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Hello Jim: Recently, my wife and I began the process of redoing our wills, mainly because our three children are well into adulthood. In speaking with a lawyer, we learned about transfer-on-death and pay-on-death provisions. Seems like a good option for us. The designations are much less expensive than setting up a trust and make probate go more smoothly. So, please take this as a suggestion for a future article. — J.M., St. Peters

Suggestion taken. Probate is awfully expensive and can stretch out for years. Your heirs may curse your departed soul if you put them through it.

Transfer- and pay-on-death provisions can help avoid probate. “They do make sense for some people,” says Mary Elizabeth Coleman, estate attorney with TuckerAllen in St. Louis County.

But there are pitfalls to watch out for, she notes. Many people — especially those complicated families or ones with lots of assets — would be better off with a revocable trust to sidestep probate.

You can use pay-on-death and transfer-on-death provisions to pass on houses (in Missouri and Illinois), cars, bank and investment accounts and the like — things with ownership documents. They won’t work for the cash Grandma stuffed in the mattress, jewelry, furniture, or the cat and canary.

For those — and to avoid other big problems — you still need a will.

When the last owner of the property dies, property with POD or TOD designations pass right to the beneficiaries without probate.

That’s really great for the heirs and lousy for lawyers. In Missouri, there’s a sliding scale for attorney fees in probate. The lawyer fee alone will run at least $11,550 on a $400,000 estate, not counting court fees and a cut for the executor. Those can double the cost. The more you leave behind, the more your heirs will pay in probate expenses.

If the family gets along well, the executor (usually a family member) may simply divvy up the furniture, cash, cats and canaries among the heirs without even filing for probate. It helps if the departed put a list in the will saying who gets what. The least-favorite kid gets the cat.

Owners can usually set POD or TOD provisions on bank accounts and investments by filling out a form. Setting them on a car requires a title application, and a house requires recording a transfer-on-death or “beneficiary” deed. Retirement accounts usually ask you to name a beneficiary, who gets the money when you’re gone.

Now for the complications. Suppose you have four kids, and you name them all on the beneficiary deed to your house. “You end up with a house with four owners and no one in charge,” says estate attorney Kathleen Bilderback of Affinity Law Group in Des Peres. “When Johnny decides he’s not going to pay his share of the real estate taxes, that’s a problem.”

A big family argument can end up as an expensive court case.

Suppose you want to pass on everything to your adult son and adult daughter. Now, heaven forbid, suppose your daughter should die before you do.

With a pay or transfer on death clause, the property all goes to your surviving son. In effect, your daughter’s own children will be cut out of the inheritance, Coleman notes.

Transfer- and pay-on-death provisions also won’t work well for minor children. They need a conservator to hold their property until they are 18.

Do you really want a teen on his 18th birthday to get control of everything you own? Think of the party he’ll throw, and the sleazy people who will hear about his good fortune.

So, the POD and TOD options work best for simple family situations — a married couple with only one adult child, no minor children involved, and not a whole lot of wealth.

It’s not a set-it-and-forget-it solution. You have to refile things as people die, kids and grandkids are born, cars are bought. “You have to be ever vigilant,” Coleman says.

Revocable trusts are another way to avoid probate. “A trust is better for someone with minor children or any significant wealth,” Coleman says. “It minimizes risk of unintended consequences.”

Title all your property into the trust, and it passes to your heirs in the way you want without a trip to the courthouse. You still own the assets while you’re alive.

You get more control over how it’s handled after you are gone. For instance, you can arrange it so that your goofy 18-year-old doesn’t get your money all at once.

A “special needs” trust can be set up for heirs who are disabled or otherwise can’t care for themselves, notes Bilderback. The trust is set up to fill the gaps in government care and disability programs.

People with trusts still need wills. They cover stuff that the trust may skip.

Revocable trusts are more expensive than a will and POD and TOD provisions. Setting one up, along with a will and powers of attorney, will run $1,500 to well over $3,000 around St. Louis. That’s still cheaper than probate. You might get a will and help with transfer-on-death provisions for about $500, says Bilderback.

Don’t die without a will. Do that and the courts will divide your money according to a formula — and you may not like it.

Here’s how that works: Accounts titled in joint name pass to the other party. If your son is on your checking account, he gets the money. Ditto with pay-on-death and transfer-on-death accounts. Retirement accounts and insurance payments go to the named beneficiary.

In Missouri, your spouse gets the first $20,000 of your remaining assets, plus half the rest; the remainder goes to your children equally. In Illinois, the spouse gets half the estate, with the rest to the kids. That dividing up is done in probate court, which is costly.

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