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My dad just left a few small assets. Do I have to go through Probate?

If a person passes away leaving assets without beneficiary designations, there is a court process called Probate. Probate allows for a personal representative to be appointed by the court to access those assets and distribute them to those entitled to them.  Who is entitled to those assets will be determined by the deceased individual’s will.  If the deceased individual did not have a will, who is entitled to those assets is determined by the intestacy laws of the state where the deceased person resided at the time of their death.

In Missouri, whether the deceased person had a will or not, if the assets are less then $40,000.00 you may be able to avoid the longer, more costly probate process.  You may be able to file a small estate affidavit with the court.  This process is faster and less expensive then if a full probate is required.

For example, assume your dad had a retirement plan, life insurance policy, bank account, and a car when he passed.  If the retirement plan and life insurance policy had beneficiaries, the retirement account and life insurance would not need to go through probate.  Assets that have beneficiary designations can avoid probate.  However, your dad forgot to add beneficiaries when he got a new car and opened a new bank account.   If the car’s value and bank account total less than $40,000.00, you may be able to use a Small Estate Affidavit to access the bank account and car.

In addition, to the Small Estate Affidavit, the court may require additional information as well.  If there was a will you will need to provide the court with the original will.  You will also need a copy of the death certificate, information about the heirs and those named in the will if there is a will (may need full legal name, address, social security number, date of birth, and date of death if applicable), and proof of values of the assets.  For the car, the car title would be needed that would include the vehicle identification number and for the bank, a bank statement showing the account number and balance of account would be needed.

Different states have different laws and even different counties may have different rules and procedures, so it is always a good idea to meet with an attorney.  The attorney can help you determine what court procedure is needed in your situation and can help you navigate the process.  My husband’s uncle recently reached out to me because his father passed away and he was trying to fill out court documents that he had found online and had a few questions for me.  I don’t practice law in the state where his father passed away but just from asking him a few questions, I was able to determine he was trying to fill out forms for the wrong county and also had forms for the wrong court process.  I suggested that he contact a Probate attorney in the city where his father had passed.  Losing a loved one is stressful enough, an experienced attorney can help you navigate the legal process.

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But Chances Are So Small – Estate Planning – Burkhardt Law Firm

The number one reason I hear for why people they don’t think they need an estate plan is: “Well, my spouse is named as a co-owner on everything I own or is a beneficiary on everything I own and the chances of us dying at the same time is small.”  Well, even if you are right and you and your spouse don’t pass at the same time and your beneficiary designations avoid probate, there are reasons why you still need an estate plan.

Things can fall through the cracks, and you may forget to put a beneficiary designation on a new asset, or there may be other unforeseeable assets that don’t have a beneficiary designation and will therefore go through Probate.  A will is a good way in those circumstances to be able to tell the Probate court what to do with those assets.  A will can waive bond and ask for independent administration which can reduce the cost and time if assets have to go through Probate.

A good estate plan does not only plan for death, it is also a plan for when you are living but incapacitated.  An estate plan may include both a medical power of attorney/heath care directive and a financial power of attorney.  These documents are utilized while you are still alive.

If you have retirement accounts, your spouse cannot be an owner of your account.  They can be a beneficiary, but that beneficiary designation does not give them any rights to access your account or funds from the account until you have passed away. If you to need to access money from your retirement account and are not capable of making financial decisions the only way to do that is through a financial power of attorney.  A financial power of attorney will allow someone of your choosing to make financial decisions and access funds when you are not capable.  If you do no not have a financial power of attorney, there may be a delay and added cost if someone has to go through the court system for conservatorship in order to access the funds. This is just one of many reasons a financial power of attorney is an important document to make part of your estate plan.

The other document utilized as part of an estate plan during your life is the medical power of attorney/heath care directive.  If you are not capable of making medical decisions for yourself a medical power of attorney will allow a person of your choosing to make medical decisions on your behalf.  Do you have specific wishes for end of life? Would you want treatments like feeding tubes to be removed if the doctor did not believe you would have significant recovery?  It is important to make your wishes known and this can be done through a medical power of attorney/heath care directive.

Even if you are not concerned about assets passing through Probate, I strongly suggest considering an estate plan so that you can have access to funds when needed through a financial power of attorney and to make your end of life wishes known through a medical power of attorney/heath care directive.

