Power of attorney is the authority granted by one person to another person to make decisions on their behalf. The power of attorney document would be signed by a person (the "principal") naming someone (the "agent" or "attorney-in-fact") as authorized to undertake actions such as managing financial affairs, making legal decisions, handling tax and legal issues and a broad range of personal and business matters.  That authority is sometimes granted immediately and is sometimes withheld until the occurrence of the principal's mental incapacity.  Power of attorney generally ceases upon the death of the principal.

So, what's the point?

A power of attorney can be extremely helpful when someone becomes incapacitated as it can allow for the agent to take swift and effective action to manage the affairs of the principal.  No cumbersome court process or administrative hurdles typically needs to be navigated.  There are of course some notable risks involved in giving authority to another person, but a power of attorney can be a very valuable tool and one we very frequently include in estate planning.

One common goal of estate planning is to avoid probate.  This begs the questions: How bad is probate, anyway?  And why's it such a big deal to avoid it?

As a bit of background, it's important to understand what probate actually is.  In short, probate is the court-supervised process of ensuring and effectuating the transfer of assets from someone that has died to... someone else.  That "someone else" gets determined by the decedent's Will (if they had a Will) or by a set of Missouri laws (intestate succession) that dictate who gets assets when there is no Will.  There are three primary downsides the probate: (i) it's time consuming (at least 6-7 months and generally longer), (ii) it's fairly expensive (fees are generally payable to the administrator or personal representative of the estate as well as a lawyer), and (iii) it involves the headaches of court filings and related paperwork.

So, is probate that bad?   Probate can readily be avoided with proper advance planning, so in many instances, letting things wind up in probate is a major setback.  Probate is generally not a catastrophic blow to one's overall planning, but the cost and time can feel very wasteful. Alternatives can speed up the distribution process, save money and create a much smoother process.

How is probate avoided? Some fairly straightforward planning can keep assets out of probate.  Tools and techniques including a trust, beneficiary deed, beneficiary designations and other approaches can each be effective parts of an estate plan that avoid probate. Of course, every situation and individual is unique, particular approaches will vary accordingly. 

A trust can be an extremely valuable tool for real estate. When a trust is created, you typically want to "fund" it with various assets. Real estate is often a central part of that. In connection with estate planning and the creation of a trust, this is generally done either by (i) a present transfer by deed into the trust, or (ii) a beneficiary deed that effectuates a transfer into the trust at death.  Of course, some goals and circumstances may necessitate other approaches. There are several benefits of moving real estate into a trust including probate avoidance, effective planning for incapacity and the opportunity to implement careful distribution plans upon your death.  For many individuals and families, real estate is a major part of their estate plan and often represents a significant part of what they own.  Planning appropriately is key and a trust is often a central part of that planning. Most often, the planning associated with real estate is a seamless part of the overall creation of an estate plan and we work hard to make the process easy and straightforward. 

Whether you're rich or poor, married or single, have kids or don't have kids, an estate plan is important.  There are various documents that we frequently use to create a well-crafted, effective and clear estate plan.  A Will and a Trust are each valuable tools in creating the right plan. While separate articles and posts could be written (and I have written!) about the particulars of Wills and the Trusts and the appropriate use of each, a simple description might be the following:  A Will directs where your property goes and who is in charge when you die but would necessitate probate, while utilizing a Trust avoids probate, streamlines asset distribution and allows for more detailed ways to distribute assets after your death.  Both are important tools but a trust is generally preferable and more effective as the central instrument in someone's estate plan.  Trusts cost a bit more than Wills on the "front end" (creation of the plan) but are generally considered a superior tool and often end up saving quite a bit of money in the long run.  Our estate plans are of course customized to each client's situation and we utilize Wills, Trusts and other documents to put in place a plan that's right for each individual's needs.

​By forming a revocable living trust, one can readily avoid probate.  When a trust is formed, the creator of the trust would normally transfer most (or all) of their assets to the trustee of the trust (which is in most cases that same owner/individual) for the benefit of that same owner/individual during their lifetime. Accordingly, during the creator’s lifetime, the trust would not usually have any impact on control or use of the assets.  
However, one key benefit of a trust is what occurs upon the death of the individual establishing the trust. Upon death, the trustee’s rights and responsibilities are transferred to a new pre-determined individual (usually appointed by the initial owner) and the assets of the trust are distributed (or retained for the benefit of successor beneficiaries) in whatever fashion has been laid out in the trust document by the owner. This often involves distribution to family members or other beneficiaries but it could be whatever the trust creator has established in the trust agreement.
In short, because the owner’s property was held by the trust, probate would be entirely avoided. The trustee takes control of trust property and manages and distributes the assets pursuant to the written trust agreement and no court involvement would normally be needed.

​Estate planning for “blended” families is particularly important and can present unique considerations. Often, spouses who marry each other later in life or after having their own children, bring with them unique assets and expectations. Goals and plans for what happens with their money and their property and how children are cared for and/or treated can vary widely between spouses. In order to implement a plan (or plans) that match the desires and expectations of each spouse, particular care and expertise are required. In some instances, separate trusts can be utilized to keep certain assets segregated and to be sure that the right property gets to the right heirs/beneficiaries. Furthermore, documents like power of attorney must be carefully considered and prepared in order to ensure the types of protections (and outcomes) that are important to each spouse. 

In order to accomplish its goals and purposes, a trust must be “funded”—meaning the trust must own the assets of the creator of the trust. It needs to have assets in it. Often, one of the largest assets is real estate.  This could simply be a personal residence but might also include other real estate such as rental property, a second home or even vacant land.  Real estate is transferred to the trust by executing a deed that is then recorded with the county (or St. Louis City) recorder of deeds.  There are times when this is most effectively accomplished by an immediate transfer by deed at the same time that the trust is signed.  Other times, a “beneficiary deed” is used to facilitate an automatic transfer upon death.  There are also occasions in which unique circumstances surrounding the property (such as shared ownership with another person) may require some varied approach.  Regardless of circumstances, we work with our clients to handle real estate transfers seamlessly as part of their estate planning.

Property that you own when you die is typically controlled by the terms of your Will, if you have one.  There are numerous exceptions to this principle (such as the use of trusts, beneficiary designations and other planning) that can effectively help someone avoid probate.
A Will, when prepared and signed properly, will direct where your assets go—whether to family members, friends, a charity or somewhere else.  However, many people mistakenly believe that having a Will effectively keeps their property and assets out of probate—believing that probate is only for people that had no Will.  This is simply untrue.  While a Will is effective at authoritatively directing the distribution of assets, such distribution is accomplished directly by the probate process and is subject to the cost and time required. Even with a Will, property would typically go through probate (or a similar court process) unless some additional planning has taken place prior to death.  Fortunately, there are many estate planning options and tools to effectively avoid probate while accomplishing additional goals, as well.  A Will can be an important component of planning—but a Will alone will not keep your assets out of probate.

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