Full probate is time consuming and expensive. As an alternative, many states have created special rules for “small estates” that make the process go faster and cheaper. In Missouri, to qualify as a Small Estate, the value of the estate must be less than $40,000. Missouri Statute 473.097 sets out when a Small Estate can be used.
Steps in a small estate
To take advantage of the Small Estate statutes, the following conditions must be met:
(1) the entire estate must be worth less than $40,000 (subtract debts and liens from the value);
(2) 30 days must have passed since the decedent passed away;
(3) unless excused by the Court, a bond must be secured; (in Cape Girardeau County and surrounding counties, the Court will usually waive the bond requirement) and
(4) when required, notice must be published to potential creditors.
Any distributee may then prepare an Affidavit (a written statement made under oath) that states:
- Whether the decedent had a Will,
- A list of all of the decedent’s assets,
- A list of all of the decedent’s debts and liabilities and assets,
- The names and information of the persons entitled to receive the property along with the facts that establish their right to the decedent’s property (for example, Jane is entitled to receive car because she is the surviving spouse of John).
The Affidavit must be filed with the clerk. If approved by the court, the court will issue a Court Order allowing the affiant to collect the estate property, pay any debts and liabilities, and distribute the estate property to the proper individuals.
how long does a small estate take?
Clients often ask, “how long does a Small Estate take?” Each case is different and unique so one case may be resolved quickly while another may take months. That said, we often see Small Estates handled from start to finish within one month. Do you have a Small Estate that you need help with? We’re happy to help. Just call.
When people say probate, what they are really referring to is Probate Court. People typically want to avoid Probate Court because it wastes time & money and takes what most people consider private and puts it in the public record.
3 ways to avoid probate in missouri
So how can you avoid probate? There are a number of legal strategies you
can use. Here are 3 of the most common strategies used to avoid probate in Missouri:
1. Joint Tenancy & Tenancy by the Entirety. Adding another person to your assets as a joint owner or “joint tenant with rights of survivorship” will allow your property to pass to them upon your death without going through probate. There are pitfalls to this strategy, however, to include subjecting such assets to any claims (such as lawsuits) against the co-owner and making them available to the co-owner’s creditors — all while you are still alive and planning on using the assets yourself. So this strategy can work but it also comes with risks.
2. Beneficiary Designations. Missouri allows Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts. Beneficiary designations like these are preferable to joint tenancy in that they allow you to transfer property only upon your death without giving away current ownership. One of the drawbacks, however, is that it can be
difficult to obtain an equitable distribution of property among your heirs by utilizing beneficiary designations. Additionally, understand that if you have beneficiaries listed on your assets, those assets will be distributed upon your death to the listed beneficiaries, even if your last Will and Testament states otherwise.
3. Revocable Living Trust. A Revocable Living Trust is a legal document that allows you to establish a separate entity (the trust) to “hold” legal title to your assets while you are alive, and to name Trustees to manage those assets according to the trust terms. Typically, you serve as the trustee while you are alive, managing your assets for your own benefit. Upon your disability or death, the trust terms appoint your successor trustee who then continues to manage- or distribute — the assets held in trust. A properly drafted trust can accomplish many goals, including guardianship and probate avoidance for your estate and bloodline, as well as creditor protection (including from divorce) for your children.
Typically our clients want to avoid Probate Court. Yet, if probate cannot be avoided, here are the steps that you have to go through during a normal Probate case in the state of Missouri.
Note, this is for a “normal” case, yet please keep in mind that each case is different. For example, if the estate is less than $40,000, a Small Estate may be used. If the estate is less than $15,000, a Small Estate may be used and the publication requirement is waived. The smart move if you’re not sure what to do is to contact an experienced attorney who handles probate.
what is probate COURT?
Probate Court is a court with jurisdiction over (1) determination of the validity of Wills and (2) administration of estates and (3) matters involving adults judged to be incompetent.
The order of events in Probate Court
- PETITION. A petition is filed with the proper Missouri probate court (normally the County where the deceased lived or where the real estate is located). For example, a resident of Jackson, Missouri would file the Petition in Cape Girardeau County. The Probate Court for Cape Girardeau County is located in the Common Pleas Courthouse.
- NOTICE. Notice is given to heirs under the Will or, if no will exists, to statutory heirs.