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Stop Waiting – Burkhardt Law Firm

I joined Burkhardt Law about 5 months ago, and since joining the firm I have had an opportunity to shadow Martha. I have learned a lot from her in these 5 months.  One of the things I have seen while shadowing her is people who wait until it is too late to create an estate plan.  Did you know that for a will to be valid you have to have mental capacity when signing?  In the time that I have been at Burkhardt Law I have seen Martha have to turn away potential clients because they no longer had mental capacity to execute an estate plan.

Has a loved one recently been diagnosed with an illness that may affect their mental capacity? Their illness may progress faster then you think and it could become too late to execute an estate plan.  If your loved one doesn’t have capacity to execute an estate plan and does not have a power of attorney, it may become difficult to access funds they need.  If a power of attorney is not in place, a loved one may only be able to access accounts by going to the court and petitioning for a conservatorship.  This can take time and there is the added issue of court costs.

I have also unfortunately seen clients come in when they are sick but still have mental capacity to sign, however, they have passed away before coming back in to sign and execute their documents. That is just heart breaking. Don’t wait until it is too late.  Benjamin Franklin once said, “Don’t put off until tomorrow what you can do today.” This is excellent advice especially when it comes to creating an estate plan. You never know what tomorrow will bring so be prepared today.

 

— Lisa Villareal

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Awkward Discussions

Over the years I’ve had many people ask me how to approach the topics of wills, trusts, and difficult end of life decisions (medical, funeral, etc). Understandably it’s a topic normal people don’t sit around and discuss. Unless of course you’re an estate planning attorney. But I did say normal.

Either people don’t want to discuss the topic themselves or they feel intrusive and pushy bringing it up to loved ones. Even I have been in the uncomfortable position of being near someone I care about and worrying if they had properly protected themselves. So how do you start a discussion on estate planning with your parents or loved ones?

Well, if I had that answer, I might have already retired. But a few tips to begin the conversation and make it a bit easier:

Tell them about this great blog you read. Find a neutral topic to introduce the subject. Don’t just jump in with “you need a will.” Bring up an article or whatever has made you think about it in the past. Refer to your attorney friend or the recent celebrity who lost millions by the lack of planning. If they are open to the topic, then you can get more personal and really talk in detail. If they seem hesitant, don’t force the issues, but just mention it every once and a while without focusing on them.

Talk about yourself. So let me be clear. This is not about you. If you are talking about a plan for another, do not make it about yourself. However, people plan for their loved ones and so if you open up about your concerns, then you might get them to talk about their own concerns and plans.

Don’t focus on death. In my meetings, I rarely use the “D” word. There are a thousand ways to talk about it without using the word itself. Instead focus on love. The real concerns are either making sure wishes are followed or making sure the ones left can focus on the family.

Be honest. There is a reason you are reading this blog. You’ve either done your own planning or your thinking about someone’s plan. Chances are it’s not about you. You’re trying to make another’s life easier. Let that come through as you bring up the topic. Make it about the big picture concerns and why you’re trying to discuss it.

Truthfully, there’s just no magic conversation. However, with a bit of tact, compassion, and understanding there’s a way to bring it up and be respectful about a potentially uncomfortable subject. And don’t forget, I’m always a phone call or blog post away when those discussions lead to questions.

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The Hierarchy of Estate Planning

After writing every month for the last 3 plus years, I sometimes find new topics to blog about difficult. But I often try and reflect on the most common topics that my clients have brought up over the last month. And this month I spent a lot of time explaining what I call the hierarchy of estate planning.

This is certainly not an official term or a concept I’ve seen discussed a lot, but I think it describes some of the concepts of estate planning quite well. What I’m really referring to is what controls a plan. Now, I’ve discussed this before and it also ties into the concept of inconsistency within an estate plan, but hopefully I can explain it just one more way for it to make sense.

How assets are titled control an estate plan. I break it down into four categories:

1 – Ownership/Titling

2 – Beneficiaries

3 – Wills

4 – Intestate Law

To determine how an asset would pass upon a person’s death, first look at who owns the property and how it is titled. If there is a co-owner with a right of survivorship (this is generally called Joint Tenants with Right of Survivorship or JTWROS), then the property passes to the co-owner.  This is also where trusts fall.  In order for the trust to control, the title must be in the name of the trust and the trust must be the owner.

If there isn’t a trust as the owner or there isn’t a co-owner, then you look to see if there are beneficiaries. If there are beneficiaries, then they then own the property. And when I say beneficiaries, I also include Transfers on Death (TODs) and Payable on Death (PODs) designations.

