A beneficiary deed can be an effective (and efficient) estate planning tool. This instrument is used by an owner of real estate to designate a “beneficiary” who would become the owner upon their death—with no requirement for probate or any other drawn out process. A signed and notarized beneficiary deed is recorded with the county recorder of deeds office and then, upon the owner’s death, only a subsequent affidavit needs to be filed in order to fully effectuate the transfer. Broader estate planning is often needed, but for simple real estate transfers, a beneficiary deed can be a wonderful approach due its simplicity and cost-effectiveness.
In estate planning, choosing the right decision maker is crucial. Who will serve as trustee of your trust when you cannot? Who will you name as agent under a power of attorney? Who will you nominate to serve as personal representative (executor) in your will? Deciding who should be in charge can be a difficult thing—and the ramifications of those decisions really are important. While the trustee, agent or personal representative is bound, limited and directed by the content of the documents you have prepared (and in many cases, by certain state statutes), their role is still central to your estate plan. In many cases, the role of such an individual is both administrative (i.e. handling a process, handling paperwork, etc.) and substantive (i.e. making important decisions regarding real life situations and what to do with your assets).
While every situation and every individual or family is unique, I generally advise my clients to consider the following characteristics when naming people to these important roles: (i) relevant expertise (health, financial, etc.), (ii) trustworthiness (always a central consideration), (iii) communication skills (in many cases they will be a key communicator to family members) and (iv) a commitment to carrying out your plan (the documents guide, but a commitment to following these is crucial).
When I meet with a new client, we almost always discuss the differences between a Will and a Trust. Frequently, an individual assumes that: Will = simple; Trust = complicated and Will = affordable; Trust = not so affordable. Fortunately, such is often not the case. A Will and a Trust really do different things—or at least address the same matters in much different ways.
A Will directs where someone’s property (accounts, home, car, personal belongings, etc., etc.) goes when they die. For this to happen, a probate estate (court supervised process for handling the affairs for a deceased person) needs to be opened and a personal representative handles the administration of the probate estate. Initial cost of a Will is often a bit less expensive but final administration is more time consuming, more involved and can also end up more expensive.
A trust generally functions as a functional replacement for a Will. A trust’s unique virtues include avoidance of probate and the opportunity to provide ongoing support or distributions to named beneficiaries. While initial cost is often a bit more than a Will, its final administration is dramatically easier, less time consuming, more private and often less expensive.
While every individual, family and situation is unique, it is generally true that a trust is a superior planning tool to a Will. However, I work with clients for whom a Will is the best fit and that’s what I prepare. For others, a Trust makes the best sense. Ultimately, these important determinations are based on a person’s needs, preferences, goals and unique personal and family situation.
A power of attorney grants someone (called the “attorney-in-fact” or “agent”) authority to act on your behalf. Generally, this document would be prepared in contemplation of a future period of mental incapacity. A power of attorney may give someone authority in the area of financial, legal and business matters. This is called a “general power of attorney” or a “financial power of attorney.” Of course, the specifics of this type of document can vary substantially. A power of attorney may give someone authority in the area of medical and healthcare matters. This is called a “health care power of attorney” or a “medical power of attorney.” The people named in these roles may be the same for each document or you may elect to name different people for each role.
The purpose of power of attorney documents is to (i) reduce ambiguity, (ii) allow for quick and clear opportunities for people to step in and help and (iii) eliminate the necessity of costly legal procedures. Not having power of attorney documents in place in advance may lead to the need for drawn out legal processes and significant ambiguity about who you want in that role and what limitations or specific directions you want to include with even court-appointed authority. Given that preparing a power of attorney is fairly easy and is not very expensive, I recommend these documents for nearly every client.
In preparing a Will, a Trust or a Power of Attorney, the intent is always that these documents will last a very long time. Estate planning documents rarely have a date when they expire or would absolutely need to be revised or replaced. However, in the following instances, revision may be important or even necessary:
(1) life changes such as marriage, divorce, or birth/adoption
(2) major changes in property/assets
(3) changed goals, preferences or wishes
(4) moving to another state
(5) the passage of a long period of time
Determining what changes may be needed is always a personalized process and requires detailed attention. I recommend meeting every 3-5 years to review and discuss planning. For existing clients, this regular follow up is always without any charge or fee.
