Estate Planning

How long do you have to open a probate estate?

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Generally speaking, a probate estate must be opened within one year of death. Also, to be valid a will must be filed with the probate court within one year of death.

What if a probate estate is not opened within one year?

If a probate estate is not opened within a year there are a few options, but they fall short of full probate administration. First, if the assets in the estate are $40,000 or less, a small estate affidavit can be obtained. The small estate affidavit can be used to transfer title and otherwise manage a deceased person’s affairs, but it is limited to $40,000 or less.

Second, if a small estate affidavit is not an option then a petition for determination of heirship can be filed. The determination of heirship results in a declaration from the court regarding who should receive assets left by the deceased person.

If your family has experienced a loss you should contact an attorney as soon as possible to discuss whether probate is necessary, and to consider your legal rights. Contact Tim McCurdy at (314) 436-8389 or tmccurdy@lashlybaer.com.

Questions?

About the Author

Estate Planning Lawyer Tim McCurdy helps families identify their goals,
and create a plan to make those goals become a reality.  

Estate planning services provided by Tim McCurdy include
non-probate transfers, powers of attorney for
both finances and health care, wills, and trust documents.

How can I transfer a car on death without probate?

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What is a transfer on death designation?

     A transfer on death designation is a simple way to transfer ownership of an automobile when the owner passes away.  By making a designation on your title application you can pass ownership of the car when you pass away.

How do I create a transfer on death designation? 

     The title application for your vehicle has a form for a transfer on death designation.  By  naming someone in that form they become the transfer on death designee.

Does a transfer on death impact ownership of the car?

     A transfer on death designation is similar to a beneficiary designation on a life insurance policy.  By naming someone the beneficiary under a transfer on death designation, that person does not receive any ownership interest in your car while you are living.  You can make changes to your designee or remove the transfer on death designation at any time by filing a new title application.

What are the benefits of a transfer on death designation?

     Vehicles are assets that can be easily missed in an estate plan.  You may have beneficiary designations for your investment accounts, a beneficiary deed for your home, and a trust that holds your significant assets.  But what if you purchase a new car at some point after you prepare your estate plan?  The vehicle you drive will likely change at least once between the time you prepare your estate plan and when that plan must go into effect. 

     Often people have prepared a comprehensive and effective estate plan but they failed to account for subsequently acquired assets, like a car.  If someone passes away without a transfer on death designation or other estate planning, their car can often become a hassle for loved ones who wish to either keep the car or sell it.  A probate estate may need to be opened just to transfer ownership of a vehicle.  Worse, sometimes a declaratory judgment action must be filed against the Department of Revenue just to obtain clear title to a car.  The cost of obtaining title can often outweigh the value of the vehicle.  By using a transfer on death designation you have a simple method of creating a beneficiary for the car without any additional estate planning.

What does a transfer on death designation cost?

     The transfer on death designation is made by including it on your title application for your vehicle.  If you are obtaining title for the first time for your vehicle you can name the transfer on death without any additional cost, since you are already submitting a title application.

What are the limitations of a transfer on death designation?

     The main limitation of a transfer on death designation is if you want to have the vehicles sold and the proceeds divided between more than one person.  If you are just leaving the vehicle to one person then you simply name that person on the title application.  If you have more than one person who you want to receive assets from the estate, you might consider naming a trust as designee for a transfer on death designation.  Alternatively, if you had more than one vehicle you could name different persons as the transfer on death beneficiaries for different vehicles.  If you name more than one person as your transfer on death designee then they will need to work together to obtain title and dispose of the vehicle.

How does the transfer on death designation work?

     Once you have created a transfer on death designation it does not impact your ownership of the vehicle or your ability to sell the vehicle.  Once you pass away, your transfer on death designee will present a death certificate to the Department of Motor Vehicles.  The Department of Motor Vehicles will issue new title in the name of the transfer on death designee.  The designee will need to pay the application fee to obtain title.  The application is processed like any other application for title for a vehicle.

What is the difference between a guardianship and a power of attorney?

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A guardianship and a power of attorney both enable someone else to make decisions and act on behalf of someone, but they are very different. The main difference is a guardianship is a court proceeding where a court decides someone is incapable of managing his or her own affairs, and appoints someone to act as guardian.

In a guardianship, the court hears evidence (including from a physician) that the person can no longer make decisions for him or herself. The person who is having a guardian appointed does not request a guardianship, and may even be opposing the appointment of a guardian.

By contrast, with a power of attorney the person creates a legal document appointing someone to act on his or her behalf. With a power of attorney, the person is giving someone else legal authority to act for him or her. The person does this while they still have the capacity to create legal documents and make decisions. A power of attorney can take effect immediately, even though the person still has the capacity to make legal decisions.

Guardianship and powers of attorney both play important roles in helping people who become disabled or incapacitated, but they are very different concepts that act in different ways. If you have questions about these differences, or are facing a situation where these may be necessary please contact us at (314) 436-8389.

What is an irrevocable trust?

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Many people are familiar with revocable trusts used for common estate planning.  While a useful estate planning tool, a revocable trust is of less benefit when conducting Medicaid planning to pay for long term care.  For Medicaid planning, we turn to the less commonly used irrevocable trust.  The irrevocable trust enables a person to place assets in a trust without those assets counting against Medicaid eligibility.

What are Revocable Trusts?

Revocable trusts are a useful estate planning tool.  Revocable trusts serve three goals:  avoiding probate; keeping taxes simple; and maintaining flexibility. 

First, by placing money or other assets in a trust and naming your beneficiaries, you are able to deliver those assets to your heirs without the expense and time of probate.  When you die, anything you have put into the trust will be given to whoever you named in the trust, in the manner you instructed in the trust.  So long as something is in the trust, your surviving family can receive the asset as you instructed without going through probate.