It is only after ownership or beneficiaries that a will would control. If there are no co-owners and no beneficiaries, then whomever would get the property under the will is the new owner.

And finally, if there are no co-owners, no beneficiaries, and no will, then intestate law controls and heirs get the asset.

So if you are trying to determine who would get an asset upon someone’s passing, take a look at the hierarchy of estate planning and figure out which category would control.

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Save Heartache & Money

This week I gave a presentation to a group of professionals I work with on a regular basis. After the meeting, several came up to me concerned that their plans wouldn’t accomplish what they thought it would. So, in the hopes of saving your family heartache and money, I thought I would the main point of that presentation.

When clients hire me to do an estate plan, my job is to avoid probate in the most cost efficient manner with as little conflict as possible. There’s two situations where probate is possible. First, is when a person is no longer able to make decisions for themselves.

If incapacitated and a person does not have any documents in place, the probate court gets involved in a guardianship or conservatorship. In these cases, the court appoints someone to make financial and medical decisions for you. That person must get court approval for any purchases and must make annual reports. Generally, in a time when they must already take care of a loved one, the court is the last thing they need to be dealing with.

This is very easy to avoid through a power of attorney or a trust. Either document may control if you’re incapacitated, but there are two main differences. First, a power of attorney will only control what is in your individual name, while a trust will only control what is in the trusts name. Also, a power of attorney ends upon death, while a trust may also control what happens after you pass.

The other side of planning is what most people think of: when someone passes. Without a will, assets go through intestate law and must go through probate. Even with a will, assets go through probate.

As such, I normally recommend non-probate transfers to be used to avoid probate upon death. This is a fancy term for joint titling, beneficiaries, or a trust. There are different benefits to each one, but generally a trust is the “best” option, while beneficiaries are “better”, and a will is “good.”

A trust is the “best” option because it allows for control over the assets while avoiding probate. Trusts are also very adaptable, permitting one to only change the trust document instead of beneficiary designations when life changes (i.e. changing beneficiaries, beneficiary percentages, and any restrictions on assets). It also can set up different layers of contingencies for beneficiaries and often provides the least amount of conflict between family members. It’s great for complicated families or when minors are involved. I also recommend it when real estate is involved, because in Missouri, if a person or people own real estate their spouses must also sign off on any transaction involving real estate. So, for families with multiple children, it’s a good way to limit the amount of people involved in any decision regarding that property.

Beneficiaries are the “better” choice because they avoid probate. But I generally only recommend them, with liquid assets, limited family members, and responsible beneficiaries.

A will is the “good” option because it goes through probate. This is necessary for families who do not want intestate law to apply and for minor guardianship. But because it goes through probate, there will be court and attorney fees and I rarely recommend it by itself.

So, in the holiday spirit save heartache and money for your family by checking the beneficiaries on your assets with this checklist!

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What Now? What to Do When a Loved One Dies

Unfortunately, this month I’ve heard of several people passing. While I normally focus on planning, there are so many questions when a loved one dies.

First, while there are timeframes involved (which we’ll get to later), take time to grieve. There is plenty to do, but generally speaking, there is also plenty of time to do it.

Second, before moving any assets, taking any checks, ESPECIALLY retirement accounts, it’s extremely important to talk to an accountant or financial advisor. There are wrong ways to take money that could cause large tax liabilities that cannot be fixed.

Third, determine what assets are involved and if there are any bills that must continue being paid. Back in December, I mentioned making a list of your assets and how they’re titled. If your loved one does not have a list already prepared, use this one as a starting point.   If you’re not planning on selling a home or car that has a loan, keep paying the loan. If you don’t have access to a bank account or other liquid assets of the deceased to make the payments, keep clear records of any money of your own you contribute to the deceased assets.

Finally, you will need to consult an attorney. In Missouri, an attorney is required to handle probate. But more importantly, if there is a will it must be ADMITTED into probate within ONE YEAR of the date of death in order for the will to be valid. It’s important to make sure the will has been admitted, not just filed. I’ve had clients come to me a year and a half after the parent has passed, thinking that because the will had been filed with the court, the will would control. Unfortunately, because it had only been filed and not admitted, more work had to be done and more people had to sign off on the court filings.

While there are important things that need to be done after some a loved one passes, very little is actually urgent (I promise the probate court won’t treat it as urgently as you imagine it) and most decision should be made with some extra time and thought. I’d much rather help people plan in advance when they’re able to think rationally, rather than after when they’re thinking emotionally. Either way, it’s a difficult time with much that needs to be done, but these few things are a place to start.

