minnesota, the laws of that state will largely govern the administration of his estate.  If he died without a will, that could be a big deal, because the intestacy laws of the state would control and Minnesota allows half-relatives to inherit.  He was married and divorced but, as in most states, ex-spouses do not inherit in a situation where there is a will and only inherit if a will specifically states that they do.

Most people close to Prince knew him as a smart man who was very aware of his circumstances and that weighs in favor of him having created an estate plan.

If Prince created a trust, then the trust would name a trustee in charge of all the assets held by it.  It would also name beneficiaries to receive property and that could be right away or over time.   Prince was also known to be a philanthropic person, so it’s possible he left funds for the creation of a foundation or several foundations for issues close to his heart.  When people create a will they can also leave money directly to a charity or to a church either as a specific bequest (the “Little Red Corvette” for example) or as a general bequest (a set amount of money).

If Prince did create a trust or several trusts, were they funded with his assets?  This is yet another issue.  Funding a trust requires that titled assets like accounts, homes, vehicles, stocks and life insurance be set up so that the trust either becomes the owner right away or becomes the owner at death through payable on death and transfer on death beneficiary designations.

Another issue for his estate would be estate taxes.   Unfortunately, Minnesota (unlike Missouri – hooray!) has an estate tax which appears to kick in after an asset exemption of nearly $2 million dollars at a top rate of 16%.  Since I am not a Minnesota licensed attorney, I can’t talk too much about that, but needless to say, the state will likely pick up a large check from Prince’s estate.

On a federal level, the estate tax exclusion for an individual dying in 2016 is $5.45 million (up $20,000 over 2015).  The tax owed will depend on what estate tax planning if any he put in place, but the estate tax rate is 40% based on the expected size of his estate.  That means 40% over the exempt amount of $5.45 million could go to Uncle Sam.  Wow.

Don’t feel too bad for Prince’s heirs and beneficiaries.  That still leaves several hundred million dollars for their benefit.  That amount doesn’t include the future value of his music which potentially could double or even triple the value of his estate.   How the federal government and the state of Minnesota value these assets for estate and inheritance tax purposes might be the subject of litigation and more complexity.

As an estate planning practitioner (and admitted fan of Prince’s early work) it should be interesting to see what happens on this subject in the next several months.  Hopefully, Prince, like anyone reading this, planned ahead.

Serving As Trustee of A Trust? Not As Easy As It Looks!

Serving As Trustee of A Trust? Not As Easy As It Looks!

SERVING AS A TRUSTEE OF A TRUST:  NOT AS EASY AS IT LOOKS

One of the services provided by Legacy Law Center is trust administration.  When a person passes away with a living trust (or other type of trust) in place, the assets in the trust must be administered, i.e. managed and/or distributed according to the terms of the trust document.

Serving as a trustee sounds like a glamorous position.  You’re in charge of money and you have a lot of power over that money, right?  Well, it’s not that simple.  For starters, a trustee is a fiduciary.  A fiduciary is a person who has the power and duty to act on behalf of another person (usually referred to as a “beneficiary”) under circumstances that require total trust, good faith and honesty.   A fiduciary must avoid self-dealing (buying trust property themselves at a discount for example) and must avoid conflict on interests.

Here’s where things get tough for most trustees.  They are in charge of a trust in which they are likely a beneficiary and other family members are beneficiaries as well.  Even in the best of families, one person in charge of significant assets is going to create circumstances in which the trustee’s moves and motives are questioned at every turn.

“Why was Mom and Dad’s home sold and not kept?”

“That accountant the trustee hired is too expensive, they should have used my accountant. “

“The trustee is using trust assets for himself.”

“What happened to Uncle Dave’s fabulous gun collection?  Everything just disappeared.”

Rest assured, in most family trusts, once the assets are in control of the trustee, the worst assumptions and second guessing will begin.  In some families it starts on the day of the funeral.  If the trustee lets things fester, trust litigation can develop.

