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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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A Time to Plan – Burkhardt Law Firm

As I sit and reflect on the last year, brainstorming for helpful topics, I’m left with one main thought.  It’s time to plan.  We’ve spent the last year much more isolated from friends and family, and, for many of us, faced with loss of loved ones or the reality of health issues.

This year, Burkhardt Law Firm has helped many families form plans and many people navigate probate when there was not a plan or when things fell through the cracks.  I’m always so grateful that our clients trust us with their loved ones and something that is rarely fun to discuss.  That being said, I see so many families put off making an estate plan.

One of the saddest moments in my job is when we have a client pass.  I hate losing someone I’ve come to know and learn about their lives and loved ones.  We’ve lost a few clients this year and my heart is truly with their friends and family.  And while losing a client is the sad part of my job, often it’s also rewarding in seeing those friends and family navigate the loss with grace and knowing that I made a difficult time easier.

On the other hand, we also get calls from potential clients’ families when they never took action and moved forward with an estate plan. This is truly the worst part of my job.  Telling someone, who is already suffering a loss, that we didn’t help the person who was passed.  Then that someone has to figure out what to do next.  Often, this involves probate.  And while I appreciate the trust in guiding someone through probate, I so wish we could have made a hard time easier by having helped with an estate plan.

My days are generally filled with conversations getting to know people and their loved ones.  I truly love my job, my clients, and my co-workers and am thankful for a different, but still great year.  I sincerely look forward to more of these conversations in 2021.  My wish for your and your loved ones is for a very Happy New Year.  And perhaps as part of that New Year, an estate plan or a update to your estate plan.

 

 

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When You Don’t Avoid Probate – Part 3 – The Worst-Case

Last month, we took a break from talking about probate to have a guest writer.  However, I want to tell you about the worst-case scenario of probate, or at least what I consider the worst-case scenario.  Before I get into specifics, I’m an attorney, I have to give a caveat:  Law is very fact dependent.  Probate cases can proceed in many different ways and require many different things depending on the specific case.  That being said, a full probate proceeding usually follows this generic procedure:

First, the people applying to be a Personal Representative has to apply for the Letters.  It can either be Letters of Administration if there is no will or Letters of Testamentary if there is a will.  As part of this process, the court requires the information I mentioned before.  If there is a will, the court requires the original will to be submitted.  Depending on the specific case, the heirs or beneficiaries involved may have several different forms to sign off.   These could include waiving bond and consenting to the Personal Representative being named, among others.

I also want to point out that notice has to go out to the legal heirs, not just the people listed in the will.  So this means if someone was disinherited, they get notice they were disinherited and have a court case already filed where they can contest the will.

Once the Letters have been approved, this court order will allow the Personal Representative to collect assets in the name of the estate.  From the estate account valid expenses of the personal who passed (burial, bills, taxes, etc.) can be paid.

After the Personal Representative has been appointed and received the Letters, the court requires an Inventory. This is just a list of assets that were held in the name of the person who passed.

Then after all of this initial work, there’s a waiting period.  Nothing really happens for about 6 months while the creditors have a period to file any claims.

After the creditor claims period, any claims can be negotiated.  Often times, we can set a hearing for the claims and the court will dismiss the claim if the creditor does not appear.  What this means is that I often will go to court, the estate will pay me for my time, but the claim does not need to be paid.

Once all of this has been taken care of, the Personal Representative can begin closing the estate.  To do this, they need to give notice to all of the people receiving money and an accounting (called the Settlement) of what has happened to the assets.  With the consent of everyone involved, some of these formalities can be waived.  They can then hand out the money and close the estate.

What this all comes down to is: The money that is supposed to go to the loved ones, ends up paying for court and legal fees.  Disinherited family have the opening to contest.  Creditors have the opportunity to get paid. The beneficiaries have to wait over (and at best) six months before receiving money.  All in all, a situation most people want to avoid.

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When You Don’t Avoid Probate (Pt. 2) – Your Options

So as I mentioned last month, I have been doing a lot of probate work recently.  And there I discussed what is needed to begin probate.  This month I want to discuss what the different probate options are.

The simplest option is the small estate affidavit.  The limitation is that you can only use a small estate affidavit if the total assets are under $40,000.  You also have to have proof of the assets and will not be an executor or personal representative. This means if you don’t know the assets, you cannot use a small estate. But if you know all the assets and they’re under $40,000, a small estate affidavit will result in a court order giving access to those assets. It’s a great option.

Another “easy” option is the determination of heirship. However,  this is only available a year after a person has died. It also requires a court hearing. And because a will has to be admitted into probate within a year of the death, you cannot use a will. The assets can only pass intestate.  At the end of the hearing, there is a court order showing who the heirs are who get the assets. So again, there will not be a personal representative to get access to unknown assets,  but it’s another simple option to get to assets.

