So — we now have to open a Probate Estate where one shouldn’t have been necessary.  Molly is going to have to deal with 6 to 8 months of headaches, and will be out several thousand dollars in Probate Fees.

When you inherit property via a Beneficiary Deed it is critical that you immediately assume all ownership functions.  This obviously includes taking care of insurance issues.  Other matters are utilities, maintenance, property taxes, and dealing with the property in the estate plan of the new owner. 

This is another example of where using a Revocable Living Trust to manage the property for the 19 year old until she was more mature would likely have saved the day.

There are many morals to this story.  First – Beneficiary Deeds are great tools when used properly, but when not used properly can cause big problems.  Secondly, many, if not most young adults who are not experienced in dealing with money, property, assets, etc. should not be given their inheritance outright until they are more “seasoned”.  Finally, don’t be penny-wise and dollar foolish.  Don’t be afraid to pay a lawyer to help prevent problems.  It’s normally a lot cheaper than paying one to solve the problem.

Email us with your questions.

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Generally trusts can only be successfully challenged on two grounds.  The first is simply lack of capacity.  In other words, if Mom wasn’t able to comprehend what she was doing because of a physical or mental limtation, then she couldn’t legally create or modify a trust, and therefore it wouldn’t be valid.

The second general ground for an attack is to claim that Mom’s trust didn’t reflect her wishes.  This is often the result of “undue influence”.  The classic example is someone holding a gun to her head and forcing her to sign.  There are other, more subtle forms, such as a child on whom she is dependent for care threatening to withhold care, etc. if she didn’t do things in a way the child demands.    Other versions of this attack include fraud, or tricking someone into signing a document that they don’t agree with.

In this case, we don’t seem to have any problems.  The step-kids are just disappointed.  That isn’t enough.  Hopefully the step-children will see the light and it won’t be in issue.

Questions?  Call or email us.

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Visit our website for more information.

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Why do we do this?  Because we know that a simple will does very little, and is appropriate for very, very few people.  Check it out – give it a try.  What do you have to lose?

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In Missouri, this so called “Right of Sepulcher” is governed by statute. It sets up a logical order of people who can make decisions. The surviving spouse, if there is one, is first, children are next, etc. If children can’t agree then generally the first one there who takes financial responsibility gets to choose.

If you are concerned about this kind of fight on your passing you can make a special provision in your Missouri Durable Power of Attorney addressing this specifically – in other words, you can choose who will make the arrangements. Pre-planning your funeral or cremation is also a good idea.  Another good idea is creating a set of Final Instructions to Loved Ones.

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My friend, Lenny, and his sister, Martha, had been named beneficiaries on their father and step-mother’s property.  The beneficiary deed was done correctly and recorded as required by law.  Lenny’s father died about a month ago, and his Stepmother can’t stay in the house by herself.  She is not dealing with the situation well, and is likely incompetent.  The Stepmother has no children of her own, and her nearest relative is her brother.  The brother is more than willing to to sell the property, which is now in Stepmom’s name alone, and split the proceeds with Lenny and Martha.  This would be the “right thing”, and represents his father’s wishes. 

Enter the evil sister-in-law.  She’s demanding that the property be sold, and that they hold all the money “just in case” stepmom needs it.  After all, the house is now stepmom’s alone, and Lenny and Martha have no legal claim to it.

The problem, you see, is that Beneficiary Deeds don’t do anything until BOTH parties die.

Lenny is sure that when evil sister-in-law gets the money he will never see it again.  I think he’s right.

A Living Trust would have prevented all of this.  The money could and would have been held for step mom “just in case” and then distributed to Lenny and Martha after stepmom dies.  This is what was initially desired.

Beneficiary Deeds work well in certain situations.  Where there are blended families involved, they often result in the wrong people inheriting. 

Lenny’s dad was well intended – a great guy.  He trusted his wife’s family too much.  Lenny and Martha are paying the price.

Don’t let this happen to you.  Contact us for help.

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I will not go through the post line by line to point these things out.  My goal is not to beat up the author.  My goal is to simply point out that you should get your advice from professionals.

Here are a few of the mistakes as  to information or advice:

1. “Without a will, which is the crux of any estate plan, your belongings become the property of the state”.

This is simply inaccurate.  First, your belongings do not become the property of the state.  Rather, they will be distributed according to the intestacy laws of your state through the probate system.  Secondly, in our humble opinion, most estate plans based on wills are ill conceived.  Better estate plans are trust based.

