In today’s digital world, almost everyone has online accounts. Have you thought about what will happen to these assets when you're gone?
By Robert Swift, Jr., J.D. – Senior Vice President & Relationship Manager
Why is there a push to avoid probate, especially in Missouri?
Probate of your will is the distribution of your probate estate under the supervision of the Probate Court in your county of residence at your death. Unfortunately, probate can be public, time consuming, and expensive. All documents relating to probate of your estate, including the terms of your will, are public and subject to inspection by anyone who wishes to look at it. Probate can also be time-consuming, with a minimum time of 6 months and, in some cases, up to a year or more. In Missouri, probate is costly, with executor, attorney’s fees, and court costs running up to 9% of your probate estate. Both the executor/representative and the attorney for your estate get the same fee, set by statute, regardless of the amount of actual work involved. By the way, all estates must have an attorney. However, probate is easily avoided.
The rule to remember is that if you die owning property in your name, that property is required to go through probate. Jointly owned property passes automatically to the surviving joint tenant. All states have passed non-probate transfers laws. For bank accounts, a Pay on Death (POD) designation on the bank’s records will transfer the property to the POD beneficiaries upon presentation of a death certificate. Similarly, for investment accounts and automobiles, trailers, etc., a Transfer on Death (TOD) designation will transfer the property to the TOD beneficiaries. For real estate, a Beneficiary’s Deed will serve to transfer the property by recording a copy of the death certificate in the county in which the real estate is located. In order to avoid probate, you have to insure that all of your assets are either jointly held or non-probate transferred.
This is a rather piecemeal approach to avoiding probate. A better way is to use a Revocable Living Trust. This is a trust that you create during your lifetime (hence the term “living”); you are the grantor (the person that creates the trust), the trustee (the person that manages the trust), and the beneficiary (the person that the trust benefits). It really doesn’t change the way you do business: you still spend your money as you wish and file the same tax returns. The only difference is that you title everything in the trust name instead of your own name. Trusts can survive your death and continue on as long as you wish them too. Because your assets are in the trust name, you have the ability to avoid probate.
A good estate plan not only directs what happens to your assets after your death, but also ensures the care of your assets during your lifetime should you, due to physical or mental illness, become incapable of handling them. A Revocable Living Trust provides for this by allowing a successor trustee that you name to step in once you are no longer capable of handling your affairs. This may be permanent or, should your capacity be restored, temporary. It also may avoid the Probate Court’s having to appoint a conservator for your estate, which can be a costly and time-consuming process. Your estate planning attorney, in addition to your Trust and Will, will also prepare a durable power of attorney for health care; this document specifies your wishes regarding medical treatment and care in the event you are unable to make or communicate these wishes to your family and physician.
Your choice of an estate plan to accommodate your needs and desires is an important life decision that requires legal advice by an estate planning attorney. If you don’t already have a plan in place, contact a member of our team at Central Trust Company to help ensure you are.
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