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Certain assets can be held as “joint” property whether between spouses or other individuals. Sometimes, in Missouri, when one of the joint-owners dies, the property may be transferred, in whole, automatically to the surviving owner—without going through probate. However , the manner in which joint ownership is set up will determine whether this is indeed the case. Accordingly, in some scenarios, jointly-held assets can indeed end up going through probate. In particular, if not set up carefully, the deceased owner’s portion could indeed be part of their probate estate. Additionally, if all joint-owners die, with no additional joint-owner, then the property would likely become subject to probate with all other property. The use of joint accounts can make a lot of sense and be a valuable tool for some types of assets, especially between spouses, but every situation is unique and merits careful consideration. Comprehensive estate planning, utilizing all available planning tools, will always result in the best, simplest and most desirable outcomes.

As a general rule, all property owned by a decedent at his/her time of death is part of the “probate estate.” This means that (unless some prior planning has occurred), in order to be legally transferred to a new owner, property must be administered through the court. This includes all of the following items: 1.  All property transferred by a valid will (please note: simply having a will does not avoid probate) 2.  All property not indicated in a will (unless in a trust or otherwise controlled by a non-probate transfer)  3.  All proceeds from accounts or insurance policies transferred to “the estate of” or to    beneficiaries that have died prior to the decedent 4.  All types of property (real estate, bank accounts, personal tangible property, stock, investments, etc., etc.) (unless in a trust or otherwise controlled by a non-probate transfer) Good estate planning can avoid probate!  When we work with families and individuals, one common central goal is to avoid probate while creating a simplified and smooth process for transferring property upon death. This can be accomplished thoroughly with the use of a trust or by other tools such as non-probate transfers.  Avoiding probate is often a central purpose in creating an estate plan.

When creating a trust, the selection of trustees is of paramount importance. Typically, the creator of the trust would declare himself or herself as the initial trustee—to serve as such as long as he/she is alive and mentally competent.  For a joint spousal trust, this would generally entail having joint trustees (the spouses).  Trustee selection becomes more central when determining who to name as “successor” trustee—in other words, who will serve as trustee after the creator dies (or becomes mentally incompetent). The successor trustee will fulfill two general duties: (1) manage trust assets prior to distribution (investment, etc.) and (2) make trust distributions within the parameters established within the trust document.  When counseling clients regarding selection of a  successor  trustee, I generally emphasize the important characteristics of (i) financial acumen, (ii) trustworthiness, (iii) communication skills and (iv) a commitment to understanding and carrying out the client’s wishes. Often, a close family member is well situated to serve as a successor trustee.  Other times, a friend or professional colleague is best suited for this role. We also frequently consider the possibility of an institutional trustee (bank, lawyer, trust company, etc.). For most clients, an institutional trustee is not ideal due to the related fees—but there are situations where this is preferred.  Every situation and every client is different, so there is truly no one-size-fits-all answer to trustee selection.

When making decisions about estate planning, nearly everyone has at least one common question: What will it cost?  While my primary focus is always on getting the best outcomes for my clients and creating the best and most straight-forward plan for them, I am also very aware of the pressing concern of price. When I began practicing many years ago, I quickly learned that my clients were looking for the best advice and best guidance they could get—but also at a reasonable price. From the very beginning of my practice, I became committed to excellent service at reasonable rates.   Someone may be able to go online and create a cookie-cutter trust document—that may or may not suit their needs and may or may not be legally valid.  Sometimes these are really low cost—perhaps only a few hundred dollars.  Often these are also really low quality (or worse!).  Some attorneys also offer very low cost “estate planning.”  Unfortunately, this also frequently correlates to attorney inexperience and/or to very low quality planning.  “Will an online trust meet my needs?” I am sometimes asked.  It “might”—but it probably will not.  I charge only flat fees for estate planning.  That means free initial consultation, no additional charge for subsequent meetings and/or drafts of documents and one unchanging fee that is clear from the beginning of my service.  I regularly provide a straightforward fee schedule to other professionals and to potential clients.   I generally charge $2,000 to prepare a full gamut of estate planning documents (Will, trust, general power of attorney, healthcare power of attorney, advance health directive, related real estate deeds). In some instances, needs exceed these more basic documents and when more complex planning is needed (perhaps an irrevocable trust, a special needs trust or multiple trusts), fees can increase marginally.  Similarly, in the event I am preparing something less than all of these documents, my fees would be reduced accordingly.  We focus on excellent service, experienced guidance and reasonable fees.  I’ve found these standards to be the right way to serve my clients.

