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Ultimate Guide to Trusts in Missouri
In estate planning, a trust can be immensely useful if you wish to specify how your estate should be managed without the involvement of the probate court. Here’s what you need to know about trusts, whether you need one, and how to set it up in Missouri. For legal advice tailor-suited to your situation, speak with one of our experienced estate planning lawyers.
What is a trust in estate planning?
A trust is a legal arrangement that specifies how your assets should be managed and distributed without involving the probate court. In this arrangement, you appoint a trustee to manage your assets on behalf of your beneficiaries, in accordance with the terms of your trust document. This flexible estate planning tool can take effect within your lifetime, after your death, or in the event of your incapacitation.
How do trusts work in Missouri?
Like in any other state, a trust in Missouri works by letting a trustee hold and manage your assets according to your terms. However, you don’t simply give your assets directly to the trustee. The trust itself is an artificial entity, similar to a corporation, where you place your assets and which your trustee manages. As the owner of the assets, you are called the trustor or grantor.
In managing the trust, the trustee has to follow the instructions in your trust document. You have much flexibility in crafting the document to suit your goals, such as if you have specific wishes on how to distribute your assets to your beneficiaries. (See our section below on the different types of trusts.)
What are the different types of trusts in Missouri?
Depending on your purpose in making the trust, you may choose from these various types of trusts in Missouri:
- Revocable living trust – A “living” trust means the trust is created during your lifetime, and “revocable” means you can change, revoke, or terminate it any time you want. Revocable living trusts are the most widely used because they allow trustors to change their minds about their asset management.
- Irrevocable living trust – This type of trust cannot be altered or terminated, not even by the grantor. One advantage of this is that assets placed in an irrevocable trust are generally excluded from the grantor’s taxable estate, resulting in tax savings. These assets may also be protected from creditors.
- Testamentary trust – In contrast to living trusts, a testamentary trust is established in the grantor’s will and thus only comes into being upon the grantor’s death. For example, you may provide in your Last Will that you want a trust to be set up for the welfare of your minor children in the event of your death.
- Special needs trust – Also called a supplemental needs trust, this is a sound option if your beneficiary has a disability and is receiving government aid. If they inherit money from you directly, they will likely become ineligible to receive government benefits. By creating a trust for them, you allow your assets to be used by or for them, without getting them disqualified for benefits.
- Charitable trust – This trust allows you to distribute assets to your beneficiaries while donating to a charitable organization. Typically, a charitable trust is an investment that generates income, such as a piece of land, for example. You can set it up so that your beneficiaries will receive their share for a number of years, after which the charity will receive the remaining assets. Alternatively, you can have the charity receive their benefits first then distribute the remainder to your beneficiaries.
- Other types of trusts – We have experience in Medicaid asset protection trusts, credit shelter trusts, life insurance trusts, generation-skipping trusts, and even pet trusts. Talk to us at Shea Kohl Law to see which type of trust is best for you and your beneficiaries.
What is the difference between a living trust and a will?
These are the two biggest differences between a trust and a will: One, a trust may let you avoid probate whereas a will requires it. Two, a trust may take effect while you are alive (depending on your terms), while a will only takes effect upon your death.
Probate is the court-supervised proceeding of authenticating your Last Will and distributing your estate. This process is often lengthy and contentious.
If you create a revocable living trust instead of a will, the trust does not have to go through probate. This is because you are not transferring your assets directly from your estate to your beneficiary. Your assets are technically owned by a separate entity (the trust) which is not part of your estate.
Is a trust better than a will in Missouri?
In certain scenarios, a trust may be preferable over a will. One of the main reasons to choose a trust is that it allows you to avoid probate (as we discussed above). Your beneficiaries will receive the assets without having to go through a long and complicated court procedure.
Many people also opt for a trust to get more flexibility and control than a will can provide. For example, if a parent wants to give their child portions of their inheritance at specific times (such as when the child turns 18 and then 21), they can specify these terms in the trust.
On the other hand, creating a will is often more straightforward than setting up a trust. This can be preferable for individuals who have non-complex assets and have simple plans for distributing those assets.
The suitability of a trust versus a will depends on your particular situation and goals. A consultation with an estate planning attorney can give you guidance on which estate planning tool is ideal for you.
What is the process for setting up a living trust in Missouri?
These are the general steps in creating a living trust in Missouri:
- Determine the type of trust for you. With your goals in mind, decide which type of trust would be the best vehicle to execute your vision. Discussing with a lawyer can be helpful in making sure your decision is strategic and legally sound.
- Decide which assets go into the trust. You’ll want to do an accounting of all your assets and figure out which ones you should put in the trust. Consider the implications of putting in various types of assets such as real estate, business interests, and insurance policies.
During this step, you should also compile all the documentation that proves the value of those assets and your ownership of them.
