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Don’t Forget…. To Title Your Assets!

I meet with most of my estate planning clients three times and in each of those meetings I (try to) emphasize that an estate plan is truly controlled by how assets are titled. Of course the legal documents are important, I wouldn’t have a job if they weren’t. But the documents I create don’t mean anything unless we know how the assets are titled.

This is because it is really how an asset is titled that determines where the asset goes and if it will have to go through probate.

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. The new owner under this ownership will have control and ownership completely outside of probate.

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. Again, these beneficiaries take ownership without probate.

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. However, a will must go through probate to transfer the property to 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. But again, the heirs would have to go through probate to gain access to the asset.

So, do me a favor, if you or a loved one has assets you’re worried about going through probate, CHECK HOW THEY’RE TITLED!

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Blended Families – Accidental Disinheritance – Burkhardt Law Firm

This week I presented at a personal finance college class and a topic that always seems to engage the students is what I refer to as accidental disinheritance. Unfortunately, I’ve seen this come up in several instances, but the most common occurs in blended families.

Husband and Wife both had children before they were married. Because they’re married, they’ve set up all of their assets jointly or have their spouse as the beneficiary on their individual assets. This is normal for most families, but the outcome isn’t always as expected.

When Husband passes, everything passes to Wife as intended, but it’s when Wife passes, that the family realizes things weren’t set up as intended. When Wife received the assets, Wife did not include H’s children as beneficiaries or did not put down beneficiaries at all. In either situation the outcome is the same, Husband’s children are not included. According to Missouri law, a widow’s assets go to her children alone, step-children are not included in intestate law. So, Husband’s children don’t even have a legal right to challenge Wife’s estate unless they were included in her will. And even if they are in the will, if she listed her children as the only beneficiaries, the beneficiary designations control over the will.

I like to believe in these situations that if Wife were informed, she would do everything correctly and Husband’s family wouldn’t have need to call me. But, of course, I get the phone call after the fact, and Wife has passed accidentally disinheriting Husband’s family. Or in some situations, Husband and Wife have met with an attorney and have set up their plan, but because they don’t fully understand the mechanics of the documents things go wrong.

For this reason, it’s extremely important that clients understand their documents and how they work. Especially in blended families, where when things go wrong, accidental disinheritance can happen.

 

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Where There’s a Will, There’s a Way… (Sorta)

You know what a will is, right? Right.  Well, at least I’m guessing you do if you’re reading this.  It’s a legal document that says where your assets go when you pass.  But there’s a lot more to it than that. So let’s discuss all a will involves! Fun!

First, I want to address a very common misconception.  Wills go through probate. No discussion, it’s that simple in Missouri.

The next question really is if you need a will then right?  Short answer. Yes.

But of course being a lawyer, the better answer is that it depends.  Do you like Missouri’s intestate laws (where your property goes without a will)?  No, then ABSOLUTELY!   A will (and maybe a pre-nup) is the only effective way to tell the court where you want your assets to go.

Agree with intestate law? Then, you may not need one as much, but you probably still want one for the following reasons.

The most important being your wishes regarding minor children.  Do you have an opinion on whom your children should live with? Make decisions for them? Control their money?  Then you better have a will.  A will is the only document a court will look at for determining guardianship of YOUR kids.  (You can learn more about guardianship here).

A will can also dictate who is in charge of your property throughout the court process.  Don’t want your brother John to handle your assets, but rather your sister Susie? Better get a will and nominate a personal representative.

You’ve heard me say it once, and you’ll hear me say it again. Probate is expensive and time consuming. Having a will can cause the court process to be less expensive and move more quickly.  In a will you can authorize independent administration which allows your personal representative to handle more with your property without court oversight.  You can also allow this personal representative to serve without bond.  This means they don’t have the expense of finding and filing a bond (which can be impossible for those with bad credit).

Using a will in probate can also shorten the time it takes to go through the court by authorizing independent administration.  This allows the personal representative to act without court supervision over many common administrative actions.  In essence, it takes a lot of the burden of court off of the personal representative and might allow things to move more quickly because the personal representative does not need to go to court as often.

So when deciding if you need a will, much of the decision comes down to who your beneficiaries are, how your assets are titled, and how much of a problem a delay in court would cause. Not sure?  Give me a call.

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Hey, That’s Not What I Wanted?!

Ever been to a restaurant where you ordered something, then when it was brought out, found out that what you ordered wasn’t what you thought it was?  That’s similar to how Missouri intestate law works.

Before explaining what the law says, let me define intestate.  Intestate just means without a will.  So, intestate law is what Missouri says happens to your stuff when you die if you don’t have a will or beneficiaries on assets.

Well that’s fine, but that just means it goes to my spouse who will use it to take care of my kids, right? Nope, and unfortunately, it’s not a simple answer.

Really, it all depends on the structure of your family.  Married? Kids? Kids from a prior relationship?  Here’s a quick chart I came up with to help:

Chart

The people who receive your assets under intestate law are called heirs (instead of devisee, beneficiary, or legatee if under a will or trust).

It’s important to note, that this only provides for biological or legal relationships.  Have a step-child who you consider your own? Not adopted? No heir.  Have a friend who you would like to include?  Too bad.  Have a significant other whom you didn’t marry? Out of luck.

So if this chart shows your assets going to a person or people going where you didn’t expect or don’t want… Well, it might be time to talk about a will.

Burkhardt Law Firm

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