Saturday, May 24, 2008

Just the Basics

Missouri wills and trusts can be a confusing thing. Estate planning is a tool that everyone needs, but the extent to which they need it can be difficult to understand without a little background. The tools available for estate planning are numerous and the advantages and disadvantages of each tool needs to be laid out in an understandable format so that prospective clients can make an informed decision. The needs of each prospective client will be different depending on their assets, whether or not they are married, whether they have ex-spouses, whether or not they have children, the age and maturity level of those children, what tax programs they need to take advantage of, whether or not the federal government eliminates estate tax in 2010 and renews the law doing so in 2011, etc…

He is a brief rundown of some of the basic principals of estate planning that I provide to my clients and that is available on our firm website at

Probate: The judicial procedure by which a testamentary document is established to be a valid will. A personal representative’s actions in handling a decedent’s estate. Property that goes though probate is subject to taxes, administrative expenses, statutory allowances, and claims of creditors. The property left over will then pass according to the decedents will. All property that is titled solely in the name of the decedent will go to probate.

Decedent: A dead person, especially one who had died recently. For our purposes it is the person who passed away leaving an estate.

Last Will and Testament: A person’s final will. A will does not always prevail over statutory requirements for surviving spouses and minor children.

Intestate Succession: To die intestate is to die without a will. Missouri intestacy laws cause a surviving spouse to share the inheritance with any descendants 50/50. If all the decedent’s descendants are also descendants the surviving spouse, than the surviving spouse gets the first $20,000 of the top. Property that does not go to the surviving spouse goes directly to any minor children. The children receive the money outright which can make for an awkward situation as the children may not be prepared to handle a large sum of money. Therefore the court appoints a court-supervised conservator for heirs who are not yet eighteen. The property of a decedent who does not have any surviving spouse or descendents goes to the decedent’s parents, siblings, and descendants of deceased siblings.

How do I avoid probate and therefore taxes, administrative expenses, statutory allowances, and claims of creditors? What ever avoid probate also avoids the provisions of the will and intestate succession. A new and effective way to do this is call Beneficiary Designations. Beneficiary Designations passes property to a named beneficiary upon the owner’s death by contract.

Beneficiary Form Ownership: This form of ownership allows property to be titled to a person payable on death, or transferable on death. This also avoids probate and Missouri law allows any written instrument that conveys or evidences ownership of property to be set up this way.

Trust Property: property that is held in a trust also avoids probate. One can avoid probate by establishing a revocable trust for one’s own benefit and transferring all their property into a trust. This allows them to maintain control over the property.


Marital Deduction: Allows unlimited amounts of property to pass to one’s lawful spouse, by gift or inheritance free for gift or estate tax as long as the spouse is a U.S. citizen. Domestic partners do not qualify for the deduction.

Unified Credit: Creates a $2 million tax shelter for property passing by taxable gift or inheritance to anyone in 2008. The federal estate tax is scheduled to be eliminated in 2010. However; the gift tax is scheduled to be 35%. Also If congress does not act the estate tax will return in 2011 with the exclusion amount being $1 million.

Immature beneficiaries

1. Instead of having a court-supervised conservatorship until the beneficiary reaches eighteen, you can choose to set up a testamentary trust. Trust provisions can be set up to delay distribution of the estate until any age and the trustee can be given the flexibility to extend trust funds before the scheduled termination on such things as support and education.

Revocable Living Trusts

1. A revocable trust acts like a will in that it allows flexibility in planning but it avoids probate. A revocable or “living” trust designates a successor trustee to take over administration of the trust upon the grantor’s incapacity or death. For the trust to be effective it requires property to be placed into it prior to the grantors death. In layman terms what a revocable trust does is hold the property that you want others to eventually inherit. You are the trustee of the trust so you still have control over the property during your lifetime. When you pass away, another person who you designate is appointed trustee. This new trustee will distribute the property that you placed in the trust according to the provisions you wrote in the trust.

Simple Will

1. In some cases a simple will may be the best choice. A simple will can allow you to choose how your estate is administered and is cheaper and easier to produce. However there are many disadvantages to a simple will, the greatest of which is probably the need for probate. Whether or not a simple will is best for you depends greatly on your particular situation.

I hope this brief introduction helps get you started in your estate planning goals. If you have any questions, please feel free to contact me at