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Major Probate Revisions On Bar Committee Agenda

MO Lawyers Media Staff//May 2, 1994//

Major Probate Revisions On Bar Committee Agenda

MO Lawyers Media Staff//May 2, 1994//

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Major revisions to the Probate Code and the Nonprobate Transfers Law will be on the table this week when the Probate and Trust Committee of the Missouri Bar holds its spring meeting at the Capitol Plaza Hotel in Jefferson City.

The Probate Code was hurriedly amended in 1989 in response to a decision by the U.S. Supreme Court which declared statutory provisions similar to Missouri’s claims statute unconstitutional. Now changes are proposed, to eliminate inconsistencies in the existing statutes of limitations which deal with having a will admitted to probate, commencing administration of an estate, and the filing of enforceable claims.

The Nonprobate Transfers Law Subcommittee proposes numerous changes to simplify the language of the Nonprobate Transfers Law by eliminating “laundry lists” and by tightening definitions to avoid repetition and confusion.

Valarie Zeeck, chair of the Probate and Trust Committee urged interested attorneys to attend the committee’s meeting and be prepared to vote on the two proposals. If approved, the proposals will be presented to the Bar’s Board of Governors for its endorsement, so legislation can be introduced in the 1995 General Assembly.

Probate Code

The Probate Code Subcommittee has been working on proposed changes to the code since shortly after the 1989 amendment was enacted, according to subcommittee chair Kathy Sherby, of St. Louis. “The amendment was done so quickly, it left some gaps and holes,” she said. “This is an attempt to make those sections work together.”

Seventeen sections of the Probate Code will be affected if the subcommittee’s proposals are all enacted.

Creditors’ Rights

Under Section 473.020 RSMo, the creditors of a deceased person may file a petition to require administration. But doing so can be difficult, because the creditors often do not possess all of the information which must be included in the petition.

Proposed changes would eliminate the burden of providing information that is not available to the creditor, and would make it clear the creditor need not apply for admission of a will to probate. The creditor would only have to provide such information as is available to it.

“The purpose of the proposed changes,” according to the subcommittee’s comment, “is to facilitate the opening of an estate by a creditor, so that it is economically feasible for a creditor to utilize this process even if the claim amount is only a modest amount.

Nonclaim Period

Claims not filed against an estate within six months after first publication of notice are “forever barred,” according to Section 473.360 RSMo. But the personal representative currently has no statutory authority to give actual notice to a creditor to foreclose the claim after the six-month period.

The subcommittee proposes to change Section 473.033 RSMo to give the personal representative the option of sending actual notice to a creditor. To prevent personal representatives from waiting until the last minute to give such notice, and to be fair to the creditor, the subcommittee’s proposal would allow creditors to file claims for a minimum of two months after receiving actual notice of the administration of the estate.

Section 473.444 RSMo, enacted in 1989, bars many claims against the estate of a deceased, if the claim is not filed within one year after death. The subcommittee proposes to revise the statute by authorizing creditors to file claims with the probate division even before an estate is opened, so long as the claims do not exceed $20,000.

The purpose of the proposed change is to enable creditors to preserve their claims in the most economical method possible. The $20,000 limit on use of the procedure is designed to limit the burden imposed on the court and its staff.

Rules Of Descent

Current law provides, in Section 473.010, RSMo, that the surviving spouse of a person who dies intestate does not receive the entire estate unless there are no surviving issue or parents of the decedent. The subcommittee believed many childless young couples are shocked to learn that the surviving spouse would have to share an estate with parents and siblings of the deceased. The proposed changes would amend the law so assets would pass only to the surviving spouse.

Family Allowance Rules

The subcommittee’s proposed legislation would change the homestead allowance from $7,500 to $15,000.

However, the proposal might reduce the amount of the family support allowance in some cases. If the surviving spouse or children are independently wealthy, or are adequately supported from another source, a support allowance would not be authorized. But children over 18 years old who are dependent on the decedent, such as college students, might receive a portion of the family allowance if the statute is revised as proposed.

