estate planning / probate
Decisions about your estate are some of the most important decisions you will ever make. You will not only determine who will inherit your assets, but also who will be in charge of your affairs both before and after you die. If you have minor children you will name a guardian. You will decide whether to have your assets administered through the probate court or outside of probate.
You have probably heard and read about lots of concepts in estate planning. You may be concerned about estate taxes and the costs of probate. You will want to make things easier for your family if you become disabled. Our firm believes that a complete discussion of your options is the best way to start. Regardless of which type of plan is best for you, we will look at several basic goals. Select each goal for more information.
You may be needing to open a probate estate for a parent or other relative. For information about how a probate estate administered, click on "Handling a Probate Estate."
Many other topics will be studied in formulating your estate plan. You may have concerns about Medicaid reimbursement or a disabled child. You may be in, or entering, your second marriage. With an initial consultation we can begin to formulate an estate plan that will benefit you and your family. You may also have questions about the way a relative's estate is being handled. We can help you sort out the questions and begin to find answers.
Getting your assets to the heirs of your choice.
Avoiding probate.
Eliminating or limiting federal estate taxes.
Having a will, if appropriate.
Planning for your own disability.
Avoiding extraordinary life support.
Administration of a Probate Estate.
Getting your assets to the heirs of your choice.
You've heard the saying, "You may think you don't have a will, but the State has one for you." This is basically true. If you die without a will, the laws of "intestate succession" determine who inherits. Often these laws are in accordance with your wishes, but sometimes they're not. Second marriage situations are perhaps the most problematic. We recommend that some type of estate planning be performed to avoid unfair and unanticipated results which can occur under the general laws of intestate succession.
Avoiding Probate if possible.
We think that the perceived "evils" of probate have been overemphasized, most notably by estate planners who want to sell clients very expensive plans involving complicated trusts. That said, we encourage clients to consider avoiding probate, and there are several very simple ways to do so.
Many married couple already use a "probate avoiding device" - a joint tenancy. One of the advantages of holding property in joint tenancy is when one person dies the survivor automatically, without probate, becomes the full owner. Other strategies include "POD" (pay on death) designations used, for example, with bank accounts; "TOD" (transfer on death) designations used, for example, on titled assets like cars and stock; and Beneficiary Deeds for real estate.
We recommend trusts for some clients as one advantage of trusts is that generally assets held in trust will pass outside probate. Trusts also allow for assets to be administered by a successor trustee in the event you become disabled (but see another method noted below). Trusts are very helpful if your net worth is such that federal estate tax becomes an issue. Trusts are also very helpful when you own real estate in another estate since you can avoid having a probate estate opened in both states. (see below)
Eliminating or limiting federal estate tax.
Many estates are not affected by federal estate tax. The unified credit presently allows $1,000,000.00 to pass to the next generation tax free. This amount will increase over the next several years:
Married couples with potential federal estate tax liabilities have a unique opportunity to basically double the exemption through the use of "credit shelter" trusts. This is a very popular strategy which can save literally hundreds of thousands of dollars in federal estate taxes. These trusts can avoid having to sell the family farm, business or other assets just to pay the taxes.
There are other strategies to limit federal estate taxes which can be reviewed in the course of developing your individual estate plan.
Having a will, if appropriate.
Wills only pertain to those assets that are requested to go through probate. If you are 100% successful in arranging your assets to avoid probate, will you still need a will? Maybe. Some people should have a will regardless of how their assets are arranged. For example, parents of minor children can name a guardian only through a will. When we prepare a trust for clients, we usually also prepare a "pourover" will so that just in case some assets are not placed in the trust, they will be distributed into the trust through probate.
Wills and the probate system are still a very stable estate planning tool. For some families, the structure and supervision of the probate system are advisable. You should not completely ignore probate as an estate planning strategy.
Planning for your own disability.
Formal guardianship cases are expensive, time consuming and embarrassing. You can arrange your affairs so guardianship will never be needed. There are two basic methods.
The simpler method is executing a general durable power of attorney. You can name your spouse, an adult child, or anyone else you choose as your "attorney in fact." This person will have full authority to conduct all of your affairs, including the sale of property and authorizing medical care, so a formal guardianship should never be necessary. The power can be granted unconditionally or you may require that a physician certify that you are unable to manage your own affairs.
The other method is having your assets held in a living trust. One of the advantages of a trust is that you will name successor trustees to take over the management of your assets if you become disabled.
Avoiding extraordinary life support.
We recommend that every client execute a general durable power of attorney for health care decisions and a health care directive. These instruments will prevent the use of life-prolonging procedures if there is no reasonable expectation of recovery from a seriously incapacitating or terminal illness or condition.
The Missouri Bar has published an excellent booklet on this topic, including forms. We will furnish you a copy at no charge.
Administration of a Probate Estate
If you need to open a probate estate, either to administer assets of a deceased parent or relative or to administer assets of an incapacitated person or a minor we can help expedite the process so that you may have more time to attend to the personal needs that may also be involved.
If the deceased left a will the individual named in the will as "Personal Representative" (or Executor or Executrix in older wills ) will need to have the will admitted to probate. That individual selects the attorney for the estate. (It does not need to be the attorney who prepared the will.)
If there is no will then the surviving spouse, if any, or one or more of the heirs will be entitled to administer the estate. In either event someone will need to be appointed Personal Representative by the Probate Court for authority to act for the decedent's estate.
We provide the Personal Representative with a description of his or her duties including taking control of the decedent's assets, settling debts, managing assets and generally getting the estate in a position so that the assets may be distributed to the beneficiaries of the estate.
Normally, assets should not be distributed until the 6 months' statutory period for filing claims or contesting will has expired. Other factors may delay distribution such as federal estate tax filings. To offset the cost of such delay estate funds may be invested in interest bearing accounts; costs may be reduced by eliminating or reducing the requirement of a bond in those estates where one may be required and by obtaining waivers for publication of legal notices. When appropriate, partial distributions may be made to eliminate tying up all of the estate assets.
As the Personal Representative is a fiduciary to the heirs of the estate, care must be taken both in the administration and the distribution of the estate to avoid personal liability.
Finally, a Personal Representative is entitled to a statutory fee for services rendered. That fee may be taken or waiver. If taken, it must be reported as earned income for income tax purposes. If the Personal Representative is also an heir, it may be advantageous to waive the fee.
Many of these principles also apply to Conservators. One distinction is that the Conservator of a minor will eventually turn over the assets held when the ward becomes 18; the Conservator of an incapacitated person will at death, pay final bills and distribute the assets pursuant to the decedent's will or to his or her heirs.
Administering an estate is an important service to the beneficiaries of the estate. We can help make that service more efficient and less burdensome.