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Missouri Probate Steps: Inventory Filing…

Missouri Probate Steps: Inventory Filing…

MISSOURI PROBATE STEPS:  INVENTORY FILING

This blog article discusses the the Missouri probate step of filing an inventory.

So a person has passed away and either they had a will or did not have a will.  Either way, a probate may need to be opened in the county where the decedent died to determine who is entitled to the assets of the decedent.  This process is called probate.

The first step in probate is someone or several people file an Application for Probate and for Letters Testamentary (if there is a valid will) or for Letters of Administration (if there is no will).  It is these Letters that allow the person to act as the Personal Representative (same as executor) or the Administrator (same as executor but only in situation where there is no will) and to deal with the assets of the probate estate.

The next step is filing an Inventory within 30 days of the Letters being issued.  This process can be tedious because it is here that you are tracking down what the decedent had but what it’s approximately worth.  It’s a complicated process.  Hopefully you have an attorney helping you through it.  As a quick aside, in Missouri you can have a Supervised estate or an Unsupervised estate.  The Unsupervised estate, in the right situation, is the easiest way to get through probate because the court does not directly monitor all of the transactions of the estate.  The catch is you need to hire an attorney in order to be allowed to open an Unsupervised estate.   My advice?  Hire an attorney.

Back to the Inventory process.  This can vary widely by county.  In St. Louis County, the Inventory is checked over by an auditing department and that is primarily due there is much more probate fraud in St. Louis County than just about anywhere in the state.  St. Charles County has a terrific probate department and they are very helpful.  They take more of a hands off approach to Inventories that are filed and will usually call if something is missing or incorrectly filed.  Probate courts in Warren County, Lincoln County and Franklin County tend to have less estates filed and often do not have their own forms.  In such a case, it is usually okay to use the forms found on the St. Louis County website, although it is always best to call ahead.

Before you can even file a document called an Inventory, however, you have to know what is included in the estate.  A bank account in the decedent’s name only with no beneficiary named will be part of the estate and must be included in the inventory.  With the letters in hand, the executor can find out the account numbers and the value.  They should also be receiving account statements by mail or online by this time as well.  If an account has the decedent’s name and someone else’s name, it avoids probate and is owned by the surviving account holder.  If there are beneficiaries named on the account, it will also avoid probate.

This is pretty much the same as with all accounts, including IRAs, 401K, non-qualified investment accounts (i.e. a Scottrade or Edward Jones account) and life insurance.  Missouri allows decedents to transfer property after death to TOD beneficiaries.  Check the title of all vehicles, including cars, boats, motors and trailers.

What about a home?  If a house is titled in the decedent’s name alone then you need to see if a beneficiary deed was recorded prior to their death.  If so, the house will avoid probate and go to the beneficiaries named on the beneficiary deed document.  If not, the house will be part of the probate inventory and an appraisal may be necessary.  Some counties allow the tax assessment figure to suffice.

Finally, personal property, unless of some value and/or titled property does not usually need to be accounted for in the Inventory.  However, and this is a big however, it should ALWAYS be inventoried by the executor to avoid a fight among the beneficiaries / heirs.

In conclusion, the Inventory notifies the court what is included in the estate and notifies the beneficiaries or heirs of the estate as well since they are to receive a copy of the filed Inventory document.  Once the Inventory is filed, the next step is to deal with creditors and the debts of the decedent.  I will discuss this step in a future blog post.

 

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.