Guide to Estate Planning in MO
Experienced Rolla attorney answers common questions about estate plans
Understanding what happens when someone dies without a will is the first step in creating a plan that will protect your assets for future generations. From probate to tax consequences to fighting among potential heirs, there are many issues you can solve before they happen with a proper estate plan in place. Take time to meet with one of our Rolla, MO estate planning attorneys and we can guide you through the process that is right for your personal situation.
Our Phelps County firm, Williams, Robinson, Rigler & Buschjost, PC, offers answers to some of the frequently asked questions regarding these matters:
For most estates, there are two types of estate tax -- the estate tax imposed by the State where the decedent resided, and the federal estate tax.
Missouri does not impose a state estate tax.
A Missouri resident may be subject to the federal estate tax, but only if the decedent's estate is of a sufficient size. As of January 2018, the amount that an individual can exempt or exclude from the federal estate tax is $11,200,000.
However, since tax laws and regulations change from time-to-time, you should always consult with an estate plan attorney and/or a tax professional before making important decisions concerning the tax aspects of your estate.
Under Missouri law, the procedure needed to complete an estate administration depends on the method of administration being utilized in Probate Court.
The simplest and least expensive way to administer an estate is through "independent administration". If you make an estate plan, you can authorize “independent administration” through your estate plan documents. Without an estate plan, all of the heirs of a decedent must agree, in writing, to “independent administration”.
Otherwise, absent “independent administration” a more expensive and time-consuming "supervised administration" is required. If an estate requires “supervised administration”, the Probate Court must first grant permission before many of the acts are taken to administer and close out the estate, pay its bills, and distribute its assets.
In broad strokes, the assets of the estate must be gathered, the obligations of the estate paid, and the balance of the assets distributed. That said, each case will be different and all the possible variations are too numerous to set out here in detail. Moreover, utilization of the Missouri Non-Probate Transfer laws can reduce or eliminate many of the procedures needed to close out an estate.
The specifics of a given case can be explained in advance by an experienced estate planning attorney.
Estate planning for IRAs can involve many complicated issues and decisions, many of which can involve tax ramifications. One size does not fit all, and each case will be different. Consult with a Missouri estate plan attorney and/or a tax professional to discuss the options available to you and your heirs and intended beneficiaries.When you schedule an appointment to meet with your estate plan attorney, there are two key issues to consider. First, you must know the property and assets which you own and have some idea about how you wish for those assets to be distributed at your death. Second, you should carefully consider which individuals you trust to be given the authority to carry out your wishes.
Based on that information, your estate plan attorney can craft the best vehicle for you to use to easily and quickly resolve your estate issues, and avoid what would otherwise be lengthy and expensive processes.
In Missouri, an accountant or CPA may act as a Trustee of a Trust. You should consult with your estate plan attorney to determine whether such a professional will best serve your situation, or, whether a friend or family member may be suitable to serve as Trustee of your Trust. As always, each case is different.If you have been named the executor of a Estate, the first thing you should do is meet with a Missouri Probate attorney to review the provisions of the estate plan and to discuss your duties and obligations under the law.
As a general rule, you will have to gather the assets of the estate, pay the obligations of the estate, and distribute the remaining assets. However, estate planning tools and use of the Missouri Non-Probate Transfer laws may have a profound effect on what is included in the Estate and how it is to be administered. Again, each case is different.
Under Missouri law, a Personal Representative of a decedent Estate can be compensated for their services. A Will can provide the method and amount of such compensation.
If there is no Will, or if there is no guidance under a Will, then Missouri law controls the compensation and one of two methods will apply. Missouri statute provides for a minimum amount of compensation based upon the value of the Estate. If such minimum compensation is not sufficient, a Personal Representative can record the time spent in carrying out services for the Estate and then petition the Probate Court for an order allowing the additional compensation.
Although partial compensation may be awarded before the Estate administration is completed, the usual practice is to pay compensation at the time the Estate administration is concluded.
This compensation only applies if assets are to be passed through a Probate Estate. If assets are passed via a Trust, generally the trust instrument will set out the manner of compensation of the trustee (if any).
If assets are passed under the Non-Probate Transfer laws, there may be no fees associated with the transfer other than perhaps fees to record deeds, etc.
As of January, 2018, the amount that an individual can exempt or exclude from the federal estate tax is $11,200,000. In Missouri, there is no separate state estate tax.
However, since laws and regulations change from time-to-time, you should always consult with an estate plan attorney and/or a tax professional before making important decisions concerning your estate.
It is advisable to create a Trust by way of a separate stand-alone instrument.
A Trust can be created under a Will, called a Testamentary Trust.
However, the better practice is to create a stand-alone Trust and avoid attempting to create a Trust under a Will.
A Trust beneficiary has few responsibilities other than keeping the Trustee of the Trust advised of their current address and other contact information. A Trust beneficiary is advised to seek counsel from a chosen CPA or other tax professional concerning the tax consequences of any distribution to be received by the beneficiary from the Trust.If someone dies without a Will, then the Missouri law of Intestate Succession will dictate the procedure which affecting both administering the Estate and the distribution of the Estate. The application of Missouri law may cause an unintended result, or a distribution to persons a decedent might find objectionable.
