Asset Protection Planning in Missouri

Rolled out earlier this month, the firm's new website is intended to outline our expertise in twelve separate areas of estate planning, including asset protection strategies, income tax planning for retirement benefits and IRAs, planning for business owners, and long-term care planning. Our new website accomplishes this goal by creating the following separate links which cover our twelve areas of concentration:

​Asset Protection Strategies

Charitable Planning

Long-Term Care Planning

Estate Planning

Estate, Gift and Income Tax Planning

Planning for Business Owners

Prenuptial and Postnuptial Agreements

Use of Life Insurance in Estate Planning

Tax Planning for IRAs and 401Ks

Trustee and Executor Representation

Trust Income Tax Planning

Tax Planning for Retirement Savings

Each month we will showcase one of these twelve areas of concentration in our client newsletter, with this month's edition being devoted to the first area, asset protection strategies.

As outlined in Jim's articles included in the immediately preceding link, Missouri laws are some of the most favorable in the country when it comes to asset protection planning, especially asset protection for married couples. And because protecting one's assets from lawsuits stands at the very forefront of estate planning, this factor can play a key role in estate planning for Missouri married couples.

The most recent positive asset protection development in Missouri occurred in August of 2024, when the state created a special category of asset protection for married couples who transfer title to their assets to a Missouri Qualified Spousal Trust while they are both living. Under this new rule, the special asset protection afforded married couples during their joint lifetime appears to now extend for the lifetime of the surviving spouse, to the extent the trust is funded during the couple's marriage, based upon this new language which was inserted into the Missouri statute:

"All property at any time held in a qualified spousal trust, without regard to how such property was titled prior to it being so held, . . . shall continue to be immune and exempt from attachment during the life of the surviving settlor to the extent the property was held in a qualified spousal trust prior to the death of the first settlor and remains in a qualified spousal trust.  This includes any property appreciation."

Prior to the passage of this new Missouri law, most married couple clients did not transfer current title to their assets to a joint, single-share revocable trust, as there was no particular advantage in doing so. Now, however, there is a distinct advantage for many married couples to transferring title to their assets to their Qualified Spousal Trust during their joint lifetime, namely asset protection for the surviving spouse where it would otherwise not have existed. We are therefore advising that couples who executed their existing joint Qualified Spousal Trusts prior to August of 2024, consider amending their estate plans to proceed under the new Missouri law.

One word of caution: Owning assets jointly between a husband and wife in Missouri (ie, as opposed to transferring them to a Missouri Qualified Spousal Trust) will likely provide a level of asset protection in almost any state during the couple's lifetime (including Missouri), whereas transferring the assets to a Missouri Qualified Spousal Trust may expose the couple to a lawsuit in another state. On the other hand, transferring assets to a joint Missouri Qualified Spousal Trust during the couple's lifetime will provide protections for a surviving spouse in Missouri, while not transferring the assets to the trust during the couple's lifetime will leave the surviving spouse completely exposed to lawsuits, in both Missouri and elsewhere. A Missouri surviving spouse will still have one option available to him or her at that point, however, and that is to fund an irrevocable Missouri Asset Protection Trust (or "MAP Trust," for short), which trust is described by Jim here. The problem is the MAP Trust is irrevocable, and the control of the surviving spouse over the trust assets is restricted.

To illustrate, suppose a Missouri married couple takes assets which were previously titled jointly between them, or as asset-protected "tenancy by the entirety property," and assigns them to a Missouri Qualified Spousal Trust. If either spouse were to be involved in a car accident in Illinois, Florida, or some other state than Missouri, the couple's previously protected assets may now be subject to a successful attack in the other state, on the grounds that the Missouri asset protection trust is against that state's public policy. On the other hand, had the couple assigned their assets to the Missouri Qualified Spousal Trust during their joint lifetime, the surviving spouse will now be protected from lawsuits, at least in Missouri; he or she would have enjoyed no such protection, had the couple not so assigned their assets, unless he or she funds an irrevocable MAP Trust at that point, the obvious negatives, again, being that the MAP Trust is irrevocable, and the surviving spouse's control over the trust assets is limited.

Although most Missouri married couples may view maximum protection against lawsuits in Missouri, including for the surviving spouse, with the least number of restrictions, as more important than maximum protection in other states during their joint lifetime, this should be the couple's call, and not the attorney's. As such, we are here to discuss with you your options.