Asset Protection: What is a Qualified Spousal Trust?

If you are a married professional, including a small business or real estate owner, or if you have creditor concerns of any kind, then you may be interested in a new Missouri law called a Qualified Spousal Trust. This trust offers creditor protection benefits for jointly owned marital assets. The lawyers at Checkett, Pauly, Bay & Morgan explain what a Qualified Spousal Trust is and who can benefit from them.

Tenants by the Entireties Properties

Tenancy by the entireties is the technical term for the joint ownership of property by spouses living in Missouri. Under Missouri law, this jointly owned property is deemed owned by the marital unit—an entity separate from either spouse alone. If one spouse has a judgment against him or her alone, the jointly owned assets are protected. 

However, if there is a judgment against both spouses, the jointly owned assets will be liable for the joint marital debt. The IRS is the only creditor whose lien can attach to a spouse’s interest in tenancy by the entireties property.

 There are disadvantages to owning property as tenants by the entireties. If both spouses pass away at the same time, then the property will be subject to probate. If one spouse dies, the survivor then owns 100% of the property outright and has no asset protection.

Individual Revocable Trusts

A husband and wife may each create their own separate revocable trust. However, a revocable trust has no asset protection benefits because you can revoke the trust and remove all the assets. Creditors can do the same.

Joint Marital Trusts

Many clients prefer a joint revocable trust. With a joint trust, both spouses create the trust and transfer assets to the trust. Typically, this joint trust serves as the primary estate planning document for many couples. Under prior Missouri law, it was unclear if joint trusts retained the asset protection benefits of tenancy by the entireties property.

What is a Qualified Spousal Trust?

The Missouri Legislature passed a new law providing that if tenancy by the entireties property is transferred to a Qualified Spousal Trust, then the trust property will have the same immunity from the claims of the separate creditors that existed if the spouses had continued to hold the property as tenants by the entireties. However, there are very exact and specific requirements to creating and enforcing a Qualified Spousal Trust, or the protection is lost.

Is a Qualified Spousal Trust for You?

A Qualified Spousal Trust can provide the best of all worlds. Your assets will be protected from your individual creditors, you will avoid probate, and you can provide for estate tax planning at the same time. If you have creditor protection concerns, you should consider a Qualified Spousal Trust. This may entail an update of your entire estate plan, but the potential benefits can be enormous.

Related Post: What is a Revocable Trust in Missouri? Our Estate Planning Attorneys Explain

Call Checkett, Pauly, Bay & Morgan in Carthage, MO

The lawyers at Checkett, Pauly, Bay & Morgan can answer your additional questions about asset protection and Qualified Spousal Trusts in Missouri. Contact us today online or by calling (417) 358-4049.

Prenuptial Agreements- When are They Needed?

We all want to protect our families and assets, and one way to do that is to sign a prenuptial agreement before getting married. 

The lawyers at Checkett, Pauly, Bay, and Morgan explain what a prenuptial agreement is and who can benefit from them.

What is a prenuptial agreement?

Antenuptial Agreements, or Prenuptial Agreements, are contracts parties enter into before marriage. More commonly called a prenup, these contracts list the assets belonging to each individual and who will retain the rights to those assets if the marriage ends.

In a marriage that ends without a prenup, the assets shared are divided equally between the two parties. If a person has substantial assets entering into a marriage, like inheritance, real estate, etc., a prenup can guarantee they will still keep those assets should the marriage end.

Why is a prenup important?

Without a prenup, a spouse has the right to nearly half of all marital assets in the case of a divorce. Also, upon the death of a spouse, the surviving spouse obtains very substantial rights under Missouri probate law. 

When a husband and wife have children from a prior marriage, the need for a prenup and the stakes involved grow substantially larger. Many contested probate cases involve children from prior marriages or children and a surviving spouse fighting over the deceased person's assets.

Who needs a prenup?

We are often asked when a client should have a prenup. At Checkett, Pauly, Bay & Morgan, we advise individuals entering into a second marriage, particularly if there are children—and especially if there are children and assets—to obtain a prenup.

Having a prenup going into the second marriage will keep spouses and their prior children from having disagreements over who should get certain assets should a divorce or death occur. 

Does a prenup have to occur before the marriage?

A postnuptial agreement is much like a prenuptial agreement but occurs after the two parties have already been married. It outlines the division of assets for each spouse should a future divorce occur.

Legal Representation in Southwest, Missouri

The lawyers at Checkett, Pauly, Bay, and Morgan can answer your additional questions about prenuptial agreements and how to draft one in Missouri. Contact us today online or by calling (417) 358-4049.

What Does a Personal Representative Do for Estate Planning?

