Nonprobate Transfer

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Own Property in Missouri? Get A Beneficiary Deed

Own Property in Missouri? Get A Beneficiary Deed

OWN PROPERTY IN MISSOURI?  GET A BENEFICIARY DEED

If you are a landowner / homeowner in Missouri, part of getting your affairs in order should include having a beneficiary deed drafted and recorded for your property.  Unlike a quitclaim deed or warranty deed which evidences your current ownership of property, a beneficiary deed is not a present transfer of ownership.  This type of deed merely states that when you pass away, if you own that property that it should pass to the beneficiaries you name in the beneficiary deed.

The biggest advantage of recording a beneficiary deed is that doing so will ensure that your property avoids probate when you pass away.  This is because the recording of one of these types of deeds is what is referred to as a non-probate transfer.   Considering that the costs of probate for a $300,000 home will probably be around $8,000 – $10,000, having a beneficiary deed drafted and recorded for roughly $250 (our fee at Legacy Law Center) is a terrific investment.

In a beneficiary deed, you are the grantor, the person granting the property to your beneficiary, who is the grantee.  If you have a living trust, your beneficiary might be your living trust rather than named individuals.  You will need to discuss this with the attorney that drafts the beneficiary deed for you, although in many cases our firm drafts beneficiary deeds as part of an estate plan that includes a living trust for a couple or an individual, so that discussion would be part of the larger discussion about all aspects of your estate plan.

The beneficiary deed is also an easy solution for those who live in one state but own property in Missouri.  We have drafted and recorded many beneficiary deeds for out of state clients who just wanted to ensure that their Missouri property will be protected when they are gone.

Beneficiary deeds are authorized specifically by Missouri law and Missouri is one of about twenty or so states in America that have them.  Keep in mind a few things about them, however.  First, unlike other deeds (such as a quitclaim deed) that can be recorded after your death, a beneficiary deed must be recorded before you pass away.  Another important thing to know is that a beneficiary deed can be revoked and a new beneficiary deed can be recorded in place of the old one.  So, for example, if you originally wanted to give your property to one of your children but changed your mind, you can record a new version granting the property to all of your children, so long as the document is recorded prior to your passing away.

A few other things to consider:  Whether you have a mortgage on the property or own it free and clear is irrelevant.  The beneficiary deed will not affect your ability to sell a property and if you do sell the property, the deed is obviously void.  Of course, if you sell one property and buy another, you’ll need to record a new document for the new property.

Here is the link to the statute authorizing beneficiary deeds: http://www.moga.mo.gov/mostatutes/stathtml/46100000251.html

Case Study: Guardianship choices where couple is divorced and have minor children…

Case Study: Guardianship choices

Mom and Dad are recently divorced and have a Daughter, age 5, together.  The custody arrangement is that Mom has primary custody during the week and Dad sees Daughter on the weekends.  Mom is interested in putting together an estate plan, including naming a Guardian in the event that she were to die.

This is a common scenario these days.  A guardian should always be named in an estate plan where an individual or a couple has minor children.  But what happens when two people are divorced?  Who should be named guardian then?

First, in the scenario above, if Mom were to pass away while Daughter was a minor, Dad would be the preferred choice of any court deciding a guardianship issue because he is the biological father.  He will be the favored choice.  But…Mom should still name someone in her estate plan to be guardian in the event that Dad is somehow unfit to be guardian if Mom was gone.  Common examples of why he might be unfit would be substance abuse problems, incarceration and mental incapacity.  So just in case, and most importantly, to give Mom peace of mind, she should name someone to serve as Guardian for daughter in the event Dad could not.

A good estate plan for Mom would then include a will (perhaps with a testamentary trust) and/or a living trust, including a guardianship designation, a healthcare power of attorney, a healthcare directive, a durable power of attorney for finance and some probate avoidance planning, either by completing beneficiary designation assets (referred to as nonprobate transfers), or in the case of a trust, by changing the titling of assets to reflect ownership by the trust.

The basics of wills…

With a will, a person can name a guardian for minor children, name someone as the executor of their estate (referred to as a “personal representative” in Missouri) and name who will inherit their estate.  A will becomes effective after death.  Prior to death, the executor has no powers to deal with the affairs of the person who drafted the will.   Finally, a will does not avoid probate, but merely provides the probate court with a plan regarding the distribution of the decedent’s property and the payment of their debts.  It’s up to the executor to “execute” the plan in the will.

When a person dies, their probate estate consists of all property that passes pursuant to the will and all property and cash assets owned at the time of death.  This would include all accounts, personal property, vehicles, stocks / bonds, life insurance and retirement accounts.  All property that has a joint tenant or which has a nonprobate transfer designation, such as a “POD” or “TOD” (Payable on Death or Transfer on Death) is not part of the probate estate.

As an example, if a married person died with a home owned jointly with their spouse, two jointly owned vehicles and a bank account in their name alone but naming the spouse as beneficiary under a POD designation, they would not have a probate estate.  Under the same example, if one of the two vehicles was in their name along and there was no POD designation on the bank account, the probate estate would include the individually owned vehicle and the bank account.

Under Missouri law, a person creating a will has freedom to distribute their estate as they desire.  One exception, however, is where the person is married.  A surviving spouse can choose either to take by the terms of the will, or ask the probate court to award them 1/3 of the probate estate if the deceased has children or 1/2 of the estate if there are no children.