- Select your trustee. This is the person who will manage your trust. It’s wise to appoint someone you have confidence in and who is good at record-keeping. In a revocable trust, you can legally appoint yourself as the trustee, but you will need to name someone else as your successor trustee, in the event of your death or incapacitation.
- Create your trust document. This is where you’ll specify the terms in managing your trust. As this is a crucial document, you’ll want an attorney’s experienced guidance in crafting and wording the paper. When you are satisfied with it, you can sign it in front of a notary.
- Fund the trust. To move the assets into the trust, you will need to retitle them in the trust’s name. (We have sections below on how to put certain assets into your trust.) For this, you can get the assistance of your lawyer or financial advisor.
How much does a trust cost in Missouri?
Some estimates say the cost of setting up a trust in Missouri ranges from $600 to upwards of $3,000, depending on the complexity of the trust. Trust creators may be tempted to try the cheapest option using online software, but this does not provide the strategic and case-specific advice of an estate planning attorney. Such legal advice is crucial, particularly if you have sizable assets and a complex estate plan.
How do I put my house in a trust in Missouri?
To put your house or any other piece of real estate into your trust in Missouri, you will need to create a Missouri Deed in the trust’s name. A deed is a document stating the transfer of ownership. Have the deed notarized and submit it to the Recorder of Deeds in the county where the house is located. Once the deed is recorded, it is legally binding and your home will then be officially owned by the trust.
How do I put my car in a trust in Missouri?
Missouri allows you to transfer ownership of a motor vehicle to a trust, whether it’s a car, truck, water vessel, or other motorized vehicle. To make the transfer, submit these documents to the Missouri Motor Vehicle Bureau:
- Application for Missouri Title and License (Form 108) or application for Missouri Boat/Vessel or Outboard Motor Title and Registration (Form 93)
- Statement of Trust (Form 4441) or copy of trust agreement
- Assigned ownership document
- Lienholder authorization or lien release, if applicable.
Retitling your Missouri vehicle entails certain fees including a $6 processing fee and a vehicle titling fee of $5 to $8.50, depending on the type of vehicle.
How do I put personal property in a trust in Missouri?
Examples of personal property you can put in a trust include artworks, jewelry, furniture, and other valuable items. To put personal property into your Missouri trust, you’ll need to write a property schedule, which is a list of personal items being transferred to the trust’s name. This list should be attached to your trust document.
How do I put my savings in a trust in Missouri?
If you want to put financial assets such as your savings account, stock, or investments into your trust, you’ll need to check with the specific financial institution for the process. Each bank, corporation, or stock exchange institution has its own procedure.
Some banks, for example, will only need a copy of your Certificate of Trust and have you sign a few forms in order to transfer your savings account to your trust. Other banks require that you create a new account under the trust’s name, to which you will transfer your funds.
Are there assets that should not be put in a trust in Missouri?
Yes, there are types of assets that shouldn’t be included in a trust. An example are individual retirement accounts (IRAs) and 401(k) accounts. Transferring these to a trust could be interpreted as cashing out the account, triggering income taxes and potential penalties for early withdrawal.
Instead of transferring the retirement account, you may name your trust as a beneficiary of it. In your trust document, you can specify how you want the retirement funds to be divided among your actual beneficiaries.
Some people may wonder if they can ‘deposit’ cash directly into the trust. The answer is no, you can’t put cash directly in a trust, as this is an artificial entity that cannot hold physical money. What you can do is create a bank account to put the money in, then transfer that account to the name of your trust.
Can you put cryptocurrency in a trust in Missouri?
Yes, you can place your crypto assets in a Missouri trust, just like any other financial asset. In theory, all you may need to do is give your private crypto key to your trustee, as whoever has this key is typically considered the owner of the account. You’ll want to be extremely prudent, however, in ensuring that your trustee is able to manage crypto securely and according to your terms.
Placing your crypto in a trust is generally better than passing it on in a will. As a will goes through probate, information such as your passkey may have to be shared to parties such as the will’s executor. If you want to take steps to secure your crypto in your estate plan, don’t hesitate to talk to an estate planning attorney.
Contact an Estate Planning Attorney at Shea Kohl Law
With over 100 years of combined experience, the attorneys at Shea Kohl Law have been providing smart legal solutions to numerous clients in Missouri. We can help you determine the best trust for your specific purpose, craft a complete trust document, and set up your strategic trust using our in-depth experience. We’ll be there with you throughout the process, providing top-notch legal advice at every step.
Let’s start by talking about your plans and wishes. Call Shea Kohl Law at (636) 946-9999 today.
Call Shea Kohl Law, LC at (636) 946-9999
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Shea Kohl Law, LC serves clients in Missouri including St. Charles, Troy and Lincoln and throughout Warren and St. Louis counties. We also serve clients in Illinois.