However,  if the assets are over $40,000, you can’t wait a year, or if there’s an unknown and you need to gather information,  the only option is a full probate proceeding. A full probate process is what most people want to avoid with a proper estate plan for a few reasons.  First, it opens the assets to creditors and challenges.  Secondly, you’re paying attorney to handle it all.  And finally, in a simple case, it won’t be resolved for over six months and normally will take over a year to complete.  So while, it’s sometimes the only option, it’s the proceeding most people think of and want to avoid.

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When You Don’t Avoid Probate (Pt. 1) – What You Need

As I help clients form an estate plan, the main goal is normally to avoid probate.  There are different ways to do that, beneficiary designations or a trust, but sometimes it simply doesn’t happen.  More and more recently I have been hired to clean up those times when a person hasn’t properly planned.

When a new probate client comes in, there’s a few things that we need to figure out to determine how probate will work:

The assets – Only assets that do not have a beneficiary or owner will go through probate.  So, if a life insurance policy has a beneficiary, it does not need to go through probate.  Or if a bank account has another person listed as an owner (but please don’t DIY plan this way), it does not need to go through probate.  So the first step, is to figure out which assets need to go through probate and the approximate value.

The heirs/devisees – I also need to know about the family left behind.  The court will need to know who the heirs are and if there was a will, who was entitled under the will.  For all these people, I need legal names, addresses, dates of birth, and, if possible, social security numbers.

The death certificate – Where a person lived and when they passed determine which court and which probate process will be used.

As you can see, it’s not a long list of things of things that I need.  However, gathering the information can be difficult.  Even just getting an approximate value of the assets can be hard, because when a person passes most companies will not give out that information until probate has begun.   But this is just the first step to beginning the probate process, next month I’ll explain those processes and how they each work.  From there, I’ll tell you the drawbacks to each and why it’s just best to avoid probate from the start!

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A New Year’s Resolution – Don’t Wait to Plan

A New Year’s Resolution – Don’t Wait

We have had the wonderful privilege of being extremely busy since I have returned from maternity leave.  I feel extremely lucky and blessed that my clients and those who refer me trust me enough that we had a great 2018 and are looking forward to a full and eventful 2019.  So, thank you to all who read this for your continued faith and trust in me.

However, I do have a bit of a request.  As we enter 2019, if you hear someone talking about a will or power of attorney, any estate plan, with the phrase “We’ve been meaning to do that…” or anything similar, please interrupt.  Now, estate planning is my business, so of course, it’s a bit self-serving.  But that really isn’t the reason.  I’ve had many acquaintances over the years who haven’t used me for one reason or another, and I understand when that happens.  A person can be too close.  But even when I’ve been told a potential client has had their plan done elsewhere, I thank them for getting it done.  Because it can be too late to plan.

I’ve helped a lot of families form a plan to avoid probate, but this year we’ve also helped many loved ones grieving sort through when a plan wasn’t in place.  And I’ll be honest, I prefer the planning in advance.  Many times, probate is simple, a few months, everyone getting along, and a magic court order that gives easy access.  I try to help it work this way any opportunity I can.  That, of course, isn’t all the time.  If there are people who need access to funds immediately, families that are more complicated, or just small assets spread everywhere, it can make probate a nightmare.  Unfortunately, I also have had to tell many families that with the amount of work (and legal fees) involved, probate just wouldn’t be worth it.

There’s also the call I get on a regular basis, where a loved one wants to help get a person a power of attorney, but there’s a question of capacity.  Sometimes, we’re able to proceed, but more often then not, it’s too late.  In that situation, the only way to access accounts would be to go to the court and petition for a conservatorship.

I hate those calls where I am the one breaking the news that court is the only way and often not a practical way because of the legal fees.  It’s terrible for me, and I’m not the one dealing with the situation.  So, do me a favor this year, and if you hear anyone making a resolution to get their estate plan encourage them not to wait!

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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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Different Probate Options

When I work with clients, my goal is often very simple: Avoiding probate. However, I believe it’s also important to have a backup plan that includes providing for probate in the most efficient way possible. In order to do this, having an understanding of the different probate cases is important.

For adults unable to make their own decisions or for minors, the court may appoint someone to be in charge of their money through a conservatorship. The court may also appoint someone to be in charge of their physical well-being through a guardianship. These proceedings are only avoidable if an adult had the mental capacity and executed a power of attorney in advance. For minors or adults with special needs, a conservatorship or guardianship will be required. For these situations, a will is the only place to legally designate a future guardian and conservator.

On the other side of probate is when a person passes with assets left in their name alone and without beneficiaries. In these situations, there are a few different proceedings in Missouri.

