When you are planning what will happen to your property after your death, avoiding a lengthy or public probate process may be one of your priorities. A properly structured trust can keep certain assets out of probate while also giving you more control over how and when beneficiaries receive them.
Avoiding probate can be especially useful if you own a home, have significant financial accounts, or want to protect other property by transferring it through a carefully considered plan.
At Shipman & DeHardt, PC, our attorneys can help you evaluate whether a trust fits your estate plan and how your assets should be titled or transferred. Located in Lees Summit, Missouri, we serve clients throughout the Kansas City area, including Blue Springs, Raytown, and Independence.
Our goal is to provide the assistance you need for estate planning and administration. If you are considering setting up a trust, we can help you understand how it may affect probate and your beneficiaries. Contact us today to schedule a consultation.
A trust can avoid probate for assets that are properly transferred into the trust during your lifetime. With a revocable living trust, for example, you can generally continue to manage the trust property while you are alive, and a successor trustee can manage and distribute those assets after your death according to the trust terms.
The key is that simply signing a trust document does not automatically place all your property into the trust. Assets generally need to be properly transferred or titled in accordance with the trust plan. Otherwise, property that remains in your individual name may still require probate.
This distinction can be easy to overlook when you are handling several accounts, real estate, or other property. A trust-based estate plan therefore involves both creating the trust and coordinating your assets with it.
The Revised Statutes of Missouri § 456.4-401 recognizes that a trust may be created by transferring property to a trustee during the settlor's lifetime or through other legally recognized methods.
When the person who created a revocable trust dies, the successor trustee generally administers and distributes trust property according to the trust's terms. Missouri law, under the Revised Statutes of Missouri § 456.6-604, specifically addresses property distribution after the settlor's death and provides rules for challenging a revocable trust.
For example, if you place your home and certain investment accounts into a revocable trust and name your children as beneficiaries, the successor trustee may administer those trust assets according to the instructions you established after your death. Assets you never transferred to the trust will typically be subject to probate.
A trust can also provide instructions for how beneficiaries receive property. Depending on the terms, you may structure distributions around particular ages, circumstances, or trustee discretion rather than requiring everything to pass to a beneficiary immediately.
A trust can provide asset-protection features in some circumstances, but the answer depends heavily on the type of trust, who created it, who benefits from it, and the nature of the creditor's claim. A revocable living trust should not generally be viewed as a way for you to shield your own assets from your creditors while you are alive.
Under the Revised Statutes of Missouri § 456.5-505, the law provides that, during the settlor's lifetime, property of a revocable trust remains subject to claims of the settlor's creditors. Asset-protection planning can also involve different trust structures and provisions, including certain irrevocable trusts and spendthrift provisions.
However, these arrangements have significant legal consequences and exceptions. For example, Missouri law recognizes circumstances in which certain claims can reach trust interests despite a spendthrift provision. When considering asset protection, it is useful to distinguish between these goals:
Avoiding probate: Consider keeping your properly funded trust assets outside your probate estate.
Controlling distributions: Consider establishing rules for when and how your beneficiaries receive your property.
Protecting assets: Consider limiting the circumstances in which creditors or other claimants may reach certain trust interests.
Managing property: Consider allowing a trustee to administer your trust assets according to the trust's terms after your death.
These goals can overlap, but a trust designed primarily to avoid probate does not necessarily provide the same protections as a trust designed for asset protection.
A trust is only one part of an estate plan, and it may not be appropriate for every person or every asset. Your circumstances, the type and location of your property, your beneficiaries, and your objectives can all affect whether a trust makes sense.
You should also consider what happens to assets that do not pass through the trust. Missouri recognizes various forms of non-probate transfers, including certain beneficiary-designation arrangements, which can transfer property outside the probate process. This means your estate plan may involve several coordinated pieces, such as:
A revocable living trust with successor-trustee provisions
A will addressing property that is not otherwise transferred
Beneficiary designations for eligible accounts or policies
Proper ownership or titling of real estate and other trust assets
Instructions for managing or distributing property to beneficiaries
Keeping these pieces consistent matters. A beneficiary designation or account title that conflicts with the overall plan can affect where an asset goes after death.
If you’re managing an estate plan alongside work, family responsibilities, and multiple financial accounts, keeping track of these details can be a challenge. Reviewing the entire plan periodically can help identify changes in property ownership, beneficiaries, or family circumstances that may require updates.
Setting up a trust involves more than deciding whether you want to avoid probate. You may need to consider how your property will be managed, who will serve as trustee, how your beneficiaries will receive your assets, and whether additional asset-protection planning is appropriate.
At Shipman & DeHardt, PC, we help clients in Kansas City, Missouri, consider these issues as part of their broader estate planning and administration needs. Our estate planning attorneys, Jay DeHardt and Jill Shipman-DeHardt, can explain how different trust arrangements may work and help you take practical steps to establish your estate plan.
If you need help determining whether a trust is appropriate for your circumstances, we can evaluate your options and identify the planning considerations that may matter most to you. Contact us to schedule a consultation and discuss your estate planning goals.
When you are planning what will happen to your property after your death, avoiding a lengthy or public probate process may be one of your priorities. A properly structured trust can keep certain assets out of probate while also giving you more control over how and when beneficiaries receive them.
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