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Estate Planning Tools & Tips: Avoiding Probate with Beneficiary Deeds, PODs, TODs, and other Beneficiary Designations April 19, 2012. 2. 2. Presenters: Marsha Goetting Joel Schumacher. Extension Economics Specialists Department of Agricultural Economics & Economics. 3. Sponsors.

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Estate Planning Tools & Tips: Avoiding Probate with Beneficiary Deeds, PODs, TODs, and other Beneficiary DesignationsApril 19, 2012

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presenters marsha goetting joel schumacher

Presenters:Marsha GoettingJoel Schumacher

Extension Economics Specialists

Department of Agricultural Economics & Economics

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solid finances web site

Solid FinancesWeb site

www.msuextension.org/solidfinances

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what is probate
What is probate?

Process of settling the estate to be sure

Property is transferred to appropriate heirs

Debts paid

Taxes paid

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non probate
Non Probate

Joint Tenancy with right of Survivorship

Contractual Arrangements

Assets in pension plan

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what would be the maximum dollar montana law allows to an attorney to settle 200 000 estate
What would be the maximum dollar ($$$$) Montana law allows to an attorney to settle $200,000 estate?

CDs

Mutual Funds

House

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Question A: Attorney maximum settle $200,000 estate
  • $65,300
  • $45,800
  • $25,600
  • $15,500
  • $10,900
  • $ 6,600

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cost of probate montana
Cost of probate Montana

Statutory limits for personal representative

2% of first $40,000

3% in excess of $40,000

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cost of probate montana1
Cost of probate Montana

Statutory limits for attorney

1 ½ times amount that was allowable to the personal representative

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cost of probate 200 000 estate
Cost of probate$200,000 estate

Personal representative

$4,400

Attorney

$6,600

TOTAL = $11,000

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hourly fee basis
Hourly Fee Basis

Based on time involved in settlement of estate

Ask attorney about method used

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probate forms
Probate Forms

Informal Probate

With will packet

Without will packet

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montana probate forms
Montana Probate Forms

State Law Library

http://courts.mt.gov/ library/topic/end_life. mcpx

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cost of probate 2 million estate
Cost of probate$2 million estate

Personal representative

$39,200

Attorney

$59,250

TOTAL = $98,450

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beneficiary
Beneficiary

Bill has $100,000 life insurance policy

Designates Vere as his primary beneficiary

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bill writes will
Bill Writes Will

“I bequest all life insurance proceeds to my son, Chris Shelton.”

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Question B: Who gets $100,000?

1. Vere?Designated beneficiary

2. Chris?

Devisee in will that was written more recently

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100 000 life insurance proceeds
$100,000 Life Insurance Proceeds

Vere

Why?

Contract

Vere is designated beneficiary on form

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beneficiary1
Beneficiary

Bill has $100,000 life insurance policy

Vere, his former wife is still his primary beneficiary

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bill has remarried
Bill has remarried

Bill & Vere had 3 children

Bill is now married to Mary

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who gets 100 000
Who gets $100,000?

Vere - Former wife

Mary - Present wife

Kids of Bill & Vere’s

State of Montana…no will

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Question C: Who gets $100,000?
  • Vere
  • Mary
  • Kids
  • Montana

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100 000 life insurance proceeds1
$100,000 Life Insurance Proceeds

Kids

Why?

Montana code: 72-2-814

Revokes any revocable disposition to a former spouse that was executed before the divorce

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life insurance retirement plan benefits
Life Insurance, Retirement Plan Benefits

Do not go through probate

Pass directly to beneficiary

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payable on death designation pod
Payable on Death Designation (POD)

Accounts at financial institutions

Savings Accounts

Certificates of Deposit

Checking Accounts

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payable on death designation pod1
Payable on Death Designation (POD)

At death ownership passes to POD beneficiaries

No Probate

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payable on death designation pod2
Payable on Death Designation (POD)

Sole Ownership of account

Marsha A. Goetting

POD Debbie Buczinski and Donna Chamberlain, equally

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joint tenancy pod
Joint Tenancy & POD

Wording on account

Barb Miller & Jack Miller joint tenants with right of survivorship

POD Charles Miller and Kathy Miller, equally

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beneficiary designation

Beneficiary Designation

POD

Payable on Death designation allowed on MSA

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transfers on death tod registration
Transfers on Death (TOD) Registration

No probate

Stocks, publicly traded

Bonds

Mutual Funds

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transfers on death tod registration1
Transfers on Death (TOD) Registration

Transfers ownership of stocks, bonds, mutual funds to heirs

They determine whether to sell or keep

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Question E: Now that you know about PODs & TODs will you utilize these estate planning tools?
  • Yes
  • No

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Question F: Have you filed a Montana beneficiary deed on your real property?
  • Yes
  • No
  • Don’t have real property

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what is a beneficiary deed
What is a Beneficiary Deed?

A way to convey real property to one or more grantee beneficiaries upon death without the cost of probate

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what is a grantee beneficiary
What is a Grantee Beneficiary?

Party to whom an owner grants interest in Montana real property

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grantee beneficiary rights
Grantee Beneficiary Rights?

NONE

Effective only upon death of owner

Can’t use for collateral

Can’t sell

Is not owner

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beneficiary deed recorded
Beneficiary DeedRecorded

Before death of owner

Clerk and Recorder

Montana county where property is located

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who can be a grantee beneficiary
Who can be a grantee beneficiary?