2.  “Do I need a lawyer to do estate planning? Not necessarily.”

This is scary.  Yes, you can legally prepare your own will.  However, this blog has several stories about people who have tried to do it themselves and caused huge problems for their families.  Your planning involves all that you have accumulated for all of your life.  One small mistake can cost someone tens or hundreds of thousands of dollars.  Lawyers, including myself, make a lot more money in the long run off of do-it-yourself planning.  Don’t be penny-wise and dollar foolish.

3.  “What about estate taxes? As of 2009, there is no federal tax on estates that are worth less than $3.5 million.”

This is a correct statement — just outdated, and relying on it can cost someone hundreds of thousands of dollars.  In 2010 there is no estate tax — at least as of right now.  If Congress fails to act the appropriate number is $1 million — not $3.5 million as of January 1, 2011.  If Congress acts — we’ll, we’ll have to wait and see.   Yes, the Estate Tax may be coming back, and many will be poorly prepared.

Now, to give the author credit where it is do.  Encouraging people of all ages and walks of life to plan their estate is excellent advice.  I applaud the intent of the article.

So — the bottom line?  See a professional.  Don’t rely on advice from well-intentioned, but poorly informed sources.

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We think this is best accomplished by writing a letter or memo to your loved ones outlining your wishes.  A relatively easy way is to use a sample and just fill in the blanks.  Perhaps a more meaningful way is to write the letter yourself, using the sample as a reminder of what to include.  It’s important to be certain and let your family know that if your wishes, as expressed, don’t make sense because things have changed, that they are free to take that into account.

Don’t use the letter to vent frustrations or disapproval.  Think of it simply as a final gift to your family.

Regardless of whether death is sudden and unexpected, or after a lengthy illness, the days before the funeral are hectic, and we all tend to go on autopilot.  A letter setting forth your wishes can be most helpful and comforting.

Don’t wait.  Take a half hour and deal with this now.  You’ll never be sorry, and your family will be most appreciative.

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Why not? Several reasons, but primarily because we don’t want somebody filling in the blanks incorrectly, or not understanding precisely what they are doing. We simply refuse to be a part of that.

Real Estate is often the most valuable thing that someone owns. Transferring it on death involves many, many considerations which are often not readily apparent. We just think it’s a really bad idea not to understand precisely what is going on when a beneficiary deed is prepared and recorded. We’ve seen too many bad results. We’ve seen too many people trying to save a few bucks who actually cost their family thousands of dollars, if not tens of thousands.

We are not so naive as to think that you aren’t going to find a form somewhere. You will. If you insist on doing it yourself we can’t stop you. We just hope you’ll think twice about getting professional advice.

To be certain, Beneficiary Deeds are valuable tools when used correctly. Knowing when and how to do so is the key.

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So — why doesn’t everybody use them all the time?  The simple answer is — everything has a time and a place.

Beneficiary deeds tend to be most appropriate where estates are smaller, families are simpler, people get along, etc.

Here are some factors that tend to make Beneficiary Deeds a bad idea:

• Blended (Second Marriage) families
• Children or other beneficiaries with marital problems
• Children or other beneficiaries with money problems
• Children or other beneficiaries with substance or alcohol problems
• Children or other beneficiaries with health problems
• Disabled beneficiaries
• Children or other beneficiaries and/or spouses who don’t get along
• Estates where disability management is important
• More complex estates — mutiple assets, whether real estate or otherwise

This is not a comprehensive list.  Again, Beneficiary Deeds work well in simpler situations.  Although they are powerful in terms of their potential, the same attributes that make them simple to use and operate, also severely limit their flexibility.

Beneficiary Deeds certainly have a place, but it’s a mistake to try to fit a square peg into a round hole.  They are very inexpensive, relatively speaking.  However, it only takes one thing to go wrong and any money that might have been saved has now been spent many times over.

The things that can go wrong include people dying in the wrong order, people getting sick, marriages turning bad, etc. It is also important to realize that if you leave real property in Missouri to three people, for instance, and they are all married, all three PLUS their spouses have to agree in order to sell or otherwise dispose of the property.  This can be cumbersome at best, or virtually impossible when things go sour.

Beneficiary Deeds also do nothing to enable management of the property if an owner is disabled.

Trust Based Plans are the best alternative to Beneficiary Deeds.  They solve all the problems that present themselves, and provide for maximum flexibility.

Don’t get tunnel vision when making the decision, and don’t be penny-wise and dollar foolish.

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