When creating a trust, the selection of a trustee is of paramount importance. Typically, the creator of the trust would declare himself or herself as the initial trustee—to serve as such as long as he/she is alive and mentally competent.  For a joint spousal trust, this would generally entail having joint trustees (the spouses).  Trustee selection becomes more central when determining who to name as “successor” trustee—in other words, who will serve as trustee after  the creator dies (or becomes mentally incompetent). The successor trustee will fulfill two general duties: (1) manage trust assets prior to distribution (investment, etc.) and (2) make trust distributions within the parameters established within the trust document. When counseling clients regarding selection of a successor trustee, I generally emphasize the important characteristics of (i) financial acumen, (ii) trustworthiness, (iii) communication skills and (iv) a commitment to understanding and carrying out the client’s wishes. Often, a close family member is well situated to serve as a successor trustee.  Other times, a friend or professional colleague is best suited for this role. We also frequently consider the possibility of an institutional trustee (bank, lawyer, trust company, etc.). For most clients, an institutional trustee is not ideal due to the related fees—but there are situations where this is preferred.  Every situation and every client is different, so there is truly no one-size-fits-all answer to trustee selection.

What is a Trust? A trust is established when property of some sort (an account, a home, some personal property, any property) is transferred to an individual “in trust” for the benefit of some other individual, group of individuals or organization.  A trust can hold title to very little property or millions of dollars of property.  Trusts can be established during your life, at your death or after your death.  Trusts can be established to benefit you, your family, your descendants, a social or religious organization or any myriad of individuals, companies or organizations.  Put simply, a trust is a vehicle by which one person holds property for the benefit of another person. General Benefits of a Trust:  A discussion of the benefits of a trust merits a lengthy and entirely separate article.  However, there is some value to understanding a few of the various reasons why someone would want or need to establish a trust.  These benefits are entirely dependent on the details of individual circumstances. (a) avoidance of the cumbersome (and expensive) probate process (b) avoidance or reduction in gift and estate taxes (so called “death taxes”) (c) providing for children and other descendants in an organized and prepared manner (d) increased control over property upon death (e) creation of incentives for behavior and accomplishment among descendants (f) increased flexibility regarding planning for incapacity and death (g) creation of on-going funding for charitable or religious organizations (h) potential reduction in tax burden on life insurance proceeds (i) privacy in financial and personal affairs regarding distribution of property Do I Need a Trust? Trusts are for more than just ultra-wealthy individuals.  While not everyone may need or want a trust as part of their estate plan, the following circumstances may indicate a need to more seriously consider the option of establishing some  form of trust: (a) your need or desire to avoid the probate process (b) your need or desire privacy in property distribution (trusts are not  public record) (c) you want to establish on-going funding for your family or a charitable organization (d) you have significant net worth (e) you want to retain some control over the money and property you pass on