To avoid unintended results, it is always a good idea to consult with an experienced estate planning attorney and create a comprehensive estate plan.
Any estate plan is better than no estate plan, and each case is different depending in the facts and circumstances.
A Will might be perfectly suitable for people with simple and direct plans of distribution, provided that beneficiaries are designated on all titled assets held by the maker of the Will.
Likewise, a Trust is a very easy estate plan approach which also offers more flexibility than the use of a Will and beneficiary designations.
Again, each circumstance is different. For example, small business owners who want to provide for seamless and immediate transition of authority to continue business operations need a comprehensive state plan to ensure their business continues.
Talk with an experienced estate plan attorney to determine which approach makes the most sense for you and your family
In the most general terms, your “estate” consists of all your assets. Your “estate plan” is simply a “plan” by which your assets are distributed upon your death.
That said, a comprehensive estate plan should address a number of more detailed issues. For example, a Trust may be needed to provide for supervision of your assets if they are to be distributed to minor children. By way of another example, use of the Missouri Non-Probate Transfer laws may speed the process by which some assets are distributed.
A review of the assets of the maker of the estate plan will dictate the best way for an estate plan attorney to craft the best plan of distribution of those assets at the time of death – and is absolutely essential.
A comprehensive estate plan also can include plans authorizing others to assist the maker of the estate plan in the event of incapacity or disability to help avoid Probate Court action or involvement.
The type of Probate Court involvement which is necessary is determined by the type and value of assets to be administered – and each case is different.
Ideally, at one end of the spectrum, a well-constructed estate plan will avoid Probate Court altogether. The only act that might be necessary would be to file a Will and take no other action.
At the other end of the spectrum, full Probate Court involvement will see the Personal Representative or Administrator having to identify and gather all the estate assets and report those to the Court (called an Inventory). The obligations of the estate must be paid and, lacking independent administration, the Court will have to approve those expenses. Finally, with the approval of the Court the remaining assets will be distributed and the estate closed.
There are a number of possibilities lying between the two ends of the spectrum involving more or less involvement by the Probate Court.
Again, the simple solution to limit or eliminate Probate Court involvement is to use a comprehensive estate plan that utilizes all the Non-Probate Transfer laws available. In the long run, hiring an estate plan attorney now to create an estate plan to avoid Probate Court as much as possible after your death, will save your heirs a great deal of time and expense later.
A power of attorney is a written instrument whereby an individual can designate another individual or individuals to take specific actions in their behalf. If drafted properly, a durable power of attorney will survive the subsequent disability or incapacity of the maker of the power of attorney. A power of attorney can also help to avoid the need for a guardianship or conservatorship in the event you become disabled or incapacitated.
A general durable power of attorney is a common addition to a comprehensive estate plan.
Anyone can act as their own attorney, but it’s usually a bad idea. For example, simply proving up the legitimacy of a Will after death can be very easy if the Will is properly drafted, yet become very difficult if it is not properly done under Missouri law. A Will standing alone, without other accompanying estate plan documents, may prove insufficient to cover all your wishes under all circumstances.
An experienced estate plan attorney will know how to properly draft a Will, and all the other documents what make up a comprehensive estate plan, to ensure your wishes are addressed under almost all circumstances. For that reason, it is strongly advised that you seek the assistance of Missouri estate plan attorney when it comes to the preparation of a Will or any other estate plan document.
It is never too early to make an estate plan. Only you can determine who will receive your property, who will care for your minor children, and who will be able to make decisions for you if you become unable to care for yourself. Death or incompetence can visit any of us at any time.
A comprehensive estate plan will help to ensure that your wishes will be carried out in the face of any event, and with the least effort and expense.
The type of Probate Court involvement required in administration of a given decedent Estate will, in great part, determine the length of the process.
Also, the number and types of assets in the Estate may affect the time needed to complete the Probate process. Some assets, such as real estate, or interests in businesses, may take longer to administer and liquidate.
The shortest time that an Estate administration can be completed under Missouri law is six months and ten days from the time that an individual is appointed as Personal Representative.
Under Missouri law, a Personal Representative of a decedent Estate can be compensated for their services. A Will can provide the method and amount of such compensation.
If there is no Will, or if there is no guidance under a Will, then Missouri law controls the compensation and one of two methods will apply. Missouri statute provides for a minimum amount of compensation based upon the value of the Estate. If such minimum compensation is not sufficient, a Personal Representative can record the time spent in carrying out services for the Estate and then petition the Probate Court for an order allowing the additional compensation.
Although partial compensation may be awarded before the Estate administration is completed, the usual practice is to pay compensation at the time the Estate administration is concluded.
This answer about the Personal Representative’s compensation only applies if assets are to be passed through a Probate Estate. If assets are passed via a Trust, generally the trust instrument will set out the manner of compensation of the trustee (if any).
If assets are passed under the Non-Probate Transfer laws, there may be no fees associated with the transfer other than perhaps fees to record deeds, etc.
You should never attempt to make handwritten amendments or alterations to an original Will, Trust or any other estate plan document. Such an attempt may invoke legal presumptions arising from the original document, and cause a wholly unintended result.
Instead, you should talk with a Missouri estate plan attorney when there is a need to amend or revise any estate plan document.
