Probate is the legal process of distributing a person’s property and assets after their death. Every estate has to go through probate in Missouri, regardless of whether the deceased had a will. Probate proceedings can be slow and unpleasant. Even when everything goes smoothly, the process takes time and costs money.
Avoid Probate If You Can
Unfortunately, probate proceedings don’t always go smoothly. Someone you left out of your will may contest it. Distant relatives may demand a larger share. Even old creditors can come knocking, insisting they should be paid even before your named heirs get a single penny.
Since probate can be a difficult process, many people ask if they can avoid it altogether. While it isn’t usually possible to escape probate completely, Missourians do have several options to spare their loved ones the worst of it.
Basic Strategies to Keep Your Estate Safe: Trusts
Among the most popular—and reliable—strategies for keeping assets out of probate is the establishment of a living trust. Missouri residents can set up several different kinds of living trusts:
- A “regular” trust
- A revocable trust
- An irrevocable trust
An estate planning attorney can help you understand the uses and limitations of each kind of trust and determine which is best for you. No matter which kind of trust you choose, however, the advantage is that the assets you transfer into it are exempt from probate.
Trusts Must Be Funded
Of course, you can’t just set up a trust and call it a day. The trust must be funded. That means that the assets you want to protect must be placed into the trust.
Most people in Missouri fund their trust through property—you can transfer your home deed into the trust, for instance, or sign a transfer-upon-death agreement that passes control of property to the trust after you’ve died. You can also set up assets such as life insurance proceedings and other non-tangible assets to transfer into your trust after death.
To protect savings or investment accounts from probate, you can transfer them into the trust as well. This way, the beneficiaries you name will have immediate access to the funds upon your death according to your instructions.
Trusts Give You More Control Than Your Will
Trusts have another benefit above wills, too. They allow you to set conditions for how assets are to be used. You might, for instance, allocate a certain amount of money for your child’s education, which can be disbursed only when they’ve reached a certain age and have begun attending university.
There are other ways to avoid probate, too.
Beneficiary Designations and Joint Tenancy
You already know that you can transfer a home deed to a trust upon death, provided you’ve filled out the right paperwork. Similarly, you can make use of what’s called “beneficiary designations” for other types of accounts, such as:
- Stock portfolios
- Other investments
When it comes to properties, there are a variety of tactics you can use to keep a paid-off house out of probate. Co-ownership arrangements which provide for joint tenancy and survivorship rights ensure your home passes to a named spouse, child, or another heir, without needing a probate judge’s approval.
However, beneficiary designations and co-ownership arrangements can also create conflict. Beneficiary designations, for instance, override your will—so if you listed an ex-spouse as a life insurance beneficiary, that ex-spouse will receive the policy pay-out even if you named your children or current partner in your will. You have to make sure your beneficiary designations are updated as your wishes change.
Similarly, co-ownership arrangements can create conflicts in the case of divorce or separation; they also set up eventual pitfalls. What happens when the last surviving owner dies?
The Key to Avoiding Probate Is an Estate Plan
For most Missourians who own property or hold substantial assets, a comprehensive, well-thought-out estate plan is integral to minimizing probate. While many people opt to simplify their estate obligations by establishing a trust, what may work best for you isn’t necessarily what would work best for someone else.
To get a head-start on future-proofing your estate—or to bolster the defenses you already have in place—complete our contact form or give us a call today. We can help you help your loved ones, both in life and after you’re gone.