Timely estate planning key to avoiding probate

by Christine Ballew-Gonzales

SBJ Contributing Writer

Keeping an estate out of the hands of the probate court takes an investment of time and money, but it pays large dividends down the road, according to Springfield attorneys.

"An estate is in probate if the assets are left in the sole name of the deceased, and if the assets aren't registered in such a way as to avoid probate after one's death," according to Richard Owensby, of the law firm of Neale & Newman LLP. There are several ways to avoid probate, Owensby said.

One way is to have assets transferred to a living trust. Living trusts should not be confused with wills.

"A will is a probate document, admitted to the probate court for the disposition of assets," Owensby said. "A living trust is a substitute for a will in that it spells out what assets are to be distributed, to whom and on what terms. They are typically administered outside of any court supervision."

Another way to keep assets out of probate is to take advantage of the Missouri Non-Probate Transfers Law.

"This law greatly expanded the means by which assets can be registered, at the same time allowing the owner to maintain complete control over the assets for life," Owensby said.

Also, statutes provide a method for registering motor vehicles and water craft in Missouri so that the ownership transfers upon the death of the owner without probate.

Putting assets under joint ownership with a son or daughter can also keep assets out of probate, although Owensby cautioned that such a move could create other challenges.

"There are many potential problems with that," he said. Joint assets could be subject to gift tax, and the owner no longer owns 100 percent of an asset that he or she chooses to make joint. In the event that the child incurs any liability, the child's interest in the asset is vulnerable to any claim asserted by the child's creditor.

Estate planning is often something that people would rather delay or not think about at all, but Owensby has seen first-hand the consequences of failing to plan. "I think many people put it off because they don't want to face it," he said. "They keep saying they'll do it someday. They don't anticipate death in the immediate future."

When should people begin estate planning proceedings? The answer depends on each person's circumstances, Owensby said.

"Estate planning makes more sense when you consider the age of the client, the health of the client and the size of the estate," he said.

Those who take the legal steps to avoid probate can save their heirs a considerable amount of money and hassle.

"With large estates, the cost is a very small fraction of what can be saved," Owensby said. "By having an appropriate estate plan, you can either avoid altogether or minimize estate taxes, and avoid probate."

The family of a deceased person whose estate is in probate could see the estate reduced by the additional costs of probate.

"It can result in additional expense in the form of attorneys' fees and court costs, and it could take additional time," said Eric Belk, of Eric M. Belk PC.

Because a judge's approval is required to sell assets involved in a supervised probate proceeding, heirs would have to wait for the case to make its way through the system before liquidating assets, Belk said. That can be frustrating for heirs.

"It is difficult, because people don't understand why you have to wait to distribute assets," he said. "It's often very frustrating and time-consuming, and that's extremely troubling. You can bypass a lot of that with a trust."

Should young, healthy people with few assets worry about estate planning? If they have minor children, the answer is yes, according to Courtney Fletcher, of the law firm of Husch & Eppenberger. In the event that both parents are deceased, an estate plan should include the naming of a guardian for minor children, Fletcher said.

Also, provisions should be made so the children can receive the proceeds from an estate that are not directly transferable to a minor, such as insurance proceeds.

"Often, when a minor receives property upon the death of a parent, such as proceeds from an insurance policy, the insurance company won't pay the proceeds to the minor unless a conservatorship is established," Fletcher said.

Not every facet of estate planning has to do with the bottom line, Fletcher said. Durable power of attorney, which designates someone who can act on behalf of the grantor should he become unable to make decisions, is part of most estate plans.

Clients can also plan for unforeseen medical circumstances by making their wishes known via a living will, or health care directive. Such planning can save loved ones a tremendous amount of emotional stress, Fletcher said.

Dying without an appropriate estate plan in place hurts those left behind, Belk said. "It's a big problem," he said. "When people die without having made estate plans, it's bad for the people involved. It's confusing and can be costly for the people left behind."