- EXECUTOR. A Petition is filed to appoint executor (in the case of a Will) or administrator for the estate. You may also hear this person referred to as the deceased’s “Personal Representative”.
- INVENTORY. The executor or administrator performs an inventory and appraisal of the estate assets.
- PAY DEBTS. Payment of estate debt is made to rightful creditors.
- SELL PROPERTY. Estate assets are sold.
- PAY FEES. Fees include attorney fees, court costs, and estate taxes (if applicable).
- MAKE DISTRIBUTION. After all expenses are paid, the final distribution of assets is made to heirs.
Probate is the process of transferring property from a deceased individual to living individuals. Sounds simple, right? Yet, it can quickly become complicated and expensive.
In Missouri, each county has a probate court that handles these transfers. However, probate takes time. The Missouri Bar advises that “the earliest that an estate may be closed and distribution made to the heirs or beneficiaries is approximately six months and 10 days after the date of first publication. However, it often takes a year or more to finish the administration.”
What happens during that time?
- 1. Hire an attorney to represent you. Make sure it is someone familiar with Missouri probate.
- 2. Apply for Letters (if there is a Will, the Letters are called “Letters Testamentary”; if there is no will, the Letters are called “Letters of Administration”)
- 3. Publish notice to creditors. This notice is important because it alerts creditors that an estate has been open and gives them information on how to submit any claims they may have.
- 4. Inventory and appraise assets.
- 5. Maintain estate property. Pay taxes, electric bills, insurance, etc.
- 6. Pay debts.
- 7. Keep careful records. You’ll need to prepare a “Settlement” showing where every dollar has gone.
- 8. Obtain court approval to distribute the reminder of the estate.
- 9. Close the estate.
If you are looking for a Missouri attorney to help you sort through probate, from opening an estate to getting funds distributed to the intended parties, we would be happy to help.
A Power of Attorney is a legal document that allows one individual to act on another’s behalf. The person granting the powers is called the principal. The person authorized to act on the principal’s behalf is called the agent or attorney in fact.
The Power of Attorney document spells out the powers that you are giving to your agent. If your agent acts within the authority granted to him or her in the Power of Attorney, those actions are legally binding on you. I’ll repeat that again in slightly different words, as it is critically important to understand. Your agent’s actions, so long as they are authorized by the power of attorney document, are legally binding on you. For this reason, before signing a Power of Attorney you should do 2 things:
- Ensure you understand what powers you are granting your agent. Are they broad or narrow? Does your Power of Attorney allow them to sell real estate? Access your bank accounts? Access your digital accounts including your personal e-mail?
- Ensure that you trust your agent. If you don’t trust them, the answer is simple, don’t make them your agent.
What does it mean for a power of attorney to be “durable”?
The agent’s authority under an ordinary power of attorney only exists so long as the principal is of clear mind. If the principal becomes incapacitated, the agent’s authority ends.
Clients often trust family members to continue to act for them even if they are disabled. As such, Missouri law allows individuals to sign a durable power of attorney. Under a durable power of attorney, the agent’s authority continues whether the principal is of clear mind or incapacitated. The durable power of attorney should include the following language:
THIS IS A DURABLE POWER OF ATTORNEY AND THE AUTHORITY OF MY ATTORNEY IN FACT SHALL NOT TERMINATE IF I BECOME DISABLED OR INCAPACITATED OR IN THE EVENT OF LATER UNCERTAINTY AS TO WHETHER I AM DEAD OR ALIVE.
Powers of attorney are powerful estate planning tools. They can be used in the following ways:
- Physical Limitations. Example: an older gentleman has a hard time getting out of the house. Going to the bank becomes a chore that takes all of his energy. He can execute a power of attorney and name his daughter as his agent. Most banks will honor this and allow the daughter to conduct business on behalf of her father.
- Mental Limitations. Example: A mother is diagnosed with dementia or Alzheimer’s disease. Recognizing that her mental functions may diminish with time, she executes a power of attorney allowing her son to pay bills, manage her finances, and take care of her.
- Child Away at College. Example: Child decides to attend college far away from parents. Yet, child’s car is registered in Missouri and he has other accounts in Missouri. Child can give his parents power of attorney to manage his affairs while he is out of the state at college.