WHAT DOES IT DO?:  A power of attorney over health care decisions grants a named individual (often a spouse or other family member or close friend) the authority to make certain healthcare-related decisions on your behalf.  Typically, this document would grant authority to a spouse or close friend or family member to make decisions for you in the event you are not in a physical or mental state to be able to do so.  As in the case of other powers of attorney, the authority you grant to someone else can and should be limited in its scope pursuant to your wishes and preferences.  In its own fashion, this document can also help spell out the sorts of treatments you desire while adding some clarity to the question of those which you do not desire.  It should be noted that a power of attorney over health care decisions is an entirely separate document from a healthcare directive, in both form and function.   WHAT HAPPENS IF I DON’T GET ONE?: Powers of attorney for health care decisions are about your ability to have health care decisions made effectively, conveniently and quickly in the event of your physical or mental incapacity.  Without a power of attorney, if you face an event in which you are unable to make or communicate your own healthcare-related decisions, these decisions would be made by someone, likely a healthcare professional who is unaware of your desires and/or preferences.  Furthermore, someone could seek this authority through a court process, but this obviously fails to address the timeliness concerns and again opens the door to dispute and potential litigation.  WHY HIRE A LAWYER?:  Powers of attorney are most appropriately prepared by an experienced attorney.  As is the case with other powers of attorney, variances of circumstances require expertise and an understanding of what you want to happen in these scenarios.  Furthermore, this document should be prepared in such a way to complement (and not contradict or confuse) your health care directive (living will).  While attorney fees for the preparation of powers of attorney over health care decisions usually turn out quite reasonable, the Missouri Bar does provide some satisfactory forms (see www.mobar.org ) that can be used if an attorney is unavailable or otherwise not preferred.

Whether starting a new business or operating a long-standing company, one of an LLC’s most important steps will be to formulate a meaningful and complete operating agreement.   An Operating Agreement will determine various components of the company’s operation and define and detail the relationship among the members of the company.  The following represent several key considerations and provisions in an LLC’s Operating Agreement: 1.  Membership Interests.  In order to clarify ownership matters, an LLC Operating Agreement should specify the percentage ownership interest of each member of the company, together with the amount of their initial capital contribution.  Furthermore, the agreement should contain specific rights and restrictions with respect to the redemption of members’ interest by the company, the admission of new members to the LLC and the voluntary withdrawal of members from the company.  Many of these matters are critical to the company’s long-term growth and are best determined from the outset.  2.  Restrictions of Transferability of Membership Interests. A well-drafted Operating Agreement will place some clear restrictions on the transfer of members’ ownership interests.  Similarly, certain types of transfers may be specifically permitted without requiring any type of member vote or approval (transfers among existing members, transfers to the company, transfers to a member’s trust, etc.) Transfer restrictions or absolute prohibitions often include restrictions on transfers to outside parties without majority approval and prohibitions on transfers to creditors.  Furthermore, certain provisions can be included to protect the company in the event of a member’s bankruptcy, divorce or death.  3.  Manager-Managed vs. Member-Managed. In conjunction with the LLC’s Articles of Organization the Operating Agreement, should indicate who is authorized to make the day-to-day decisions of the company.  Typically, this would be either a designated “Manager” or one or more of the members of the LLC, called a “Managing Member.”  Additionally, the duties and obligations of the manager or managing member(s) should be clearly described in the Operating Agreement, including such matters as their potential liability, the company’s indemnification of such member/manager and whether they are compensated for their work. 4.  Additional Capital Contributions. As mentioned above, the Operating Agreement should delineate the specific capital contribution of each of the members.  Additionally, an operating agreement should clarify if and when additional contributions will be required and whether majority or unanimous consent will be necessary to require such additional capital contributions.  5.  Membership Voting. An Operating Agreement should clearly define how membership votes are calculated, who has voting rights and what sort of approval (majority, super-majority, unanimous) is required for certain decisions or actions of the company.

