Law News and Tips

An Estate Planning Checkup

Fred Vilbig - Thursday, July 30, 2020

AN ESTATE PLANNING CHECKUP

Fred Vilbig © 2020

      I recently met with a couple who wanted what I’ll call an estate planning checkup. They said they had a will and just wanted me to check to make sure everything was in order.

      When we met, I asked to see their wills. She produced a very simple, generic will. She sheepishly admitted that she had printed it off the Internet a few years ago. In reviewing it, I saw that on her death, everything went to him if he was alive. If he was not alive, it went out right to their kids. Although it had normal (albeit brief) powers authorizing the personal representative to do whatever was necessary to take care of the estate, it did not allow for what is called independent administration.

      She was surprised when I explained to her that the will would require the court to oversee and approve everything in the administration of her estate. She apparently thought you avoided probate with a will. A will is only a roadmap through probate. It doesn’t avoid probate. We then discussed ways to avoid probate.

      I also talked about the problems with giving property outright to children. If they kept it in their own individual names, the assets could be exposed to the claims of their creditors. If they married and put it in joint names with their spouses, half of it could be taken in divorce. We talked about ways to avoid that.

      I then looked at the signature page. She had, in fact, signed the will. There were spaces for the signatures of two witnesses, but they were blank. There wasn’t a notary block at all.

      I explained to her that her will was not valid. On the death of the second of them to die, their estate would have to be administered by intestate succession (the will Missouri has written for you). They were not happy to hear that.

      In order to have a valid will, there are generally certain requirements that have to be satisfied. There are some exceptions, but that will be for another column. Generally, in order to have a valid will in the state of Missouri, the testator has to be competent. Testamentary competency is very basic: you need to generally know what’s going on; you need to generally know the nature and extent of your estate; and you need to know the objects of your beneficence (that’s a fancy law school word for who your kids are). In addition, the will has to be written. You need to publish or declare that it is your will in front of witnesses. And the witnesses need to sign the will declaring that they found you to be competent and that you signed it in front of them. Although not required for a valid will, we always add a notary block regarding the witnesses’ signatures. Otherwise, on your death, we need to track the witnesses down, drag them to court, and have them prove that those are their signatures on the will.

      I understand that people are trying to economize. But I have found generally that homemade wills end up costing a lot of money and causing a lot of problems.

      Give me a call. Let’s talk.

A Bad Idea

Fred Vilbig - Thursday, July 02, 2020

A Bad Idea

Fred Vilbig © 2020

     I got a call from a client the other day.His mother had died, and he had a lot of questions.

     His mother and father had divorced years ago.She had remarried, and she and her new husband had had a loving relationship.Not knowing who might die first and wanting to be fair, they had verbally agreed that everything would pass to the survivor on the death of the first of them to die, and on the death of the second, everything would be split 50/50, with half going to her son and half going to his children.They didn’t put that agreement in writing, and everything was owned jointly.They did both execute wills that included those provisions, but that was it.And therein lies the problem.

     When a married couple own property jointly, on the death of the first of them to die, everything passes to the surviving spouse.There is no need to probate anything since there is nothing to probate.If you’re talking about real estate, you do need to file an affidavit of death to clean up the title.With regard to financial assets, you probably need a death certificate to show to the financial institution.But no probate.

     And when the assets pass to the surviving spouse, the surviving spouse is free to do whatever they want with them.My client said that his step-father was talking about putting the accounts in joint names with his son.The idea was that he wanted his son to be able to pay his bills.But joint ownership between non-spouses can create problems.In the case of bank accounts (they have special rules that apply to them), his son would be able to use that money to pay his bills.But his son would also be free to drain that account.Or if he got sued and lost, the other party could attach those funds to satisfy his or her judgment.In the case of a brokerage account, both joint owners would need to jointly withdraw funds, so he would be no better off than if the account was still in his name.And then on the death of the step-father, all of the assets would pass outright to the surviving son. There would be no probate, and the will that split things 50/50 would prove to be a useless piece of paper.

     The best thing that my client’s mom could have done would have been to enter into a pre- or post-nuptial agreement.She and her husband could have agree to split the assets in writing just like they had verbally agreed to do.

     But now, my client was in a sticky situation.Although he had a good relationship with his step-father, his step-father was free to do whatever he wanted to do with the assets.I told him that his step-father could put the assets into a trust, and that would avoid probate, allow for his son to take care of him if he became ill, and incorporate the testamentary disposition play he had agreed to with his wife.If he didn’t want to do a trust, he could keep his will and execute a power-of-attorney allowing his son to pay his bills, but not put everything in joint names.There are ways to salvage the situation to achieve what the spouses had agreed to, but it will take some cooperation.