One of the most intimidating things when dealing with death and the affiliated personal affairs is estate planning. There are so many legalities and intricate details to make sure every asset is accounted for and every line is signed, it can be nearly impossible to handle on your own. This is why attorneys like Checkett, Pauly, Bay and Morgan exist. To bridge the gap between the intimidating, but necessary, facets of estate planning and management. 

Selecting an Attorney

The selection of an attorney is crucial when it comes to such personal matters. Your lawyer will act as a personal representative in all negotiations and affairs. The personal representative of the estate (usually called the executor) is the person or organization designated to manage the estate of the deceased. 

As a trustee, the personal representative must liquidate and distribute the deceased’s estate as efficiently as possible in accordance with the instructions outlined in the deceased’s will and probate and/or the state’s probate law. This is usually (but not always) the place where the deceased lived when they died. Although the procedures vary from place to place, the approach is generally the same across the board. 

Duties of a Personal Representative

The main duty of the personal representative is to protect the inheritance, assets, and personal effects in a manner consistent with the wishes of the deceased. Although this may seem relatively simple, it is important to let the personal representative understand the responsibilities associated with the position. Failure to comply with the duties and responsibilities set by the deceased may lead to litigation against private representatives of real estate for failure to fulfill fiduciary duties.

 Generally speaking, personal representatives are responsible for opening real estate, collecting real estate assets, protecting real estate, preparing real estate inventory, paying various real estate expenses, valid claims against real estate (including debts and taxes), making claims against third parties on behalf of the real estate and ultimately assigning real estate to the appropriate beneficiaries.

Whether the personal representative was assigned by the individual prior to their passing or is appointed by a family member post-mortem, it’s crucial to choose someone with a good reputation who can be trusted. This individual will take charge of separating all assets of the deceased and delegating them accordingly. For most, this is the way their final wishes are carried out. To honor the individual and their intentions, choose an attorney you can trust as your personal representative. 

Estate Planning Attorneys at Checkett, Pauly, Bay & Morgan

Talk to the estate planning attorneys at Checkett, Pauly, Bay & Morgan, LLC, about some tips for planning your estate. Contact our law firm online or call (417) 358-4049 for more information.

What Is a Revocable Trust in Missouri? Our Estate Planning Attorneys Explain

Having a trust as part of your estate plan is one of the most effective ways to avoid delays in probate court after you pass away. Trusts are called many things, such as a living trust, revocable trust, or revocable living trust. In today’s blog from the estate planning attorneys at Checkett, Pauly, Bay & Morgan we answer the question, “What is a revocable trust?”

Related Post: Asset Protection in Estate Planning

The Definition of a Revocable Trust

A revocable living trust is so named because you set it up and manage it during your lifetime. It’s revocable because you can change the terms of the trust at any time. A will dispurses your assets after you die, but a trust occurs before that. You have many estate planning options, and a revocable living trust is one viable choice that gives you control over who receives your assets. The key to avoiding probate altogether is to fund the trust.

The Flexibility to Manage Assets

If you want flexibility when managing your assets, a revocable living trust offers one of the best solutions. You can name anyone as your personal representative, or the executor of the trust, so long as they are over the age of 18 and judged to be of sound mind. The personal representative has the authority to manage your assets at your direction. This includes getting documents signed properly, selling property, and dispersing money from bank accounts in whatever increments you see fit.  

The Trust Agreement

Estate planning, including revocable trusts, involves three parties: The owner of the assets (you), the personal representative, and the beneficiaries who receive the assets. Your personal representative is the person who has the authority to give your assets away at your instructions. The beneficiaries are usually your family members, but they could also be organizations. 

You have the sole authority to amend, restate, or revoke the trust at any time while you’re alive. As a trustor, you can set time frames for giving your property away, such as when someone turns a certain age or only after the trust has been in place for a certain amount of time. It’s your estate, and the estate planning attorneys at Checkett, Pauly, Bay & Morgan, LLC can help you determine the best way forward.

Who needs revocable trusts?

One of the most prevalent myths about revocable trusts in Missouri is that they’re only for the rich. This is absolutely not the case.  Properly funded family trusts are the one sure way to avoid probate. A house filled with furniture and family heirlooms you want to leave to your grown children is more than worthy of a revocable trust. Consider the house’s monetary value at hundreds of thousands of dollars and the sentimental value of what’s inside of it.

Estate Planning at Checkett, Pauly, Bay & Morgan, LLC

Every person’s estate plan is different. The experienced estate planning attorneys at Checkett, Pauly, Bay & Morgan can discuss your options based on your unique situation. Contact Checkett, Pauly, Bay & Morgan or call (417) 358-4049 for more information. The first consultation is always free.