Wills, Trusts & Joint Tenancy

How is my property distributed at my death?

In Missouri, when someone dies their property may be distributed in one of four ways:
  • By the directions in your will, or if you don’t have a will, then your property is distributed according to the probate laws of Missouri, which is called, “intestate”;
  • By the directions in a trust that you created;
  • Through joint ownership of property, such as owning a bank account or house that lists a joint owner. At your death, the joint owner is the 100% owner of the property. This is called owning property as a joint tenant with rights of survivorship;
  • By naming someone as a beneficiary. People are generally named as a beneficiary on a life insurance policy or an individual retirement account (IRA). This is also the same as naming someone as a pay-on-death (POD) beneficiary on a bank account or naming someone as a transfer-on-death (TOD) beneficiary, for instance, on a car title, or through a beneficiary deed to real estate.

WILLS

What is a will?

A will is a legal document that is signed by someone over the age of 18 and provides instructions on how to dispose of all of their property at the time of death, if that person’s property is not disposed of by a different method.

Do I need to have a will?

It is probably a good idea to execute a will. A will gives you the power to distribute your property according to your own wishes. A will allows you to make specific gifts to certain people (such as a family heirloom), nominate a guardian for your minor children, create a trust through your will, name the executor/administrator of your estate and provide for any other wishes you may have for your property at your death.

How do I create a will?

For a will to be a valid legal document in Missouri, you must meet these requirements:
  • The will must be in writing;
  • The will must be signed by you, or by someone signing your name in your presence and at your direction;
  • The will must be witnessed at your request by two competent people over the age of 18;
  • You have to understand that you are signing your will and you must declare to the witnesses that you are signing your will;
  • You and the witnesses must sign the will in the presence of each other;
  • You have to have “capacity” to make a will and must be over the age of 18;
  • Missouri does not require this, but it is a good idea to also execute a “self-proving” affidavit at the time you sign your will and have it witnessed by two other people. A self-proving affidavit is a document that "proves" the will was executed in conformity with the laws of the State of Missouri and it alleviates the need to have a separate hearing in probate court to "prove" the will was executed properly.

Is my will still valid if I executed it in a different state than Missouri?

Yes. Your will is valid if it is in writing, signed by you, and was executed in accordance with the laws of the place you executed the will or where you live at the time of execution.

What if I want to change or revoke my will? How can I do that?

You can revoke your previous will by physically destroying it (tearing, burning, etc.) or canceling it with the express written intention that you want to revoke the will. You can also revoke a will by executing another will. A will that is revoked by cancellation must be witnessed the same as if you were making a new will. A previously revoked or destroyed will cannot be revived except by executing a new will.

NO WILL

What happens if I die without a will? What happens to my property?

If you do not make other arrangements on how your property will be transferred at your death, such as a trust or joint ownership, then your property will be transferred according to the probate laws of Missouri. Dying without a will is called, dying “intestate.”
If you do not have a will at your death, then Missouri’s probate laws will distribute your property like this:
  • Surviving Spouse
    • If you are married and have no children, then your spouse will receive all of your property;
    • If you are married and there are surviving children that are also children of your surviving spouse, then your surviving spouse receives the first $20,000 of the estate, plus ½ of the balance of the intestate estate;
    • If you have one or more children who are not the children of the surviving spouse, then your surviving spouse receives ½ of the estate balance.
  • No Surviving Spouse
    If there is no surviving spouse at your death and you have no will, your estate will be distributed as follows:
    • To your children in equal parts (or if your child had died prior to you, that child’s share goes to that child’s own children to be further divided in equal parts);
    • If you don’t have children or grandchildren, then to your father, mother, brothers, and sisters in equal parts (or if that person had died prior to you, that person’s share goes to that person’s own children);
    • If you don’t have children or grandchildren, and your father, mother, brothers, sisters and their children are deceased or there are no descendants from your siblings, then to your grandfathers, grandmothers, uncles and aunts in equal parts(or if that person had died prior to you, that person’s share goes to that person’s own children);
    • If there are no such relatives, then your estate goes to your great-grandparents in equal parts (or if that person had died prior to you, that person’s share goes to that person’s own children);
    • If there are no living lineal descendants entitled to inherit, and no surviving spouse, then the estate will go to the descendants to a predeceased spouse (who was married to you when they died) and if there is more than one predeceased spouse, then the estate goes in equal shares to the descendants of each predeceased spouse;
    • If there are no such descendants, then your estate goes to the State of Missouri.

TRUSTS

What is a trust?

A Trust is a legal entity that can hold title to property for the benefit of one or more other persons or entities. The person who sets up the trust is called the Creator (also known as the Grantor, Trustor, or Settlor).

The person or entity that controls the Trust and is responsible for managing the Trust assets is called the Trustee. The Trustee holds the legal title, but not the full title, to the property that is in the Trust. This means that the Trustee can only use the assets and proceeds from the Trust property for the benefit of the people the Trust is set up to benefit, never for his or her own profit.

The persons who are intended to benefit from the Trust are known as Beneficiaries. Beneficiaries own what is called the equitable title to the property held by the Trust. This means that they have a right to have the assets used for their benefit in the way directed by the Trust provisions.

What is a living trust?

A living trust is created during your lifetime and exists immediately upon creation. A revocable living trust can usually be revoked and amended by the trust creator. A living trust should always be “funded” with cash or other property.

What is the advantage of setting up a living trust?

