You want to leave a specific sum of money to a specific person when you die. In Missouri there are two clean ways to do it: put the money in a bank account with a transfer-on-death designation, or write the gift into your trust. Each one is simple. Each one has a failure mode that involves your power of attorney, and the failure modes point in opposite directions.
Consider a client we will call Margaret. She is seventy-eight, has a revocable trust that leaves everything to her two children, and wants to leave $50,000 to Diane, the neighbor who has driven her to appointments and checked on her every day for the past six years. Margaret does not want the children involved in that gift, does not want Diane to have to ask anyone for it, and does not want it tied up in probate. She asks which is easier: opening an account for Diane, or adding Diane to the trust.
Both will work. The question is what happens if Margaret changes her mind, and what happens if Margaret cannot.
Option one: a bank account with a transfer-on-death designation
Missouri’s Nonprobate Transfers Law lets the owner of a bank account, brokerage account or security register it in beneficiary form by adding the words “transfer on death to” or “pay on death to” and a name. Under RSMo § 461.028, the designation transfers the owner’s interest to the beneficiary effective at the owner’s death, provided it was on file with the bank before then. The money passes by operation of law. No probate, no court, no lawyer, and no waiting beyond the time it takes Diane to present a death certificate.
Margaret would open a new account, deposit $50,000, and sign the bank’s beneficiary form naming Diane. That is the whole plan. Several features make it attractive.
Diane has no rights until Margaret dies. Under RSMo § 461.031, a TOD beneficiary has no interest in the property during the owner’s lifetime and her consent is not needed for any transaction. Margaret can spend the money, close the account, or change the beneficiary at any time under § 461.033, without telling Diane.
It is private and separate. The gift does not appear in the trust, so the children never see it, and it does not require the trustee to do anything.
It costs nothing. A beneficiary form at the bank is free. A trust amendment is not.
Missouri handles the contingencies. If Diane dies first, § 461.045 lets Margaret add “LDPS” to the designation so the gift passes to Diane’s descendants; without it, the money falls back into Margaret’s estate.
The drawback: the account can be undone by someone other than Margaret
A TOD designation is only as durable as Margaret’s control over the account. Suppose Margaret has a stroke. Her daughter, acting under a durable power of attorney, takes over the finances. The daughter looks at the account, sees $50,000 earmarked for a neighbor, and decides it belongs in the trust with everything else. She removes Diane as beneficiary, or closes the account and moves the money into the trust’s account. Margaret dies. Diane receives nothing, and the trust distributes the money to the children.
Whether the daughter had the power to do that depends on the wording of the power of attorney. Under RSMo § 404.710.6, an agent may change beneficiary designations, create or change survivorship interests, make gifts, or fund a trust only if the power of attorney expressly grants that authority. Many do, because lawyers draft broad powers so the agent can manage a real emergency. And under § 404.714, an agent who has the power is still bound to use it in the principal’s best interests, to avoid self-dealing, and, absent explicit authorization, to exercise a high degree of care in maintaining the principal’s estate plan without modification, including beneficiary designations.
So Diane may have a claim. It will be a lawsuit against the daughter for breach of fiduciary duty, and its subject will be what Margaret actually wanted. The daughter will say the account was an oversight, or that her mother had cooled on Diane, or that the money was needed for care. Diane will say the account was the whole point. The witness who could settle it is dead. These cases are expensive, they take years, and they turn on evidence that a $50,000 gift rarely generates: notes, letters, statements to third parties, the lawyer’s file. A TOD account is simple to set up and, for exactly that reason, leaves a thin record of intent.
Two further points. Under RSMo § 461.300, a TOD beneficiary can be required to contribute toward the decedent’s debts and statutory allowances if the probate estate cannot pay them, in an action brought within eighteen months of death. And if Margaret becomes incapacitated and later wants to enlarge the gift, or add Diane’s daughter, she cannot; only an agent with express authority can act, and that agent may be the person least inclined to.
Option two: a gift written into the trust
The alternative is an amendment adding a specific gift: on Margaret’s death, the trustee distributes $50,000 to Diane before dividing the remainder between the children. The amendment can say what happens if Diane dies first, whether the gift is paid in cash or in kind, whether it comes off the top or after expenses, and whether it is conditioned on anything. It becomes part of a document the successor trustee is legally bound to follow and that the children, as remainder beneficiaries, cannot override.
This route has strengths the account cannot match.
The record of intent is the document itself. A trust amendment is signed, usually notarized, prepared by counsel, and kept with the estate plan. The question of what Margaret wanted is answered on its face.
An agent cannot quietly reverse it. Under RSMo § 456.6-602.5, an agent under a power of attorney may amend or revoke a settlor’s trust only to the extent the trust instrument or the power of attorney expressly authorizes it. A conservator may do so only with court approval. Most trusts and most powers of attorney do not grant that authority, so the gift is locked once Margaret can no longer sign.
It can be as detailed as the situation needs. Contingent beneficiaries, staged payments, a condition that Diane survive by thirty days, direction about taxes and expenses. A beneficiary form has one line.
