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

Presenters: Marsha Goetting Joel Schumacher Extension Economics Specialists Extension Economics Specialists Department of Agricultural Economics & Economics Department of Agricultural Economics & Economics 3

Sponsors 4 This program is made possible by a grant from the FINRA Investor Education Foundation through a partnership with United Way Worldwide.

5 Solid Finances Web site solidfinances

6 Probate in Montana

77 What is probate? Process of settling the estate to be sure – Property is transferred to appropriate heirs – Debts paid – Taxes paid

88 Non Probate Joint Tenancy with right of Survivorship Contractual Arrangements –Assets in pension plan

99 What would be the maximum dollar ($$$$) Montana law allows to an attorney to settle $200,000 estate? –CDs –Mutual Funds –House

10 1.$65,300 2.$45,800 3.$25,600 4.$15,500 5.$10,900 6.$ 6,600 Question A: Attorney maximum settle $200,000 estate

11 Cost of probate Montana Statutory limits for personal representative 2% of first $40,000 3% in excess of $40,000

12 Cost of probate Montana Statutory limits for attorney 1 ½ times amount that was allowable to the personal representative

13 Cost of probate $200,000 estate Personal representative $4,400 Attorney $6,600 TOTAL = $11,000

14 Hourly Fee Basis Based on time involved in settlement of estate Ask attorney about method used

15 Probate Forms Informal Probate –With will packet –Without will packet

16 Montana Probate Forms State Law Library library/topic/end_life. mcpx

17 Cost of probate $2 million estate Personal representative $39,200 Attorney $59,250 TOTAL = $98,450

18 Contract: Life Insurance Bill Vere

19 Beneficiary Bill has $100,000 life insurance policy Designates Vere as his primary beneficiary

20 Bill Writes Will “I bequest all life insurance proceeds to my son, Chris Shelton.”

21 Question B: Who gets $100,000? 1. Vere? Designated beneficiary 2. Chris? Devisee in will that was written more recently

22 $100,000 Life Insurance Proceeds Vere Why? – Contract – Vere is designated beneficiary on form

23 Changed situation Bill & Vere are divorced Bill Vere

24 Beneficiary Bill has $100,000 life insurance policy Vere, his former wife is still his primary beneficiary

25 Bill has remarried Bill & Vere had 3 children Bill is now married to Mary

26 Who gets $100,000? Vere - Former wife Mary - Present wife Kids of Bill & Vere’s State of Montana…no will

27 Question C: Who gets $100,000? 1. Vere 2. Mary 3. Kids 4. Montana

28 $100,000 Life Insurance Proceeds Kids Why? –Montana code: –Revokes any revocable disposition to a former spouse that was executed before the divorce

29 Retirement Plan Beneficiary Designations IRAs 401 k 403 b 457

30 Life Insurance, Retirement Plan Benefits Do not go through probate –Pass directly to beneficiary

31 1. Yes 2. No Question D: Have you added a POD or TOD to your financial accounts?

32 Payable on Death Designation (POD) Accounts at financial institutions –Savings Accounts –Certificates of Deposit –Checking Accounts

33 Payable on Death Designation (POD) At death ownership passes to POD beneficiaries No Probate

34 Payable on Death Designation (POD) Sole Ownership of account –Marsha A. Goetting POD Debbie Buczinski and Donna Chamberlain, equally

35 Joint Tenancy & POD Wording on account –Barb Miller & Jack Miller joint tenants with right of survivorship POD Charles Miller and Kathy Miller, equally

Beneficiary Designation POD POD Payable on Death designation allowed on MSA Payable on Death designation allowed on MSA 36

37 Transfers on Death (TOD) Registration No probate – Stocks, publicly traded – Bonds – Mutual Funds

38 Transfers on Death (TOD) Registration Transfers ownership of stocks, bonds, mutual funds to heirs –They determine whether to sell or keep

39 1. Yes 2. No Question E: Now that you know about PODs & TODs will you utilize these estate planning tools?

40 1. Yes 2. No 3. Don’t have real property Question F: Have you filed a Montana beneficiary deed on your real property?