Living trusts are usually marketed as a good way to avoid probate court because the trust holds title to the trust property, which is in control of the trustee. Depending on the fact situation, this can either be an advantage or disadvantage. The advantages to a living trust include private management of assets for an incapacitated individual without court involvement, and more privacy for your affairs.

Are there disadvantages to setting up a living trust?

Probably the chief drawbacks for setting up a living trust would be cost and inconvenience. Preparing and implementing a living trust will likely cost more than preparation of a will. A living trust also requires additional steps to complete the planning cycle, such as “funding” the trust. This means that all or most assets must be transferred into the trust’s name by retitling the assets.

If I create a revocable trust, can I save taxes and protect my assets from creditors during my life?

No. You are still treated as the tax owner and owner for creditor purposes of assets titled in the name of a revocable living trust. The answer may be different for asset protection, however, if the property is held as “tenancy-by-the-entirety.”

What are the formal requirements for a living trust to be valid?

The trust must identify three entities: (1) the grantor/creator/settlor (all the same), who creates the trust and whose wishes are expressed in the trust language; (2) the beneficiaries; (3) the trustee, who manages the trust assets and accounts to the grantor and beneficiaries. Where the trust is established by an agreement, both the grantor and trustees should sign, preferably before a notary (witnesses are usually not required). For a revocable living trust, the grantor/beneficiary/trustee can be the same person.

What is a joint revocable trust?

A joint revocable trust is a single-document trust created by a married couple. A joint trust provides two main functions: (1) it provides assets management for both spouses during their lifetimes; and (2) it contains the couple’s estate plan and all the instructions for distribution of assets at death.

Who has control over a joint revocable trust?

Each spouse has joint control over and access to the assets placed in a joint trust. The trust language can provide for appropriate management responsibilities.

Can a joint trust be amended?

Yes. The terms of the trust will provide directions, but typically the joint trust is fully amendable during the joint lifetime of the spouses.

Who should be the trustee of my trust?

For a living trust, often the grantor/creator of the trust is the initial trustee. A joint trust usually names both spouses as co-trustees. If the grantor/creator does not want to or cannot serve as trustee, the options are considerable: spouse, family member, trusted third party, or corporate trustee.

What happens to my trust after my death?

The assets in your trust are distributed by your trustee according to the terms of your trust to the beneficiaries. The administration of a living trust is usually never before a supervising court unless a beneficiary or interested party requests court involvement. This can be an advantage and disadvantage because without any unexpected complications, the total cost, time, and difficulty involved in administering a trust should be dramatically lower than that required for a comparable probate estate. But a lack of court supervision also means less oversight of the trustee’s behavior and an increase in the risk of undetected and/or unrecoverable losses to the trust beneficiaries.

JOINT TENANCY

What is joint tenancy?

Joint tenancy is commonly used to refer to titles held as “joint tenants with the right of survivorship” (JTWROS). Joint tenancy is a form of multiple ownership of real or personal property, in which full legal title passes to the survivor(s) on the death of a joint tenant. For example, if Mary and John own real estate as joint tenants and Mary dies, then John is the 100% legal owner of the real estate.

What type of property can be held as joint tenants?

Almost any type of property can be held as a joint tenant: real estate, bank accounts, stocks and bonds, and most other properties, especially between spouses.

What are the advantages to having property held in joint tenancy?

Joint tenancy can be effective for avoiding the delays and expense of probate. At a joint tenant’s death, title to property automatically passes to the surviving joint tenant. Because joint tenancy is easily understood, there is little need to consult an attorney in order to transfer most kinds of property into joint tenancy. Joint tenancy is also a simple and sometimes default method of estate planning.

What are the disadvantages of joint tenancy?

There are a number of disadvantages of joint tenancy, depending on the circumstances:
  • Heirs of the deceased joint tenant will not receive the property;
  • Joint tenancy can be difficult if there is a divorce or a need to sell property arises since the consent of all joint tenants is needed;
  • In order to transfer joint tenancy property to a trust and maintain its character, specialized language in the trust as drafted by a lawyer is required;
  • No income-tax benefit to joint tenancy;
  • Creating joint tenancy may subject the property to the claims of the second party’s creditors, or subject the property to misappropriation and waste. For example, if a relative is named as a joint tenant of your bank account, that relative could withdraw funds without your permission. Also, if your child’s name is on your bank account as a joint tenant, then your child’s creditors can have access to the funds to satisfy the child’s debts.

What other ways can property be held if not in joint tenancy?

Sole ownership, tenants in common, and tenants by the entirety.
  • Sole ownership is when you alone control what happens to the property, and can sell it or will it to someone. If you die as a sole owner of property, then that asset will have to go through probate court to properly transfer title.
  • Tenants in common. This is where there are two or more owners and each owns an undivided share of the property. There are no survivorship rights. Upon the death of an owner, that owner’s share will pass not to the other tenants but to the decedent’s heir or others named in the decedent’s will. If there is no indication about how the property is held, in Missouri, tenants in common is presumed, unless it is property held by a husband and wife.
  • Tenancy by the entirety. This is a form of property ownership specifically designed for married couples. Missouri continues to recognize tenancy by the entirety. In Missouri, neither spouse can sell tenancy by the entireties property without the consent, agreement or acquiescence of the other spouse. One of the main advantages of tenancy by the entireties is that the property held in this form cannot be subject to either spouse’s individual debts (but it can be subject to joint debts). Thus, most of the contemporary case law on tenancy by the entireties tends to involve bankruptcy or some other creditor interest.

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