1.  Will.  A properly-drafted will should squarely address the issue of child guardianship.  A provision nominating a guardian(s) for minor children should always be included in a will for an individual who has (or expects to soon have) children under the age of eighteen years.  Typically, an individual or couple is “nominated” for guardianship, and a secondary, or back-up individual or couple is included in the event that the first nomination does not work out due to premature death, incapacity or unwillingness of the nominated individual(s).   In the event that there is no will, or if the will is silent with respect to guardianship, a court will determine the most appropriate individual to assume guardianship of the children.  As might be expected, this can result in difficult family disputes and an emotionally traumatic experience for children, and ultimately it may result in guardianship granted to an individual or couple whom the parents would not have selected or approved.  When the parent’s will does include nomination of a guardian or guardians, the ultimate determination is still made by a court, but the provisions of the will would typically govern its decision.  Exceptions would include unwillingness by the nominated guardians, or, as should be expected, other considerations made by the court based on the best interests of the child.  2.  Transfer to Custodian Account. Funds can be transferred to a custodian for the benefit of a minor child.  Such a transfer can occur during the donor’s lifetime or can be made by the personal representative of the donor’s estate.   The Missouri Transfers to Minors Law (MTML) governs these types of transfers.  The property held in a custodial account must be used by the custodian for the benefit of the minor child and the funds must be prudently invested.   A detailed record and accounting of the funds must be kept by the custodian.  The major benefits of this type of transfer are (i) providing funds to a minor child and (ii) the potential minimization of taxes for the donor from the gift.  It should be important to note that a donor should not also serve as custodian if tax minimization is a motivation for the transfer.  The custodianship will terminate when the child reaches twenty-one years of age.  3.  Testamentary Trust. A testamentary trust is a trust which only comes into existence in the event that certain situational criteria are met—usually the death of both parents while the children are under a designated age, perhaps twenty-five or thirty years old.   The specifics of the existence and duration of a testamentary trust are determined by the parents and detailed in the relevant provisions of the parent’s will.  The creation of a testamentary trust speaks to the concerns of legal minority, a child’s immaturity, and the need to provide for the maintenance and needs of the child. A testamentary trust is typically embodied in a will, in the form of a separate section of that document.  It is not usually a separate agreement or document in and of itself.   A testamentary trust designates that a named trustee (often a family member or close friend) is to hold indicated property for the benefit of the children.  The assets in the trust are used strictly in accordance with the terms of the stated provisions, often for maintenance, health and education.  The administration of the testamentary trust is substantially more flexible, less expensive and simpler to administer than a probate conservatorship, while squarely addressing the issues of minor property ownership, avoiding a premature windfall to the child and providing for the maintenance and support of the child, all in accordance with the detailed desires of the parents. An additional benefit of a testamentary trust is the parent’s ability to create financial incentives for certain behavior or life choices.  To this end, the allocation or outright transfer of money or property can be predicated upon educational milestones, family events or similar circumstances. 4.  Irrevocable Trust for a Minor: Avoiding Taxation on Gifts to a Minor. When an individual gives a gift to a minor child, they often want to create an explicit limitation or restriction on the use of those funds or property. By transferring the property/money in trust, these desires for control or direction are readily accomplished.  However, if not structured properly, such a gift will not qualify for the donor’s annual exclusion from gift tax. In order to properly structure a gift in trust, to maximize the tax benefits to the donor, the gift must meet certain IRS guidelines embodied in I.R.C. 2503(b).  Essentially, the child to whom the gift is given must have a chance (usually a 60-day window of time) to claim the gift outright.  This can occur immediately at the time of the gift or when the child reaches the age of twenty-one.  Additionally, the trust and property transfer must be irrevocable. 5.  Life Insurance Policy. No substantive discussion of estate planning with minor children can be complete without a brief inclusion of the benefits and opportunities of adequate life insurance.  Many individuals and couples with younger children lack the assets to sufficiently fund a meaningful testamentary trust.  An adequate life insurance policy can readily provide the needed assets to provide for the ongoing needs of younger children.  For younger families, a testamentary trust is very often funded primarily with the proceeds of a life insurance policy.  Some consideration should also be given to the creation of an irrevocable life insurance trust, especially in the event of significant assets, which might otherwise be subject to estate taxation.  6.  Trustee Selection. The discussion of a testamentary trust and an irrevocable trust for a minor necessitates some consideration of the trustee designation.  When any property is transferred “in trust” for beneficiaries, the property is formally held by a “trustee.”  While the trustee is legally obligated to use the trust property solely for the benefit of the beneficiaries and in strict accordance with the trust agreement, care should still be taken in selecting an appropriate trustee.  A trustee may be given wide latitude with respect to discretion in the use of the property.  Also, the reliability and responsiveness of the trustee are of understandable importance to the beneficiaries.