41 Real Property Transfer Montana Beneficiary Deed

42 What is a Beneficiary Deed? A way to convey real property to one or more grantee beneficiaries upon death without the cost of probate

43 What is a Grantee Beneficiary ? Party to whom an owner grants interest in Montana real property

44 Grantee Beneficiary Rights ? NONE Effective only upon death of owner – Can’t use for collateral – Can’t sell – Is not owner

45 Beneficiary Deed Recorded Before death of owner  Clerk and Recorder  Montana county where property is located

46 Who can be a grantee beneficiary? Spouse Children Relatives Friends Corporation

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

48 What happens if grantee beneficiary dies before owner?

49 Owner options Specify a successor beneficiary

50 Mark files & records Mark (Dad) Owner Evan (Son) Grantee Beneficiary Luke Successor Beneficiary

Mark (Dad) Owner Evan (Son) Grantee Beneficiary Luke Successor Beneficiary 51 Evan Successor

Mark (Dad) Owner Evan (Son) Grantee Beneficiary Luke Successor Beneficiary 52 Charity as Successor

53 What about Beneficiary Deed if you already have a will?

Example: Father files deed naming daughter as grantee beneficiary Gary (Father) Owner Linda (Daughter) Grantee Beneficiary

55 Linda (Daughter) Grantee Beneficiary Gary later wrote a will leaving property to his son Matt Gary (Father) Owner Matt (Son) Named in will

56 Question G: Who gets property when Gary dies? 1.Linda (Grantee Beneficiary) 2.Matt (named in the will that was written later)

57 Linda (Daughter) Grantee Beneficiary ALL Gary (Father) Owner Matt (son) 0 Grantee Beneficiary receives property (Contractual)

58 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

59 Grantee Beneficiary: Joint Tenancy Patricia Owner Fay JT Grantee Beneficiary Ellen JT Grantee Beneficiary

60 Fay JT Grantee Beneficiary Ellen JT Grantee Beneficiary Title to be held by beneficiary grantees as Joint Tenants with Right of Survivorship Patricia Owner

61 Fay dies before Patricia Fay Grantee Beneficiary Ellen Grantee Beneficiary Patricia Owner Fay’s kid Who Gets Fay’s share?

62 Question H: Who gets property? 1.Fay’s child 2.Ellen (sister) 3.State of Montana, no will

63 Fay heirs don’t inherit Fay Grantee Beneficiary Ellen Grantee Beneficiary Patricia Owner Fay’s kid=0

64 Fay & Ellen die Fay & Ellen die before Patricia Fay JT Grantee Beneficiary ??????????????? Ellen JT Grantee Beneficiary Patricia Owner

65 Fay & Ellen die before Patricia Fay JT Grantee Beneficiary Montana 4-H Foundation Successor Beneficiary Ellen JT Grantee Beneficiary Patricia Owner

66 Grantee Beneficiary Tenants in Common Edna Owner Wendy TC Grantee Beneficiary Patsy TC Grantee Beneficiary

67 Wendy TC Grantee Beneficiary ½ interest Patsy TC Grantee Beneficiary ½ interest Edna Owner Edna specifies title to grantee beneficiaries as Tenants in Common

68 Wendy TC Grantee Beneficiary Patsy TC Grantee Beneficiary ½ interest Edna Owner Edna specifies title to grantee beneficiaries as Tenants in Common Wendy’s kid = 1/2

69 Patsy ½ interest TC Grantee Beneficiary Wendy dies before Edna Wendy TC Grantee Beneficiary ????????? Edna Owner

70 Patsy ½ interest TC Grantee Beneficiary Wendy dies before Edna Wendy TC Grantee Beneficiary MSU Foundation ½ interest TC Successor Beneficiary Edna Owner

71 Patsy & Wendy die before Edna Wendy TC Grantee Beneficiary MSU Foundation Successor Beneficiary Patsy TC Grantee Beneficiary Edna Owner

72 Filing more than one deed John files beneficiary deeds: 2011 & 2015 – On same land – Names a different beneficiary in 2015

73 Question I: Which deed is effective on the same property? 1. June 25, 2011 Grantee: Susan Smith 2. Mar. 25, 2015 Grantee: Lucy Anderson

74 Subsequent Deeds If more than one beneficiary deed on same property recorded  Latest one  Controlling document Beneficiary Deeds

75 Retitle the Property Notarized affidavit certifying death of the owner:  Signed by the grantee beneficiary or beneficiaries

76 Montana Beneficiary Deed Questions????

77 Beneficiary Designations MT HR

78 Designation One Beneficiary –Name & relationship –Amanda J. Smith, Mother

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

80 One primary beneficiary & one contingent beneficiary

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

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

83 4 Brothers Beneficiaries

84 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.

85 Right of Representation

86 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.

87 Named Beneficiaries

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

89 Survivors : 3 children

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

91 Survivors : One child & grandchildren

92 Estate as Beneficiary My Estate –Passes by Montana Intestacy Statutes

93 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

Evaluation Usefulness Sound Quality Knowledge gain Pace

95 Opinion Length Quality of Visuals Polls

96 Best wishes as you proceed with your estate planning Marsha