Second, most revocable trusts do not create complications come tax time.  During your life, you do not need to obtain a separate tax ID number for the trust.  In most circumstances, for tax purposes the tax treatment is the same for the property you place in the trust, and any income from that property.  Your income from property placed in the trust is treated the same as if you still owned that property in your own name.

Third, a revocable trust allows you to keep control of assets in the trust during your life.  You can move assets in and out of the trust, change the terms of the trust, change what happens to the assets when you die, and even end the trust completely.  You can make changes to the trust by simply following the instructions of the trust you yourself created.  The flexibility of a revocable trust is what makes it so useful for estate planning – you are able to control all of your assets during your life, while enabling your children to avoid probate when you pass away.

What makes a trust irrevocable?

An irrevocable trust will expressly say that the trust cannot be revoked.  Once the trust is created the person creating the trust will have no power to change the trust.  Someone looses the flexibility of the revocable trust.  While there are several downsides to using an irrevocable trust, they are used in very specific situations.  For example, in Medicaid planning assets transferred by a person to an irrevocable trust are not considered “countable” for purposes of establishing Medicaid eligibility.  The five year lookback still applies, but if a person has time they can transfer significant assets to an irrevocable trust without impacting Medicaid eligibility. 

What is a Medicaid-compliant annuity?

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With few exceptions, holding a financial investment in excess of the asset limit (currently only $4,000 for single persons) will disqualify you for Medicaid in Missouri. One of the most powerful exceptions to this rule is a Medicaid-compliant annuity. With a Medicaid-compliant annuity, money that otherwise would need to be spent down to qualify for Medicaid can be used to purchase an annuity that creates a revenue stream. The revenue stream can either go to a spouse to help replace the lost income of the person going into the nursing home, or to help pay for a penalty period if necessary.

To be a “Medicaid-compliant” annuity, the annuity must be irrevocable, payout during the expected life expectancy of the annuitant, not have any balloon payments, and name the State of Missouri as the first beneficiary when the person dies. If the annuity pays out completely within the person’s life-time then there will be no payment to the State.

A Medicaid-compliant annuity can be a powerful tool as part of an overall planning strategy to ensure the health care a senior needs is paid for while protecting the senior’s life savings. To learn more contact us today.

What is a payable on death designation?

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What is a payable on death designation?

     A payable on death designation, or “POD,” is a method for naming a beneficiary on a bank account.  When you pass

away, the person identified in the POD takes ownership of the bank account without the need to go to probate.

How do I create a payable on death designation?

     A POD is a beneficiary designation provided to your bank.  Your bank will have a form to name a payable on death beneficiary for your bank account.  You should ask your bank for this form.

How does the payable on death designation work?

     You complete a form at your bank to name a payable on death beneficiary.  You have the right to make any changes to that designation.  You can change your payable on death designee, or remove it completely.  When the last owner of an account passes away, the bank will normally require a death certificate.  Once they are provided the death certificate, they will transfer ownership of the account to the payable on death designee.  The account will be renamed in the name of your payable on death designee.

What are the benefits of a payable on death designation?

     A payable on death designation enables you to designate a beneficiary who will take ownership of your bank account.  Your beneficiary will not need to go to court to obtain ownership of the bank.  Naming a POD does not give the beneficiary any right to your bank account while you are living. 

What is the difference between a payable on death designation and a joint account?

     Many people will name a loved one as a joint owner of an account.  This can be useful if you need help managing your finances.  For example, an aging parent might create a joint account with their child so the child can help manage their finances.  When the parent passes away, the child who is the joint owner of the account will now become the owner of the account.  The parent has managed to pass the account onto the child without any a planning or the need to go to probate. 

Joint ownership of an account can create problems, however.  For example, if you have more than one child but only one child on the account, when you pass away that account will become the account of the child named on the account.  This can lead to inadvertently failing to leave an equal amount to each child.  Also, by having joint ownership of a bank account with a child, you may be placing your money at risk to the creditors of your child.  Also, anyone on the account has complete access to all the money in the account.

What are the limitations of a payable on death designation?

     A payable on death designation is a simple way to pass on ownership of a bank.  This may not be an effective strategy if you have more complex planning needs.  For example, your beneficiaries may not be at an age where they should inherit a significant bank account.  A payable on death beneficiary designation simply passes ownership when you pass away. 

     By contrast, if you use a trust then you can put terms in the trust that ensure your child does not receive his or her inheritance until they are old enough to be ready.  Also, a payable on death designation may not be a good solution if you have a special needs child, or if you have concerns about the financial stability of your beneficiary.

     A payable on death designation can be an effective part of an overall estate plan.  You should consult with an estate planning lawyer, however, before relying completely on payable on death designations to pass on significant wealth.

Does a will avoid probate?

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NO!! A common mistake is the belief that you need a will to avoid probate. In fact, a will must go through probate to be valid. A will enables you to decide where you belongings go when you die, but it requires your loved ones to go through the slow and costly process of probate. There are many ways to avoid probate and accomplish the same thing, such as a trust, beneficiary designations, and “non-probate transfers” such as transfer on death designations for vehicles or pay on death designations for bank accounts.

Does a will avoid probate?

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Many people think they need a will to avoid probate. Actually, a will must be filed with probate, and passing assets to loved ones with a will requires opening a probate estate. A will is better than nothing, because without any estate planning assets will pass on death according to the default rules created by Missouri law, which can be quite different from what a person might want. For avoiding probate, however, there are many estate planning alternatives that will accomplish the same goals of the will, but in less time and for less cost. These estate planning tools can include a trust, beneficiary designations, PODs and TODs, and a beneficiary deed.