PROBATE AND THE PROCESS

The probate court and probate process have proper functions. Probate is necessary to ensure your assets are distributed correctly and as you may dictate by a Will, and to protect the rights of your heirs and creditors.  If you have a Will, you can make very specific directions and change what the statutes otherwise require.  The court will ensure your wishes are carried out.  If you do not have a Will, the Missouri statutes set out how your assets are distributed.  In most cases that would be how you would wish anyway: to the surviving spouse; if none, then to children in equal shares; if a child predeceases you and has children of his or her own, then those grandchildren split their parent=s share, etc.

What assets are governed by the probate court: Only those in your personal name alone, not jointly with anyone else, and which do not already name a beneficiary.  For example, a bank account or car in joint names with another automatically are owned by the other party on your death, even if you intended that party to Atake care@ of the rest of the family or others, and even if you did that only for the other party to help pay bills, etc.  Assets held in a trust are not governed since the trust is a separate owner.   Life insurance and ATOD@ or transfer on death accounts are not governed.

Small Estates – If all assets less liens, debt, and encumbrances are less than $40,000.00.

The statute still requires an attorney, but here the assets can be handled without a full probate case.  The procedure is an AAffidavit for Collection of Small Estate, @ designating the heirs who will get the property under the statute.  If there is a Will, it must be filed and the Will governs the distribution. The Court then issues an Order called ACertificate of Clerk@ which designates who owns the assets.    Other requirements are that 30 days have elapsed since the death of the decedent, no application for full administration is pending or has been granted, or such application has been granted and subsequently revoked, and a surety bond, in an amount not less than the value of the personal property, approved by the judge or clerk of the probate division is filed by the person making the affidavit.   The bond is conditioned upon the payment of the debts of the decedent, including any debts to the state of Missouri, and the expenses of funeral and burial. The court may dispense with the filing of a bond if it finds it is not necessary 

An attorney is still required to manage this procedure.  However, separate arrangements must be made for payment of the legal fees since the ultimate court order does not cover them.

All other cases

Who is in charge.   Your Will can designate who you trust to be in charge.  The title used to be Aexecutor@ but is now Apersonal representative.@  

Our personal representative services:   If there is no Will or no person qualified to post the bond, or the court grants a challenge to that designation, I have often been appointed by the Court to handle the administration of the probate estate.   I have been qualified for a surety bond in every case where I have been asked to serve. 

Supervised and Independent Administration 

There are two forms of probate administration.

A supervised case.  This is usually required where was no Will, or the Will did not authorize Aindependent administration.@  In that case the Personal Representative must get court approval for most actions, such as selling a car, investing funds, hiring an accountant for tax returns, hiring an attorney to pursue claims, and filing suit to pursue claims against others etc.  It also requires the Personal Representative to prepare and file annual reports and accountings and get court approval of the accounting each time.  While sometimes necessary, supervised administration carries delays in many actions while waiting for court approval, and additional attorney’s fees to get that approval.

Independent administration is the modern method of efficient administration. Under this method, there is still accountability, however.  It must be designated in the Will, or approved by the Court with consent of all heirs.   Court approval is not required except in special situations, and there are no annual settlements.  However, there must still be final Statement of Account approved by the Court, a proposed Order of Distribution following the Will, or the law if there is no Will, and court approval of any fees in excess of the statutory minimum.  All heirs are entitled to challenge the final accounting and fee application, with or without independent administration.

If you have a Will:  

1.    The Will must be filed within one year of date of death. If not, it is no longer enforceable.

2.     If the witnesses= signatures are notarized and the proper statutory language is used in the witness paragraph, the witnesses are not required to appear in court later.

3.    The Will suggests who you want in charge, now called the Personal Representative, formerly AExecutor.@  The Court will appoint that person unless that person declines or is unavailable, or other heirs object and file a Petition to have someone else appointed.  Then the court will conduct a hearing and determine who is best.  Without an objection, the Court will appoint the person you name.  Note: The named Personal Representative has absolutely no authority to do anything at all until the probate estate is opened and the Court issues the Order appointing that person.  

4.   Regardless, the Personal Representative is required to use the services of an attorney to file the Petition and throughout the administration.

5.   Fees and costs. The court costs are minimal. For fees, the Personal Representative is entitled to compensation based upon the Missouri statute setting out the minimum fee schedule. That person may receive additional compensation only if the court approves. The same applies to the attorney for the estate.  In general the minimum fee under the statute is just short of 3% of the total of personal property in the case.

However, where our office or any other attorney is appointed as the Personal Representative, there can be only one fee.  That is another reason why this office is often appointed as Personal Representative.

So for example, for a $100,000.00 estate the minimum fee would be $3,300.

In a typical estate of $100,000.00, the minimum fee is usually the most paid.

The fees will be paid from the assets in the estate.  However, when the estate is quite small and services will not be covered by the schedule, the client is expected to separately pay the fee and will be reimbursed to the extent the minimum fee schedule applies.

4.    If the Will says a security bond is not required, then the court will follow that request.  Otherwise, the Personal Representative will be required to have an insurance company file a bond in an amount to cover the value of the property that is not real estate.  The purpose is to guaranty the Personal Representative properly administers the assets.  If additional assets are discovered, the Court will require an increased bond.   The cost of the bond will be paid from the assets in the estate.

