Can A Power of Attorney Give Away Property?

If you hold the power of attorney for someone, you may wonder if you have the ability to gift the principal’s property. Maybe you are questioning whether gifts by a family member’s power of attorney are proper. Perhaps you hold power of attorney and are considering a gift to you yourself!

Pursuant to Missouri statute, certain powers of an attorney-in-fact must be specifically set forth in the grant of the power of attorney. This statue specifically states that the ability to make or revoke a gift of the principal’s property must be expressly set forth in the document granting the power of attorney. Even a principal’s verbal authorization to make the gift is not enough. It must be set forth in writing in the power of attorney document. An attorney-in-fact who gifts property without the proper written authorization to do so risks a law suit for breach of fiduciary duty.

If you hold power of attorney and are considering gifting the principal’s property, you should make sure you have the authority to do so. If you believe your attorney in fact or that of a loved one has improperly transferred property, there may be legal recourse available to recover the property. If you have any of these or other concerns over your or someone  else’s actions as an attorney-in-fact, you should consult with an attorney.

What Is A Revocable Living Trust?

What Is A Revocable Living Trust

A trust is an agreement that determines how a person’s property is to be managed and distributed during his or her lifetime and also upon death. A “living trust” is one created during the settlor’s lifetime. A “revocable” trust is one where the settlor has reserved the right to amend or revoke the trust during his or her lifetime. A revocable living trust normally involves three parties:

The Settlor or Grantor – The person who creates the trust and usually the person who funds for the trust. More than one person can be a settlor of a trust, such as when a husband and wife jointly create a trust.

The Trustee – The person who holds title to the trust property and manages it according to the terms of the trust. The settlor often serves as trustee during his or her lifetime. The trust should identify another person or a corporate trust company to serve as successor trustee after the settlor’s death or if the settlor is unable to continue serving for any reason.

The Beneficiary(ies) – The person(s) or charity(ies) that will receive the income or principal from the trust. This can be the settlor (and the settlor’s spouse) during his or her lifetime and whoever the settlor wants to receive the trust estate after the settlor’s death.

How To Create A Revocable Living Trust

First, an attorney prepares a legal document called a trust agreement, declaration of trust, or an indenture of trust. This document is signed by the settlor and the trustee. Secondly, the settlor transfers property to the trustee to be held for the benefit of the beneficiary named in the trust document.

Can a Revocable Living Trust be Changed or Revoked?

Yes, the settlor usually reserves the right to amend or revoke the trust at any time. This enables the settlor to revise the trust to take into account any change of circumstances such as marriage, divorce, death, disability or even a simple change of mind. The settlor can even terminate the trust entirely. Upon the death of the settlor, most revocable living trusts become irrevocable and no changes can be made. Married couples sometimes have their trust become irrevocable after the death of one spouse.

If I Have A Revocable Trust, Do I Still Need A Will?

Yes, although a revocable living trust may be considered the principal document in an estate plan, a will should also be part of an estate plan. The will, referred to as a “pour over” will, names the revocable living trust as the principal beneficiary. Any property the settlor failed to transfer to the trust during is added to the trust upon the settlor’s death and distributed to or held for the benefit of the beneficiary according to the trust instructions. The settlor may not be able to transfer all desired property to a revocable living trust during the settlor’s lifetime.

For example, the probate estate of a person who dies as a result of an auto accident may be entitled to an insurance settlement proceeds. These settlement proceeds can only be transferred from the estate to the trust pursuant to the terms of a will. Without a will, the proceeds would be distributed to the heirs under the Missouri laws of descent and distribution.

Also, a parent cannot nominate a guardian for minor children in a revocable living trust. This can be accomplished only in a will.

Will a Revocable Living Trust Avoid Probate Expenses?

Property held in a revocable living trust at the time of the settlor’s death is not subject to probate administration. Thus, the value of the property is not considered when calculating the statutory fee for the personal representative or the estate attorney. In addition, the required bond for the personal representative will be reduced to the extent the property is held in the trust and not subject to probate administration.

Certain expenses associated with the death of a person are not eliminated. Trustees are paid for their work unless they waive their fees. Attorneys and accountants may have to prepare deeds to transfer property from the trust to the beneficiaries and prepare the final tax returns.

What Are The Advantages Of A Revocable Living Trust?

In addition to reduced probate expenses, the avoidance of probate administration has other advantages. There are few public records to reveal the nature or amount of assets or the identity of any beneficiary. This keeps the transfer of assets and their value out of the public record.