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A New Year: Why Estate Planning is Important

Happy New Year! At the start of the New Year, I always have families coming to me wanting to set up an estate plan. It’s something many people put off and I suppose they use the New Year to make a resolution to get it done. So, for this New Years instead of explaining the process and different legal aspects, I simply wanted to explain why I think estate planning is so important (which I hope you agree with if you’re reading this).

I don’t have a personal horror story of how things went wrong or anything along those lines. But I do have (for another few weeks until 2 more are added) 5 nieces and a nephew. I hope that their parents never need their estate plan. However, because their parents have planned for them, I know it’ll be a little bit less difficult if they do.

The only major loss I’ve experienced was my grandmother and I truly cannot tell you how hard that was for me and my family. When it happened, I helped plan the funereal, clean out her house, and do many of the things that just needed to get done. Things went by very quickly and in a haze. It was already a difficult time and I cannot imagine trying to deal with the court and additional legal matters during that time. Because my grandmother had thoroughly planned, we didn’t have to. She made it that much easier for us.

Unfortunately, death is a certainty of life, and in most situations, that’s a very hard truth. A good estate plan can take away a lot of legal complications that occur when a loved one passes. I encourage everyone to make it that much easier for those left behind by creating an estate plan. Much of an estate plan is for your loved ones.

But there’s a whole other aspect of estate planning that is both for you and your family. The probate court doesn’t just get involved at death, it also has authority over adults who can’t make decisions for themselves. When a person becomes incapacitated they no longer can make legal, financial, or perhaps even medical decisions. If they haven’t planned properly, whomever is taking care of them must go to the probate court to get permission to access accounts, sell houses, etc.

When a loved one is already incapacitated much of their loved ones energy is already spent on that person, having to go to court and sort out bank accounts, cars, homes, etc. is just another obligation requiring time and energy that could be spent in other ways.

Essentially, an estate plan makes a hard time easier. There are still legal issues that must be taken care of when a person passes or cannot make their own decisions, but at time that’s already difficult, a bit easier is very helpful.

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Even The Simpsons Worry About Guardianship… Do You?

This week when I turned on the television to watch two of my favorite shows, I got caught thinking about work. Maybe it was a theme within FOX, but both The Simpsons and Bones revolved around issues of estate planning.

The episode of The Simpsons didn’t involve any big discussions or much deep thought (though I know that comes as a surprise). The whole episode shows Marge and Homer Simpson trying to find guardians for their children. While their problem is finding anyone who wants their kids (see the clip below) most people face the harder decision of finding someone they trust to care for their kids.

Bones took the issue more seriously (again, big surprise), it also presented the subject with much needed humor. As I discuss this subject on a daily-basis, I very much appreciated a popular media tackling the matter and presenting it in (as much as possible) a positive light.

As I watched, the lawyer in me laughed at the two extremes Booth and Bones presented. A good will does not need to be 312 pages, but in turn should also not be hand-written on a sticky note. Further, when you have a complicated family or sizeable assets or just want to avoid the courts, a will probably will not accomplish your goals. Revocable trusts are a great option for most families (even if you’re not a genius scientist with best selling books).

However, I winced at the proposition Booth presented of leaving his girlfriend assets and trusting her to be fair to his son. This is something I advise people on a regular basis. Never create any legal document expecting everyone’s best behavior. If you could do that, then why create the legal document to begin? If you want to leave something to your children, leave it to the children, not another person. If you leave it to the guardian/parent/partner, that person has no legal obligation to use it for the children.

In reality I probably winced at the majority of Booth’s sentiments. Especially, that preparing for death is inviting it. Unfortunately, death is a fact of life and can be extremely difficult on those who are left behind. When someone isn’t prepared in advanced, they also leave behind a tangle of assets that the court has to sort out. This leaves their loved ones not only in with emotional grief, but very likely legal grief as well.

Even if I disagreed with some of the characters throughout Bones and wouldn’t recommend Homer & Marge’s style of picking guardians (finding random strangers), I appreciated FOX and both shows tackling a hard subject. In doing so it raised some important questions and hopefully will get some families talking. It’s at least gotten me to do so.

Burkhardt Law Firm

Phone: (314) 518-1581
Email: mburkhardt@burkhardtlaw.com
Address:
2333 Grissom Dr., Suite 107
St. Louis, MO 63146