Wills, Trusts and Estate Plans
Estate Planning Lawyer | Sedalia, MO
When most people contemplate handling their affairs after they die, they ask for a will. In most cases what they need is an estate plan. Let’s go over the difference.
A will is a document which sets forth your wishes for how you would like to dispose of your estate when you die. A will has no effect until after your death and only when it goes through the probate process. This occurs when someone gives to the probate court your will and opens up an estate. The court will appoint a personal representative to gather together all of the assets of your estate, allow creditors to make claims against the estate and carry out the terms of your will to the maximum estate possible. The probate process takes at least six months and requires a court case to be opened up. Moreover, your will becomes a public document.
For these reasons, many people try to avoid probate where possible. Missouri has enacted a nonprobate transfer law, which would allow you to transfer certain items of property such as real estate, bank accounts and automobiles automatically upon your death. For instance, if you wanted to pass on the family home to your son upon your death, you could execute a beneficiary deed. Upon your death, ownership of the home will transfer automatically to your son. A series of nonprobate transfers can transfer the important parts of your estate automatically upon your death.
Another way of avoiding the probate process is by creating a trust. A trust is sort of like a box to which you can attach rules to govern whatever is in the box. A trustee is an individual who controls the box according to your rules. The general idea behind a trust is that you will give your property to the trust and you will be the first trustee. You will name a second trustee to take over if you become incapacitated or die. The rules of the trust will be that you can do whatever you want with the trust and use the trust for your benefit while you are the trustee. Your successor trustee, however, must adhere to a separate set of rules and either use the trust property for your benefit or else disburse it in according your rules.
While nothing changes in your ability to use the property you give to the trust, you do not technically own the property—your trust does. When you die, there is little or nothing to probate and the terms of your trust govern the disposition of your property.
A trust gives you more control over the disposition of your property after your death and is not a public record for the whole world to see. When properly maintained, a trust leaves little or nothing to probate. A trust can provide for you and your family to some extent before your death, should you become incapacitated, whereas a will only becomes effective after you die and the court opens an estate.
While trusts give you more control and flexibility over your assets, they also involve more work. A trust only covers what you give it. A trust document only creates the box and attaches the rules; you still have to put things in the box. Moreover, you have to make sure that property you get after you execute the trust goes into the box as well. For instance, when you execute your trust document, you may title your car in the name of the trust. If you sell your car and buy a new one, you will need to make sure that the trust owns your car.
To help with this, a trust document will also include a simple will (called a pourover will) which conveys all your assets to the trust. If you forget to title your new car in the name of the trust, then your will convey it into the trust.
Finally, you should also think about what happens if you are incapacitated for some time. Someone will have to make sure the bills get paid and someone will make medical decisions on your behalf. A durable power of attorney will allow you to appoint a person to handle your affairs and make healthcare decisions if you are unable. It is vitally important that every person contemplate healthcare decisions to be made before they need to be made. For this reason, Baker Legal Services is offering for free a form which can be used as a durable power of attorney for health care decisions. If you have any questions about this form, give us a call and we will go over it with you.
At Baker Legal Services, we can help create a comprehensive estate plan tailored to your specific situation. If you already have an estate plan, you should review it every five years and after major events in your life to make sure your estate plan accurately states your wishes. If you ever have a question, please give us a call.