Property can often be distributed  more quickly to the beneficiaries, avoiding the delay associated with probate administration. Probate court approval is not necessary to sell an asset in a trust, thus avoiding further delay.

In addition to avoiding probate in Missouri,  probate administration in other states where real estate is owned can be avoided by transferring the out-of-state real estate to a revocable living trust. This can be a significant advantage if the settlor owner real estate in more than one state.

Real estate, businesses, and other assets can be actively managed by a successor trustee in much the same way a settlor would have done before the settlor died or became incapacitated.  This provides continuity for family owner and operated businesses. For example, a trustee can use trust assets to pay utility bills, property maintenance expenses, and real estate taxes until real estate is sold or distributed. The trustee also might work out property distribution issues, such as some beneficiaries wanting the real estate while others want money.

What Are Some of the Disadvantages of a Revocable Living Trust?

Since a revocable living trust is a more complex legal document that must be funded by changing property titles while the settlor is alive, it is costlier to establish than a will. Accounts need to be retitled, deeds and other transfer documents must be prepared to the settlor’s assets to the trust, and beneficiary designations need to be changed to the trust. All of this can require a substantial amount of the settlor’s time.  The use of a revocable living trust requires ongoing monitoring to ensure that assets remain in the trust and that newly purchased assets are titled in the trust.  For example, a settlor who purchases real estate after the trust is created must remember to title the newly acquired real estate in the name of the trust.

Wills and Why You Need One

What is a will?

A will is a legal document that sets forth who will receive your property when you die. It can also include instructions for payment of any debts you owe at the time of death as well as identify who will care for any minor children who might survive you. You must be at least 18 years old and of sound mind (sometimes referred to a “having capacity” or a “capable adult”) to make a will. Each state has a set of laws governing wills. Therefore, if you move out-of-state after creating a will, a lawyer in the state you move to should review the will in order to ensure it is still valid. Be aware that a will does not avoid the necessity of probate and must be “probated” to have legal effect.

A will disposes of the property in your estate, which is all the property you own solely in your name when you die. You may give your property to any person or organization you choose, in any manner you choose. Some laws limit what you can do in a will, and you should seek the advice of a lawyer to ensure that what you want to do can be done successfully. A will should designate a personal representative (sometimes referred to as an executor) as the person who will be in charge of your estate after you die. This person is responsible for ensuring you wishes are carried out after your death. Your spouse can choose a certain amount, specified in a state statute, from your estate if he or she does not like your will.

In Missouri, a will is legal when signed by the person making the will and the signature witnessed by two people. A will is “self-proving” if a special clause is used when the witnesses sign and the maker’s signature is acknowledged by a notary public. This makes the process of probating a will easier and less costly.

Why have a will?

There are many reasons to have a will. These include:

  • Saving some costs by waiving bond and providing for independent administration.
  • Identifying who will receive your valued personal belongings in a list referred to in the will. You can change the list without changing your will.
  • You, and only you, decides who receives your property.
  • Nominating a guardian for your minor children.
  • Designating whether or not you want to make anatomical gifts.
  • Providing for minor or disabled children in a trust without court supervision by appointing a conservator to take care of what they would receive.
  • Setting up a trust for your family.
  • Saving on some death taxes.
  • Stating what you want done with the damages you receive if you die in an accident caused by another person.
  • Knowing that you have planned for your family.

 

How To Change or Cancel a Will

A will lasts until changed or canceled by its maker. It can be changed by creating a codicil, but the codicil must be made with the same formalities as when the will was signed. Because of this, many times it is easier to execute a new will rather than creating a codicil. You should consider changing your will if:

  • Your family changes through marriage, divorce, birth or adoption of children, or death or disability of a member of your immediate family.
  • A person or organization you named to receive a portion of your estate dies or ceases to exist.
  • Your family, property, money, or other assets change in value or nature.
  • You move to another state.

Proper creation of a will cancels all previous wills. Another way to cancel a will is to destroy the original and any copies.

Do I Really Need a Will?

There are ways to transfer certain property without a will. These options include:

  • Property or bank accounts titled jointly with another or others.
  • Life insurance policies and some annuities are ways to own property and provide for their transfer upon your death to named beneficiaries.
  • Non-probate transfers such as beneficiary deeds for real estate, pay-on-death provisions on bank accounts and certain other assets, and transfer-on-death provisions on motor vehicle titles, stock certificates, and brokerage accounts.
  • Individual retirement accounts (IRAs) and employer retirement plans with employee contributions are ways to provide for their transfer to named beneficiaries upon your death.
  • Property held by a revocable living trust (but you should still have a “pour­ over” will).
  • Missouri ‘s law of intestate succession.