Spouse

Children

Relatives

Friends

Corporation

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who can be a grantee beneficiary1
Who can be a grantee beneficiary?
  • Charitable Organizations
    • Government Agencies
    • MSU Extension
    • Montana State University

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owner options
Owner options

Specify a successor beneficiary

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example father files deed naming daughter as grantee beneficiary
Example: Father files deed naming daughter as grantee beneficiary

Gary (Father)

Owner

Linda

(Daughter)

Grantee Beneficiary

gary later wrote a will leaving property to his son matt
Gary later wrote a will leaving property to his son Matt

Matt (Son)

Named in will

Gary (Father)

Owner

Linda

(Daughter)

Grantee Beneficiary

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Question G:Who gets property when Gary dies?
  • Linda(Grantee Beneficiary)
  • Matt(named in the will that was written later)

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grantee beneficiary receives property contractual
Grantee Beneficiary receives property (Contractual)

Gary (Father)

Owner

Matt (son)

0

Linda

(Daughter)

Grantee BeneficiaryALL

can there be more than one grantee beneficiary
Can there be more than one grantee beneficiary?

Yes, owner should:

Specify form of ownership after death:

Joint tenants with right of survivorship

Tenants in common

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grantee beneficiary joint tenancy
Grantee Beneficiary: Joint Tenancy

Patricia

Owner

Fay

JT Grantee

Beneficiary

Ellen

JT Grantee

Beneficiary

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title to be held by beneficiary grantees as joint tenants with right of survivorship
Title to be held by beneficiary grantees as Joint Tenants with Right of Survivorship

Patricia

Owner

Fay

JT Grantee

Beneficiary

Ellen

JT Grantee

Beneficiary

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fay dies before patricia
Fay dies before Patricia

Patricia

Owner

Who Gets

Fay’s share?

Fay

Grantee

Beneficiary

Ellen

Grantee

Beneficiary

Fay’s kid

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Question H: Who gets property?
  • Fay’s child
  • Ellen (sister)
  • State of Montana, no will

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fay heirs don t inherit
Fay heirs don’t inherit

Patricia

Owner

Fay

Grantee

Beneficiary

Ellen

Grantee

Beneficiary

Fay’s kid=0

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fay ellen die before patricia
Fay & Ellen die beforePatricia

Patricia

Owner

Fay

JT Grantee

Beneficiary

Ellen

JT Grantee

Beneficiary

???????????????

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fay ellen die before patricia1
Fay & Ellen die before Patricia

Patricia

Owner

Fay

JT Grantee

Beneficiary

Ellen

JT Grantee

Beneficiary

Montana 4-H Foundation

Successor Beneficiary

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grantee beneficiary tenants in common
Grantee Beneficiary Tenants in Common

Edna

Owner

Wendy

TC Grantee

Beneficiary

Patsy

TC Grantee

Beneficiary

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edna specifies title to grantee beneficiaries as tenants in common
Edna specifies title to grantee beneficiaries as Tenants in Common

Edna

Owner

Wendy

TC GranteeBeneficiary

½ interest

Patsy

TC GranteeBeneficiary

½ interest

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edna specifies title to grantee beneficiaries as tenants in common1
Edna specifies title to grantee beneficiaries as Tenants in Common

Edna

Owner

Wendy

TC GranteeBeneficiary

Patsy

TC GranteeBeneficiary

½ interest

Wendy’s kid = 1/2

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wendy dies before edna
Wendy dies before Edna

Edna

Owner

Wendy

TC GranteeBeneficiary

Patsy

½ interest

TC GranteeBeneficiary

?????????

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wendy dies before edna1
Wendy dies before Edna

Edna

Owner

Wendy

TC GranteeBeneficiary

Patsy

½ interest

TC GranteeBeneficiary

MSU Foundation½ interest

TC Successor Beneficiary

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patsy wendy die before edna
Patsy & Wendy die before Edna

Edna

Owner

Wendy

TC GranteeBeneficiary

Patsy

TC GranteeBeneficiary

MSU FoundationSuccessor Beneficiary

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filing more than one deed
Filing more than one deed

John files beneficiary deeds: 2011 & 2015

On same land

Names a different beneficiary in 2015

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Question I: Which deed is effective on the same property?
  • June 25, 2011 Grantee: Susan Smith
  • Mar. 25, 2015 Grantee: Lucy Anderson

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subsequent deeds
Subsequent Deeds

If more than one beneficiary deed on same property recorded

Latest one

Controlling document

Beneficiary

Deeds

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retitle the property
Retitle the Property
  • Notarized affidavit certifying death of the owner:
      • Signed by the grantee beneficiary or beneficiaries

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designation
Designation

One Beneficiary

Name & relationship

Amanda J. Smith, Mother

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equal beneficiaries
Equal Beneficiaries

John R. Smith, husband, and Derry A. Smith, son; equally

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wording
Wording

John R. Smith, husband, if living; otherwise, Derry A. Smith, son

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3 beneficiaries
3 + Beneficiaries

Jerry B. Smith, Robert P. Smith, William A. Smith, & Gary A. Smith, brothers - equally

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However, if either one predeceases me, that beneficiary’s children living at my death shall take equally the share that their deceased parent would have taken if he or she survived me.

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wording1

Wording

If any of these named beneficiaries is not living at my death, then his or her share shall be divided equally by those named beneficiaries who survive me.

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wording2
Wording

To my children, Donna K. Chamberlain, Marsha A. Goetting & Debbie R. Buczinski, equally

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wording3
Wording

To my children, Donna K. Chamberlain, Marsha A. Goetting & Debbie R. Buczinski, equally or by representation if any of my children predecease me

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estate as beneficiary
Estate as Beneficiary

My Estate

Passes by Montana Intestacy Statutes

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trust as beneficiary
Trust as beneficiary

Barb Miller, trustee, of the Barb Miller Family Trust, her successor or successors in trust, under a trust agreement executed by Barb Miller on May 6, 2011, as amended

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Evaluation
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Opinion
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  • Polls

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