I’ve seen circumstances where the trustee could not take the emotional toll that the role put on them.  They were desperate for my firm to help.   Hiring a trust attorney to assist in the administration of the trust can create a firewall between the trustee and beneficiary while ensuring the trustee carries out their duties effectively.  For example, in the situation where the beneficiaries are already doubting the moves of the trustee even before they have the assets in their control, the trust attorney can send out a letter stating that the beneficiaries are welcome to contact the firm for updates but that updates will come via letter once they are necessary.  A letter from the attorney outlining the timeline for resolution of the trust is often a good way to set expectations.  When that letter comes from the trustee, second guessing can only worsen.

Our firm does not draft trusts without a no-contest provision which states that any beneficiary who files a lawsuit contesting the trust potentially loses their inheritance for doing so.  Now, there are exceptions to these provisions, but courts will uphold them on the belief that if the grantor of the trust (the creator of it) wanted that provision, they meant for it to be enforced.

Remember this as well:  The trustee in most trust situations does not have to rush through the process of identifying assets and distributing them.  That’s a competing problem for a trustee because working too fast can lead to mistakes and a fiduciary that makes mistakes can be personally liable. 

Ultimately, the best move a trustee can often make is to utilize the provision in the trust allowing them to hire professionals to handle the investing of trust assets (financial advisor), to account for them (CPA) and to deal with the legal issues of the trust (attorney).  Once these professionals are hired, a trustee will often find that the mob puts down their pitchforks, that a path with an end in sight develops and that they handle their duties more effectively and efficiently.

One more thing:  We always remind our trustees that they were chosen for a reason and their crazy brother and angry sister were passed over as trustee for a reason.   You were the one chosen because you were the most dependable.

 

 

Avoiding Probate: It’s Not Just About Money…

Avoiding Probate: It’s Not Just About Money…

 

AVOIDING PROBATE:  IT’S NOT JUST ABOUT MONEY

               As an estate planning attorney, a central goal that I preach is for my clients to avoid probate.  Most of my clients associate probate with something akin to the plague and people like bankers, insurance agents, financial advisors, TV hosts and society at large have done a good job educating clients on the simple premise that they should avoid probate at all costs.

But why?

Most people would guess the expense.  That is certainly a legitimate reason.  In Missouri, a probate administration can lead to costs to the court, big expenses being paid to your personal representative (also known as the executor) and, if you want the easy version of probate in Missouri, independent administration, the services of a knowledgeable and experienced probate attorney.  In a recent probate, an approximately $450,000 estate ended up costing about $1,000 in costs to the court for filing fees, inventory fees and various other expenses and approximately $31,000 in fees split equally between  the personal representative and attorney .

Think about that for a second…that represents almost a 7% loss in the value of your probate estate due to costs and fees, or one more percent than you pay to sell a home!  But here’s a big difference…real estate commissions are unavoidable.  Probates costs and fees are not.

But forget about money and costs for a second, because there are three other huge reasons to avoid probate, that are largely overlooked.

Those are:

