At your death, is it your intention to pass on a significant portion of your worldly assets to lawyers, personal representatives and other unknown entities through court supervised administration? Without simple planning that is what will happen.
Even if your assets pass through the terms expressed in a will your estate is subject to the probate court process. This means statutory fees will come out of your assets and a delay in getting your assets to your loved ones. These fees can be paid to both your personal representative and an attorney who is required to represent the personal representative in a probate estate.
These fees are set on a sliding scale based upon the value of your estate. They begin at 5% of the estate for the first $5,000.00 in value and then decrease incrementally to 2% for everything over $1,000,000.00. This same amount applies to both the personal representative and the attorney. In addition there are expenses for court costs, publication and posting a bond.
Further, the time it takes to probate an estate of over $40,000.00 in value typically takes a year or more from the date of filing.
But, there are several simple non-probate transfer tools available to avoid probate court and to transfer your assets to your loved-ones without these costs and delays.
The creation of a revocable living trust is one of the tools available to avoid those costs associated with Missouri probate court, as those assets in a revocable living trust are not subject to probate administration.
There is a common misconception that the creation and use of a revocable living trust is extremely complicated and time consuming. With the advice of experienced Missouri estate planning attorney a revocable living trust can usually be set up after a single office visit and after some fundamental decisions are made including who you want to manage your trust and how you want your assets divided to your beneficiaries.
The person our people who create the trust are referred to as the Settlors. Those who manage the trust are referred to as the Trustee. It is most common for the person or people who create the trust (Settlor) to also serve as the Trustee of their own trust during their lifetime or until they are no longer able to manage their own affairs. In which case, a person who has been designated as the Successor-Trustee takes over the administration of the trust. So, the creator of the trust does not lose control over the management of their assets during their lifetime. Further, as the name implies, the trust is revocable or modifiable during the lifetime of the Settlor.
A vital step in the effective use of a revocable living trust is the funding of the trust. A trust is funded by simple retitling assets in the name of the trust or in the settlors’ names as trustees of their trust. Your attorney can guide you through this process and advise you on which assets to put in your trust. Assets which are not put in the trust by this process are not part of the trust.
Through the use of beneficiary designations on your investments, bank accounts, life insurance and other assets you can also avoid probate court and the costs associated with its administration. With the use of a beneficiary designation the ownership of that asset will transfer automatically to the named beneficiary after proof of death is provided. However, the use of the beneficiary designation alone will not give you the flexibility in your planning that you may desire when you have multiple heirs, you have heirs who are minors or when you desire to place specific conditions or timing on the transfer of your assets to your beneficiaries.
If you are a Missouri resident and have questions about what estate planning tools are right for you to avoid the costs and delays associated with the probate court process you can contact our office today for a free consultation.