The drawback: the gift is locked for Margaret too
The same rule that protects Diane from the daughter also prevents anyone from helping Margaret. If Margaret and Diane have a falling out next year, Margaret has to go back to her lawyer and sign a further amendment; she cannot simply change a form at the bank. That is an inconvenience and a fee, and it means the gift tends to stay in place through inertia after the relationship that justified it has ended.
The more serious version is incapacity. Suppose Margaret is competent when she decides that Diane should have the gift, but suffers the stroke before the amendment is signed. Or suppose the amendment is signed, and two years later, while Margaret is incapacitated, Diane moves away and a new caregiver takes her place, and Margaret, in her lucid moments, makes clear that the gift should follow the caregiving. Under § 456.6-603, while Margaret is alive the trustee’s duties run to her alone, but the trustee has no power to amend. The agent has none either, unless the documents say so. A conservator would need a court order. The trust does exactly what it was written to do, which is now the wrong thing, and no one can fix it.
The account can be changed by the wrong person. The trust cannot be changed by anyone. Both problems have the same cause: nobody decided in advance who should be able to change the gift, and under what circumstances.
Side by side
TOD account
Set up in an afternoon, at no cost, without the family knowing.
Changeable by Margaret at any time, by a bank form.
Changeable by an agent with express authority under § 404.710.6, subject to the fiduciary duties in § 404.714.
Thin record of intent; disputes are litigated after death.
Reachable by creditors under § 461.300 if the probate estate is short.
Trust gift
Requires a lawyer-drafted amendment; the children may see it.
Changeable by Margaret only by a further amendment.
Not changeable by an agent unless the trust or POA expressly says so (§ 456.6-602.5); conservator needs court approval.
Strong record of intent; the document is the evidence.
Frozen during incapacity, even when circumstances change.
What we usually recommend
The choice between the account and the trust matters less than a decision most people never make: who, if anyone, should be able to alter this gift if you cannot. Once that is decided, either vehicle can be drafted to carry it out.
If the gift should be untouchable, put it in the trust and make sure the power of attorney does not grant authority to amend the trust or change beneficiary designations, or grants it only for specified purposes. Then the daughter cannot reach the gift through either door. Add a short signed statement of reasons to the file; it costs nothing and it ends most arguments before they start.
If the gift should be adjustable during incapacity, the trust can say so. A trust may authorize an agent, or an independent trust protector, to modify specific gifts within limits, for example to substitute a successor caregiver or to reduce the gift if care costs exceed a threshold. Section 456.6-602.5 permits it as long as the authority is express. The same clause can require that any change be made by someone who does not benefit from it, which removes the self-dealing problem that makes the TOD scenario so contentious.
If the TOD account is the right tool, because Margaret values the privacy or does not want to reopen the trust, then the power of attorney should be drafted with the account in mind. It can withhold the power to change beneficiary designations, or permit changes only with written consent of a named third party, or direct that any funds removed from a TOD account be held for the named beneficiary. A note in the lawyer’s file, or a letter to the beneficiary, turns a one-line form into evidence.
Whichever you choose, do not do both. A TOD account naming Diane and a trust provision leaving Diane $50,000 is a $100,000 gift, or a lawsuit about whether it was meant to be. Missouri does allow a TOD account to name the trustee of a trust as beneficiary, which some clients use to get the simplicity of the account with the control of the trust; that is worth discussing with counsel rather than improvising at the bank.
Helpful resources
Related on this site: The inherited house nobody appraised: date-of-death valuation under a beneficiary deed or in probate
RSMo § 461.028, registration of accounts in beneficiary form (primary source)
RSMo § 461.031, effect of a beneficiary designation during life and at death (primary source)
RSMo § 461.033, revocation or change of a beneficiary designation (primary source)
RSMo § 461.045, lineal descendant substitutes (LDPS) (primary source)
RSMo § 461.300, liability of nonprobate transferees for debts and claims (primary source)
RSMo § 404.710, powers that must be expressly granted in a power of attorney (primary source)
RSMo § 404.714, duties of an attorney in fact (primary source)
RSMo § 456.6-602, revocation or amendment of a revocable trust (primary source)
RSMo § 456.6-603, the settlor’s powers and the trustee’s duties while a trust is revocable (primary source)
The Missouri Bar, Probate Law Resource Guide (2024) (state bar association, public-education publication)
Related on this site: The Basic Estate Plan · Revocable Living Trusts · Estate Planning · Common Mistakes by Executors and Successor Trustees
Related on this site: Qualified spousal trust, QTIP, personal residence trust, or revocable trust and beneficiary deed: comparing Missouri estate planning tools.
Want a gift to survive both a change of heart and a change of health?
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This article is educational and is not legal or tax advice. It does not create an attorney-client relationship. Margaret and Diane are a composite illustration, not clients. Missouri’s nonprobate transfer, power of attorney and trust statutes are summarized in general terms and change over time, and the outcome in any real dispute depends on the exact wording of the documents involved. Consult a licensed attorney about your own situation.