  1.   Time: In Missouri, you have to wait 10 days after death before you can file in most cases and then the estate cannot be closed for at least six months.  Best case, therefore, you are looking at a 190 day process.  In most cases, you can add at least a couple of months.  In some cases, the estate won’t be closed for at least a year, sometimes longer.  So, not only have you lost a loved one, but now as a beneficiary or heir of an estate you have to wait a long time to get your inheritance!
  1.  Complexity:  I work on probates every day and while I do a great job for my clients I have to say….I don’t like doing them.   Absolutely cannot stand them.   St. Charles County has a terrific probate division but many of my probates are in St. Louis County and they are a nightmare to deal with.  If you can get through to someone, you will get two different answers from two different people.  Every county has a different set of procedural details that must constantly be adhered to, which is tough because those details seem to change by the month.   Probates are comparable to getting your teeth pulled.  The smallest details can delay them for days and even weeks.
  1. Family Issues / Strife:  Imagine with your family who would be more than a little bit anxious / conspiratorial about an inheritance owed to them.  If someone makes out a will and then dies, unlike on TV, there is generally not a reading of the will.  That is largely a Hollywood created fiction.  In larger estates with a variety of distant relation family members or different beneficiaries (like people that don’t know each other), it might make sense to have a will reading.  So people think that something is being hidden from them when the personal representative and the attorney for the estate don’t just cut them a check.  Probates cause family tensions and in families where there is already tension, it can only aggravate things.  As I noted above, you have to wait at least 190 days in most probates before the estate can be distributed and closed and that’s because creditors have a right to make a claim against the estate.  I very rarely authorize early disbursement of an estate for this reason.  Who knows who is out there claiming they are owed money.  If the money in the estate is immediately distributed, how are you going to get it back if a creditor shows up out of the blue in the last month making a huge claim against the estate?

Half of my estate planning clients are meeting with me because they know they need to.  The other half are meeting with me because they just had some terrible disaster happen in there family or watch it affect someone they know, so now they want to avoid it.

Here’s the silver lining:  It is easier than ever to avoid probate with a living trust or even without a living trust under some circumstances.  In less than an hour Legacy Law Center can sit down with you, figure out what your particular circumstances are, what you need based on those circumstances, tell you what it costs and give you a accurate timeline of when it will be completed, signed and in your hands protecting you and your family.

 

Do I Need An Attorney For Probate In Missouri?

Do I Need An Attorney For Probate In Missouri?

Do I Need An Attorney For Probate In Missouri?

    Yes.  You do need an attorney in Missouri for probate.  Here is why:  First, in order to proceed with an independent probate administration, state law requires it.  Under RSMo. 473.787 (3) (link:  http://www.moga.mo.gov/mostatutes/stathtml/47300007871.html), an independent personal representative (executor) shall “secure the advice and services of an attorney” on legal questions arising in connection with matters related to the opening of a probate estate, applying for an the issuance of letters testamentary or administration, preservation of estate assets, the inventory of the probate estate, dealing with creditor claims and their payment or resolution, filing of tax returns, making distribution and the closing of the estate.

So basically Missouri law requires it if you want to proceed independently.  The alternative is to proceed with a supervised probate estate, which is often specifically not called for either under the will of the decedent.   Because the last will and testament controls the actions of the personal representative, often an attorney must be hired.

Secondly, a probate estate should be opened with the assistance and services of a probate attorney because opening, administering and closing an estate is complex.   That’s a practical consideration.  In addition, probate matters can be very emotionally draining for families.  If you’ve ever lost a loved one, you know how emotionally charged that situation can be.  If you’re the executor named in the will,  you’re often going to feel a lot of pressure to get things done quickly.  I’ve seen this happen in the closest of families.  Family members often don’t understand that just because there is money in the estate, that money just can’t be immediately divided and checks cuts.

Also, remember, the problem is that you owe a “fiduciary duty to the persons interested in the estate” (i.e. the heirs or beneficiaries).   There is no incentive for you to handle the estate alone and in fact, if you do so and then claim you were not up to the task, you can be held personally liable for any of your errors.   Frankly, a person handling an estate without any knowledge how to do so is already engaging in a breach of their fiduciary duties.

Finally, remember the probate process in Missouri is complicated and requires you to devote time to handle it.  Very few estates are as simple as people believe.  Assets cannot be found, creditor claims pop up that were previously unknown.  Deadlines must be met and the court has little to no mercy on those that claim they aren’t attorneys.  With the help of an attorney, those deadlines can be met and headaches can be avoided.

Your best bet is to work with a probate attorney and let them handle all of the filings.  The best part?  You’ll still be involved in the process and still earn a statutory fee (usually the same amount as the attorney) for serving.