If a person has no Will or it is not filed within a year after death. 

1.    This is called an Aintestate estate@ and an heir must apply to be appointed Personal Representative. If no heir comes forward, or is not qualified or financially unable to post the proper bond, the court may appoint another heir on request, or appoint someone else with the consent of all heirs.  Typically this person is an attorney, since it will avoid a fee for both the Personal Representative and the attorney.  The attorney will have far more experience in what needs to be done and how to do it.

2.    A surety bond is almost always required but this office has never been turned down on a bond application.  Where an heir or other person is requested to be in charge, the attorney should first determine whether that person is qualified to obtain the bond.  If the bond is later denied, the process has to begin again.  Denial of the bond will slow down opening the probate estate and taking charge of the assets.

3.   The fees are based upon the same fee schedule. Where the attorney needs to perform extraordinary services, like preparing tax returns or pursuing litigation to collect claims, or contests over claims filed against the estate, the attorney may be entitled to additional fees but only after justifying them to the court, notice to all heirs is given with an opportunity to object, and a court hearing is held.  The court is not required to grant the total fees requested, nor to honor the hourly rate of the time expended.

Relief and payments to heirs while the estate remains open. 

The estate can not be closed for at least six (6) months, the deadline for creditors to file claims.  However, this not necessarily mean a delay in at least partial distributions to heirs.  A surviving spouse and minor dependent children are entitled to certain allowances regardless of any claims, so they can be paid shortly after the case is opened, regardless of claims..  Thereafter, if it is obvious the assets are sufficient to pay all costs, fees and claims, the court can allow partial distributions to the heirs.

Claims And Allowances: 

The following allowances in probate are allowed ahead of any claims. 

1.    Exempt property.   The surviving spouse, or unmarried minor children of a decedent are entitled absolutely to the following property of the estate without regard to its value: The family bible and other books, one automobile or other passenger motor vehicle, including a pickup truck, with its means of propulsion, all wearing apparel of the family, all household electrical appliances, all household musical and other amusement instruments and all household and kitchen furniture, appliances, utensils and implements; in equal shares.

3.    Family allowances.    In addition to the right to homestead allowance and exempt property, the decedent’s surviving spouse and minor children whom the decedent was obligated to support and the children who were in fact being supported by the decedent are entitled to a reasonable allowance in money out of the estate for their maintenance during the period of administration, which allowance may not continue for longer than one year.

4.    Homestead Allowance:   On application of the surviving spouse or of the guardian, conservator, or person having custody of the persons of the unmarried minor children of a decedent, the Court shall make an allowance to the surviving spouse or unmarried minor children of an amount not exceeding fifty percent of the value of the estate, exclusive of exempt property, and the Family allowance, but to a maximum of $15,000.00.

Claims of Creditors:

Once the Court authorizes opening the Estate this fact is published in the local legal newspaper.  Creditors then have a deadline of six (6) months from the date of the first publication within which to file claims.    This is where the value of the attorney is proven.   If the attorney for the Personal Representative objects to the timeliness, or validity or lack of documentation of the claim, the Court will set a hearing after notice to the Creditor.   The burden is placed upon the creditor to come forward at a scheduled hearing to prove the legitimacy of the claim. 

Exceptions: 

What if a Petition to open the estate is not filed?  Creditors have up to one year to file claims and ask that the estate be opened on their own behalf.    If one year goes by without a Petition, all creditors failing to file claims are forever barred from attempting to collect them.  And, any Will becomes unenforceable.

The time limitations do not apply to claims for:

1. Costs and expenses of administration
2. Exempt property
3. Family allowances
4. Homestead allowance
5. Tax claims of the U.S. or any taxing authority

Time frame for administration. – give it at least eight months at a minimum

A regular probate case (other than an Affidavit for Collection of Small Estate, which can be concluded in maybe 60 days) can not be closed for at least six (6) months from the date of publication.  This is because creditors are allowed those six months to file their claims.  If no claims are filed, the attorney can begin preparation of the required Final Settlement in the case.  It may take the court one or several months to review all the receipts and disbursements before the Settlement is approved.  In a perfect world, the attorney prepares the Settlement within a few weeks before the six months expire, and then files the week after the six months is over.   The Court auditing staff reviews and approves it within two weeks thereafter, and the Court issues the final order authorizing distribution of the assets to the heirs.  (There is no perfect world).

If litigation is pending to challenge claims filed, or to pursue claims for the decedent against others, the estate can not be closed until those matters are finally concluded.  If the litigation pursuing the decedent=s claims results in judgment in the estate=s favor, the estate can not be closed until that judgment is collected or it appears, on court approval, that the judgment became uncollectible.  Partial distributions to heirs and those designated in the Will can still be made, however, as long as funds are retained to pursue the litigation.

In short there are many necessary and legitimate reasons why a probate estate is not closed for months and sometimes years after it is opened, but there are built-in provisions to relieve financial distress of heirs.

Upon review of the above extensive discussion of the probate process, it should be clear why use of an estate planning Trust now is a virtual necessity to avoid all this.