Other Changes

The subcommittee has also proposed changes to eleven other sections of the Probate Code. “The purpose of these changes is to make the various statutes of limitations consistent,” said Sherby. “The changes pertain to limitations on admitting a will, admission of a will in conjunction with a will contest, use of a determination of heirship proceeding, dealing with form wills, dealing with small estates, and whether you can do a refusal of letters after the expiration of one year.

Nonprobate Transfers Law

Currently, the Missouri Nonprobate Transfers Law (Chapter 461 RSMo) comprises 27 sections. The revisions of the law proposed by the Nonprobate Transfers Law Subcommittee would affect 18 of those sections, and would add seven new sections.

“The purposes of the revisions are clarification, simplification and cleaning up some loose ends,” said Clayton attorney Andrea Jackson, who served as recorder for the subcommittee. “The main thing we were trying to accomplish was making the law easier to understand and easier to work with,” she said.

“There are a few changes in the terminology, the most important being changing ‘transferor’ to ‘transferring entity.’ The most significant substantive changes have to do with the creditors’ rights section.

Creditors’ Rights

The rights of creditors, where the decedent’s probate estate is insufficient for payment of claims, are now covered by Section 461.071 RSMo. The subcommittee proposes that the statute be renumbered as Section 461.300, since it applies to transfers which are not “nonprobate transfers” as defined in the law, and that it be substantially revised.

Currently, only the decedent’s personal representative may enforce the creditors’ right to compel an accounting by decedent’s beneficiaries. If that person is friendly to the beneficiaries, he might refuse to bring the action. Under the subcommittee’s proposal, creditors would be able to force such proceedings for an accounting; but the statute of limitations for doing so would be reduced from two years to 18 months.

The revised statute would clarify what sort of property is subject to it: property that the creditor could have reached during the lifetime of the deceased – but only to the extent of the decedent’s contribution to the property.

The new Section 461.300 could not be used solely for the purpose of paying administration expenses. It also could not be used to collect money from beneficiaries for payment of estate taxes, unless the personal representative is required to pay those taxes before paying a claim that has a lower level of priority.

In proceedings under this new section brought by the personal representative, the court could order that both costs and attorney fees be included in the judgment. In proceedings brought by creditors, costs could be included, but attorney fees could not.

Default Provisions

Under current law, if the person designated as the beneficiary of a nonprobate transfer dies before the owner dies, the property passes on the death of the owner to the lineal descendants of the beneficiary, per stirpes. Under the subcommittee’s proposal, the property would go instead to a contingent beneficiary, unless the primary beneficiary is a lineal descendant of the owner.

The disclaimer statute, Section 461.048, would also be revised “to make it easier for people to do what they want to do,” according to Jackson. If the change is enacted, the owner making the nonprobate transfer could specify what would happen in the event the beneficiary disclaims, instead of being treated as predeceased.

Section 461.051 provides that a nonprobate transfer to one’s spouse is revoked if the parties later divorce. The new provision would treat annulment in the same manner. It would also provide that in-laws named as beneficiaries are treated as having disclaimed the provision if there is a divorce.

Under present law, if a nonprobate transfer is procured by fraud or undue influence, the disqualified beneficiary’s share goes to the owner’s surviving spouse and children. The new provisions would simply void such transfers. They would also provide that where a beneficiary causes the death of the owner, the beneficiary designation is treated as if the beneficiary had disclaimed.

The subcommittee’s proposal would also change the treatment of afterborn children, by providing that they would receive only a fractional share of the property, proportionate to the number of children.

Third Party Transfers

The subcommittee suggests enactment of a new statute, Section 461.027, to make it clear that third parties could convey property directly to the owner with a beneficiary designation, and the owner would retain the right to revoke or change the designation. This would eliminate the need to prepare and record two deeds, the first to the owner and the second to the owner with a beneficiary designation.

Assignments Of Rights

Under the subcommittee’s proposal, Section 461.023 would be changed so that an owner wishing to transfer his rights under a promissory note or other contract would not have to deliver the assignment to the obligor. All that would be required is execution of the assignment in proper form, with acknowledgment.

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