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.
Real property can avoid probate through the use of a beneficiary deed. A beneficiary deed is a real estate deed that transfers the owner’s interest in real estate to the beneficiary named in the beneficiary deed when the owner dies. For married couples who jointly own real estate and jointly execute a beneficiary deed, the interest will not transfer to the beneficiary until both individuals have died. Common beneficiaries include children and other relatives. In order to be valid, a beneficiary deed must be notarized and properly recorded in the county where the real estate is located.
Importantly, a beneficiary deed does not change the owner’s interest or rights in the real estate and does not transfer the owner’s interest in the real estate until the owner’s death. A beneficiary deed may be amended or revoked by the owner at any point prior to the owner’s death.
By properly planning non-probate transfers of real property, real estate will avoid probate. On death, real estate will automatically transfer to the individual or entity that you have designated and avoid probate. However, if real estate 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 real estate, such as beneficiary deeds, 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!