Estate planning for a child or loved on who has a significant developmental, physical or mental disability can be particularly challenging and is also particularly important. Many of the priorities, goals and questions are no different than any other situation: How can I be sure that they are taken care of? If they are young or unable to manage their own affairs, who should be given responsibility to help them? How can I protect them from foreseeable (or unforeseeable) problems or challenges? However, while these sorts of goals and questions are common among various situations, there are often other more unique questions: How will a gift impact eligibility for Medicaid or other public benefits? How can I be sure that someone is looking out for their best interests? How can I plan for a potential change in circumstances or needs?
Fortunately, there are some unique estate planning tools that can be used to address these questions and effectively plan for the well-being of any individual. A trust is commonly an effective tool to provide for the needs of another. In some contexts, a “special needs” or “supplemental needs” trust can be a particularly effective tool to help provide for an individual who is also eligible for public benefits or similar financial assistance. Ultimately, each individual and each situation is quite unique and requires an experienced and skilled lawyer to help guide you through the right solutions.
Having some type of trust-centered planning is important whenever young (or not so young) children are involved. As every parent understands, the cost and effort to raise children is tremendous. Of course, children are not self-reliant or self-supportive, so providing for their needs often becomes a central component of a parent’s estate plan. In the event of a parent’s death (or incapacity) there must be in place a means of providing for the needs of their children—such as daily maintenance, clothing, housing, health care, educational and recreational expenses. Appropriate planning often involves a revocable living trust or a testamentary trust, as each of these place a designated trustee in charge of making important financial decisions and meeting the needs of child-rearing. With a trust in place, the designated trustee can be directed (and is thus legally bound) to use trust assets for the children and within the parameters set forth by the written trust document. This type of planning protects the child by assuring that their needs are met but also protects the trust assets from misuse (or over use) by the child.
As I meet with clients, I often discover a misconception about what a Will accomplishes. “If I have a Will in place, then I can avoid probate, correct?” is the sort of question and assumption I frequently encounter. While a Will serves several important functions and is a key component of most estate planning, it does not avoid probate. In fact, the only way that a Will is utilized is through the probate court. It is an effective and important tool—but will NOT keep your property out of probate. Fortunately, there are several tools and strategies that can indeed streamline your estate planning, avoid probate and help you accomplish your planning goals. These often include a trust, a beneficiary deed or other strategies, but of course every individual and every situation is different and requires individualized attention and planning.
Missouri law provides for the right of an owner of real estate to transfer such real estate without submitting that property as part of a probate estate. In other words, with the right planning, real estate can be transferred without probate. Under 461.025 RSMo, an owner can sign what is a called a “beneficiary deed”— a document which structures a transfer that will occur only upon the owner’s later death. In many ways, a beneficiary deed functions similarly to a bank “TOD” or other beneficiary designation. To be valid, a beneficiary deed must be signed and recorded during the lifetime of the owner (it can be rescinded or changed during their lifetime with a properly prepared and recorded document). Upon the later death of the owner, a fairly simple affidavit would need to be prepared and recorded to complete the transaction and finalize an ownership transfer. In practice, a beneficiary deed is an effective tool in transferring real estate while avoiding probate. Of course, every situation is different and there are many instances in which this approach is not appropriate–but in many instances it can be a valuable solution.
A last will and testament is a fundamental part of any effective estate plan. At its essential core, a Will directs where someone’s property goes when they die. In most cases, a Will also contains a nomination of someone to serve as personal representative of their estate (executor) and may contain provisions relating to the necessity of a bond and the need for “supervised” or “independent” probate administration. Property subject to a Will must go through the probate court in order to be transferred. While a Will is part of nearly any estate plan, comprehensive planning often seeks to avoid probate and therefore often bypasses the use of a Will. Indeed, probate avoidance is commonly a central goal of effective estate planning and tools like a beneficiary designation, a living trust and a beneficiary deed are often utilized to avoid probate—each of which take property outside of the control of a Will. While the specifics of any estate plan vary, a Will is nearly always one tool that we use to effectively reach a client’s goals.