Individuals and couples with young or teenaged children face unique hurdles in estate planning.  In truth, many of these considerations apply equally to individuals with children who perhaps have reached the age of majority (eighteen years in Missouri), but are still not fully independent.  At issue are matters ranging from guardianship to financial support to important potential tax-related considerations.  When these matters are adequately addressed, together with the many other more general estate planning considerations, a life and estate plan can be created that assures that a family’s needs are met, their children are supported and cared for and unnecessary taxation is avoided.  Each family situation (and particularly those involving young children), is truly unique, from both a financial and personal perspective.  Accordingly, life and estate planning for each family is unique and an estate plan must be crafted to fit the situation, needs and desires of a particular family.  THE ISSUES: UNIQUE CONSIDERATIONS FOR MINOR CHILDREN 1.  Legal Guardianship.  As every parent of a minor child has surely asked themselves, “Who will take care of the kids if something was to happen to me (or us)?”  If this issue is not addressed directly, a court will determine the most appropriate individual to assume guardianship of children.  As might be expected, this can result in difficult disputes among surviving family members and an emotionally traumatic experience for children, and ultimately it may result in guardianship granted to an individual or couple whom the parents would not have selected or approved.  2.  Legal Minority: Inability to Own and Control Property. Individuals under the age of eighteen cannot own property and cannot undertake many of the tasks associated with property ownership.  Regardless of the very obvious concerns of actual maturity and experience, this legal limitation of minority creates very apparent hurdles for families with younger children.  In the event that property is transferred to children as part of an estate plan, without further clarification or planning, a court-appointed conservator would be designated to hold the property.  While this indeed offers some actual protection to the child’s eventual legal right to the property, it creates some very difficult and problematic issues with respect to control and desired use of the relevant property.   3.  Immaturity. In addition to the legal incapacity of a minor child to own and control property, there are very practical concerns with a young person’s lack of experience and their likely financial, emotional and social immaturity.     Where proper planning has not occurred, a probate conservatorship would be created, as discussed above.  However, once the youngster reaches the ripe age of eighteen years, they will actually get the property—perhaps an even worse outcome than the conservatorship.  This generates numerous concerns due to the child’s general immaturity, their likely susceptibility to undue influences and their station on life.  Many children of this age are yet to even graduate from high school, much less prepared to prudently use any amount of significant money or property. 4.  Maintenance and Needs Associated with Child Rearing. As every parent understands, the cost and effort to raise children is tremendous.  To state the obvious, children are not self-reliant or self-supportive.  Accordingly, in the event of a parent’s death (or incapacity) there must be in place a means of providing for the needs of their children.  These needs often include daily maintenance, health care, educational and recreational expenses, and college tuition).

Does Having a Will Keep You Out of Probate Court? | Schleiffarth Law Firm LLC 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 have 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.

Having a Trust as part of your estate plan can help you avoid probate and reach better and smoother outcomes when compared with simply having a Will. However, it is important to be aware of various types of Trusts, including: revocable living trust; irrevocable trust; special needs trust; testamentary trust; life insurance trust; asset protection trust. Moreover, it is important to understand the various types of available tools (i.e. the various types of available Trusts) and when they might be appropriate. For example, clients often ask what the difference is between a “revocable” Trust and an “irrevocable” Trust.  As the names suggest, the core difference is whether it can be changed or “revoked.”  A Revocable Trust is generally flexible during your lifetime and often the lifetime of your spouse.  It can be revoked, amended, updated, changed and revised over time.  Conversely, an Irrevocable Trust generally cannot be changed or revoked - but is intended to be permanent in its initial structure.  Now of course, underneath these umbrella terms are found various types of Revocable Trusts and various types of Irrevocable Trusts. Any particular Trust is put in place to serve certain purposes and protect certain interests of the client. For a majority of situations, a Revocable Trust is most appropriate.  For example, it is very common for a couple or individual to want to protect their assets from probate and ensure that their children (or other chosen beneficiaries) receive their assets in an efficient and purpose manner - all while the creators of the trust retain the ability to make changes over time. In such a situation, a revocable living trust is often best - although the particulars of any given situation can direct other approaches.   An Irrevocable Trust is generally most appropriate for more unique situations such as planning for estate tax liability, seeking asset protection or other less common scenarios (but again, every situation varies and the appropriate tools vary as well) Amidst the variety of tools and Trusts available in estate planning, my job is to make things easy.