As explained in this post on non-probate transfers of real property, Missouri has one of the most comprehensive non-probate transfer laws in the nation. As emphasized in other posts, a key to a successful estate plan is avoiding probate. Probate is undesirable for several reasons. First, probate is expensive. Any estate (assets such as real estate and personal property) that passes through probate will lose a portion of its value due to court costs and fees. In many cases, that can mean thousands of your hard-earned dollars passing to the government and other parties simply because of poor planning.
Probate is unfavorable for other reasons. Probate takes a long time: a minimum of 6 months, but often over 1 year. Probate is also public: your assets and debts are public information to any interested party. Finally, your family has limited control over the process.
Titled personal property can avoid probate through the use of transfer-on-death designations. Titled personal property commonly includes motor vehicles, watercraft, and trailers. Re-titling your titled personal property to transfer on death is usually a short and simple process that can be accomplished at your local DMV / license office.
Non-titled personal property can avoid probate through the use of a beneficiary deed for personal property. Non-titled personal property commonly includes heirlooms and household items. While non-titled personal property often has limited monetary value, the sentimental value can be priceless.
Bank account holdings can avoid probate through the use of pay-on-death designations. It is also an option to use a joint account, if you are comfortable doing so.
Intangible personal property can avoid probate through the use of beneficiary designations. Intangible personal property commonly includes life insurance as well as securities, including investment and retirement accounts such as employer-sponsored retirement plans (e.g. 401(k)s, 403(b)s, and 457s) and IRAs. Because a person’s spouse is often their primary beneficiary, it is important to also name contingent beneficiaries in case your spouse predeceases you.
Importantly, a beneficiary deed, beneficiary designation, pay-on-death designation, or transfer-on-death designation does not change the owner’s interest or rights in the property and does not transfer the owner’s interest in the property until the owner’s death. Each of these designations may be amended or revoked by the owner at any point prior to the owner’s death.
By properly planning non-probate transfers of personal property, the property will avoid probate. On death, the property will automatically transfer to the individual or entity that you have designated and avoid probate. However, if property is not properly designated, it will pass through probate and lose a portion of its value to court costs and fees.
If you have additional questions about non-probate transfers of personal property or are ready to have an estate plan prepared, call or come visit the estate planning attorneys at the Paul Law Firm. Consultations are always free!