These and other methods not mentioned here should be used in place of a will only after you have talked to a lawyer. However, you should always have a will in addition to these other techniques as a safety net to cover those items that are not “titled” assets. So, yes, you really need a will!

Intestate – What Happens if I Die Without an Estate Plan?

Dying without an estate plan is known as dying “intestate.” Property you owned only in your name will go to your spouse, close relatives and sometimes to more distant relatives. If no relatives are found, a highly unusual circumstance, your property goes to the state! Without an estate plan, Missouri statutes will determine who receives your estate.

If You Are Married at the Time of Your Death

If you are married at the time of your death and you die intestate, your surviving spouse will receive:

  1. The entire estate if there are no surviving issue of the decedent;
  2. The first $20,000 in value of the estate plus half the balance of the estate if there are surviving issue of the decedent and all of the surviving issue or also issue of the surviving spouse;
  3. Half the estate if there are surviving issue, one or more of whom are not issue of the surviving spouse.
Who Gets the Rest of the Estate or What if There is no Surviving Spouse?

After distribution of the portion of the estate to a surviving spouse, the remainder of the estate, or the entire estate if there is no surviving spouse, will go to:

  1. The decedent’s children, or their descendants, in equal parts;
  2. If there are no children or their descendants, then to the decedent’s father, mother, brother, and sisters, or their descendants, in equal parts;
  3. If the decedent has no children, father, mother, brother, and sisters, or their descendants, then to the grandfathers, grandmothers, uncles and aunts, or their descendants, in equal parts;
  4. If the decedent has no children, father, mother, brother, sisters, grandfathers, grandmothers, uncles and aunts, or their descendants, then to the great-grandfathers, great-grandmothers, or their descendants,in equal parts;
  5. This goes on and on until the nearest surviving relative is found who then gets the estate.
What If There is No Surviving Spouse or Relative?

If there is no surviving spouse or kindred of the decedent, then the whole  estate will go to the kindred of a the predeceased spouse, if there is one. The estate will the pass to the predeceased spouse’s kindred as described above. If there is more than one predeceased spouse then the estate is divided in equal share’s to go to the kindred of the predeceased spouse. If there are no relatives of any kind to be found, including those of predeceased spouses, the estate will go to the State of Missouri.

Even giving a little thought to what could happen if you die intestate reveals scenarios no one would want. The lack of an estate plan could result in all or a portion of your estate going to in-laws of your in-laws or some relative you have never spoken with, much less met. This underscores the importance of putting together a comprehensive estate plan to make sure your wishes are carried out after your death.

What is an estate plan?

You may not have thought about it, but you have an estate. An estate is all the property a person currently owns, regardless of type and amount. This includes real estate, bank accounts, stocks, bonds, mutual funds, life insurance policies, and personal property such as vehicles, jewelry, and furniture.   As the saying goes, you can’t take it with you, and an estate plan sets out who gets your assets after your death.

A comprehensive estate plan will accomplish more than just listing who gets what. A comprehensive estate plan should take into consideration and may include:

  • Identifying family, loved ones, or charities that will receive your assets after your death
  • The method to avoid the time and expense of probate and transfer your assets to your beneficiaries as efficiently and inexpensively as possible
  • Naming a guardian and manager of assets for any minor children
  • Instructions for your care should you become disabled or otherwise unable to make those decisions yourself, including what life-prolonging measures you want taken
  • Providing for family members who are unable to care for themselves or unable to manage their financial affairs
  • Instructions for your funeral arrangements and payment of any final expenses surrounding your death

Estate planning is not just for the retired, elderly, or terminally ill. No one can predict what the future will bring. An unexpected death or disability can cause you, your estate, and your beneficiaries unnecessary expense and anxiety if no estate plan is in place.

If you become disabled without an estate plan in place, the court may have to appoint a guardian or conservator to make decisions for you. Wouldn’t you rather choose who will take care of you and your financial affairs if you become disabled?

If you die without an estate plan, your assets will be distributed according the state’s probate laws. This means loved ones you want to take care of after your death may not receive the assets needed to provide for them. A comprehensive estate plan can ensure your family and loved ones are properly cared for after you’re gone.

If you die without an estate plan and leave minor children, it’s possible the court could decide who they will live with and who will care for them. A proper estate plan gives you the power to make that decision.

Estate planning is for everyone and there is no reason to delay the estate planning process.