Without a power of attorney, if something happens to you, and you need someone to manage your affairs, your family will likely end up in probate court asking the judge for a Guardianship and Conservatorship. This is an unnecessary waste of time, money, and stress.
Take control. Plan ahead. Choose someone you trust. Create a power of attorney.
When one’s estate passes through probate in Missouri, there are a number of fees that the estate will face. There can be (1) bond premiums, (2) cost of publication in a local newspaper, (3) court costs, and the largest expense (4) attorney fees.
By statute, Missouri law establishes a minimum fee schedule for estates passes through probate. The fees are a percent of the money and personal property in the estate. It can also include any real estate sold during probate.
The minimum attorney fees in Missouri probate are as follows:
|Size of Estate
|Less than $5,000
|$5,001 – $25,000
|$250 + 4% of amount over $5,000
|$25,000 – $100,000
|$1,050 + 3 of estate over $25,000
|$100,001 – $400,000
|$3,300 + 2 ¾% of estate over $100,000
|$400,000 – $1,000,000
|$11,550 + 2 ½% of estate over $400,000
|$26,550 + 2% of estate over $1,000,000
The statute is 473.153. It can be found here: http://www.moga.mo.gov/mostatutes/stathtml/47300001531.HTML
Plus, the law allows the personal representative to take an amount equal to the attorney’s fee. The result is for an estate of $150,000, one may face $9,350 of expenses. Planning is better!
Often I have clients schedule an initial consultation to discuss having a Last Will and Testament drafted for them. While I am happy to do this for clients, upon further discussion, most clients realize that what they actually want is something different than a Will.
A Will is great for nominating guardians for minor children. Having a Will is also far better than passing away intestate (that is, without a Will) where default Missouri law controls the management and distribution of your estate rather than it being distributed according to your desires.
Yet, a Will often leads to Probate Court. This is the very thing that most of my clients want to avoid. After all, probate court (1) costs money, (2) consumes your loved one’s time, (3) leaves some decisions up to the local probate judge, and (4) is a matter of public record.
A much better plan is to avoid probate. And in most situations, in Missouri, avoiding probate is not that difficult to do. Clients can avoid probate by using all or some combination of the following:
1. a Revocable Living Trust (RLT) agreement,
2. a Beneficiary Deed for Missouri real estate,
3. a Gift Deed for personal property,
4. Payable on Death provisions for bank accounts,
5. Transfer on Death provisions for vehicles and boats, and
6. Beneficiary Designations for retirement and financial accounts.
Might it cost a little bit of money now to avoid probate later? Probably. Yet, avoiding planning now is being penny wise and pound foolish. One great thing about estate planning is the peace of mind it brings to my clients, that their affairs are in order and their wishes will be carried out.
If individuals choose to organize their affairs while they are alive, it is called Estate Planning. If individuals fail to plan while they are alive, then the process to organize their affairs is called Probate. Either way, if an individual has assets, his or estate will be organized by someone.
Estate Planning focuses on getting your assets to who you want, how you want, in the manner you want. To do this, we use a variety of tools including durable Powers of Attorney, Wills, Living Trusts, and Other Trusts (SNT, QTIP, Qualified Spousal Trust, Marital Deduction Trust). Like most things in life, when people take time to plan, they are more satisfied with the end result. When estate planning clients leave my office they are satisfied that they know how their assets are going to and when the transfer will take place.
Probate is the alternative to Estate Planning. It is the State’s estate plan for you. Each state has its own probate laws. In Missouri, the probate laws are found in Chapter 473 of the Missouri Revised Statutes. Say John and Jane are married and have 3 children together. If John passes away, the probate laws of Missouri (RSMO 474.010) state that Mary would get the first $20,000 of his estate and only half of the remaining estate. The other half of the remaining estate would go to the children. So to keep it simple, on an estate of $200,000, Jane would only receive $120,000 while the children would receive $80,000. Probably not what either John or Jane would have wanted. And this could have easily been prevented with simple estate planning.
Free options to avoid this include having Joint Accounts or Naming a Payable on Death beneficiary. Other, more powerful options include having a Will or a Revocable Living Trust. Simply not planning and hoping things will take care of themselves, is tough to justify when the solution is either free or fairly inexpensive. Planning is better.