After a year has passed since a person’s death, the heirs may also file a determination of heirship. Another simplified proceeding, this simply produces a court order effectively giving title to the legal heirs. Because fewer documents are required than other proceedings, this can give access quicker and generally less expensively. Unfortunately, the major downside to this probate process is the assets are given to the legal heirs under intestate law which may not have been the intention. In addition, the court requires a list of all assets going through the determination of heirship and would not give access to unknown assets.

Another option is the small estate affidavit. For estates under $40,000.00, this includes subtracting debt, the court may issue a certificate based on this affidavit. This allows the person signing the small estate to collect the listed assets. While this is a simplified option giving access to assets often within a few months, you must know and have statements for the assets. Because there are normally fewer documents require, it again is often also much less expensive than other probate proceedings. In addition, some counties will allow an individual to file these affidavits without an attorney. Unfortunately, St. Louis County does require an attorney.

Finally, the last option is a full probate proceeding. If a company says you need “Letters” this is what they are referring to.   The proceeding begins by issuing the Personal Representative (or Executor) Letters of Administration or Letters of Testamentary. These Letters allow the Personal Representative to call companies to gather information and assets for the heirs or devisees of a will. Generally, these proceedings will take a minimum of 7 months and can take years. It also gives an open court case for creditors. It is most likely to be the most expensive, but if the assets exceed $40,000, it has been less than a year since the death, or there are unknown assets, this is the only option.

So, how does this effect an estate plan? For small estate affidavits and a full probate proceedings wills can be admitted. However, a will can actually (nominally) increase the court fees. But a will can also waive bond (another expense) which may not always be done otherwise.   If a specific person should be appointed Personal Representative or intestate law is not the desired outcome, a will is always going to be necessary. But knowing the different methods of probate and potential fees should also help decide a backup to the main estate plan.

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Who Owns Your Property? Missouri Ownership

As I repeatedly tell my clients and have probably written many times in the past, titling is key to an estate plan. This specifically relates to ownership of an asset and who and how an owner is listed on that property. Recently, I had a client ask for a bit more information on what the different types of joint ownership are and she suggested I share that in my blog. So here you go.

In Missouri there are three types of joint ownership. The first is “Tenants in Common”. This is the default ownership for multiple owners unless you specific otherwise. This means that the owners each own their share as an individual. If one owner dies, their share passes as they designate. This could necessitate probate if proper planning has not occurred. This form of ownership also does not protect the owners from the creditor of any other owners. So if one owner owes money or is sued, that debt could be imposed upon the joint property.

“Joint Tenants with Right of Survivorship” or “JTWROS” is the second form of joint ownership. If property has this designation, it means the property will pass to the last surviving owner upon the other owner’s death. This is a great way to avoid probate if the surviving owner is meant to receive the entire property. However, this is not always the best solution. For example, if the children are listed as JTWROS, but the grandchildren should inherit their parent’s share if the parent passes before them, it may defeat the intent. This ownership also exposes the property to the each individual’s owner liability like Tenants in Common (where the property may be subject to the other owner’s debts).

Because of the liability risks Tenants in Common and JTWROS cause allowing one owner’s creditors access to the assets, I often consult against these forms of ownership.

However, the final form of ownership, “Tenancy by the Entirety” does not have this risk. In Missouri, Tenancy by the Entirety is the only form of ownership where the creditors of one owner may not access the joint property. This ownership can only be between a husband and wife. Further, the property has to be titled during the marriage. If the asset is titled in the owners’ name before the marriage, the property has to be retitled to obtain Tenancy by the Entirety.

While this might give you a guide to how your assets are titled, the best way to guarantee your assets are in a form of ownership that meets your needs is to consult with an attorney.

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Ensure Your Estate Plan Avoids The Headache of Probate

Every year attorneys have the pleasure to updating their knowledge through continuing education. So this week it was my pleasure to sit through two days of extreme detail about probate court. I’m certain you are not reading this because you want to learn all about probate. However, what I want to communicate is that there was two days of material for an attorney (and there could have been more) demonstrating how complicated probate can be.

Even when it is not complicated, it is an administrative headache. An attorney is often required which is frequently the major expense of probate. But the expense is not the only problem. Probate also has many time constraints. Publication and notices are required unless the estate is under $15,000. Which introduces at least one month, if not over six months, of waiting. Opening a probate estate also creates an easy place for challenges and creditors. All great reasons to avoid probate.

Procedures and laws surrounding probate also affect how you plan to avoid probate. One of the laws mishandled frequently is that a spouse is entitled to at least 1/3 of the assets. This is extremely important in blended families when the spouses do not intend to leave all the assets to the spouse. In order to effectively do this a prenuptial or postnuptial agreement is necessary.

The other important provision regarding probate is that minors may not receive more than $15,000 without involving the probate court. Essentially, this means a trust is required to avoid probate when leaving money to minors.

If this sounds like something you want to avoid, then learn more about avoiding probate here.

Burkhardt Law Firm

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