Avoid the Probate Court
What Does Probate Mean and How Can It Be Avoided.
Many people believe that if they have a Will their estate will avoid probate. This is false.
Some people believe that if their estate value is less than the federal and/or state estate tax exemption then there won’t be a probate. That’s false too.
Almost any asset subject to disposition by your loved one’s will is distributed by the probate process. Understanding what probate means is crucial to understanding these issues.
What Is Probate
Probate is a legal process under which the deceased’s assets are transferred to their beneficiaries. The Last Will has to be filed with the probate court in the state and county in which the decedent lived at the time of his or her passing.The Personal Representative (formerly called “Executor”) in the will must petition the court for “Letters of Authority” which gives the personal representative the power to transact business on the decedent’s accounts.
Why Is Probate Necessary
The probate process “protects” the beneficiaries of the estate, any potential creditors, and of course, the taxing authorities.
A person may have done many wills and amended their wills over their lifetime. This court process insures that one document is formally approved as the final expression of a person’s intent with regard to the distribution of the assets.This is when any party may object to the will.
The Personal Representative then organizes all the assets of the deceased and files an inventory with the court so all interested parties can determine in full light what the estate is worth. They can also question if the inventory is complete or is missing assets.
Massachusetts law provides that creditors have one year from date of death to file a valid claim against the estate. There are laws that deal with creditors, how they are to make claims, and how the Personal Representative may object to a claim.
Once all the creditor claims are dispensed with and taxes are paid, the Personal Representative then has to submit an accounting statement of the estate to the court, listing all of the income and expenses. The Personal Representative then presents a schedule of proposed distributions pursuant to the terms of the will.
All the beneficiaries have the chance to object to any item listed in these petitions, and can appear before the court. A judge decides if any objection has merit.
That person must then petition the court to close the estate and be discharged from further obligations as a fiduciary for the estate. So as you can see, probate is a strictly supervised court (public) process.
Probate Is A Public Process
Almost everything that goes through the court system becomes a matter of public record and many courts have put this information online through court websites. All associated family and financial information becomes accessible to anyone who wants to see it.The value of your assets, your creditor claims, the identities of your beneficiaries and even any family disagreements that affect the distribution of your estate will all be available, often by only a click. Be aware that there are creditors and predators (including identity thieves) who are scouring court records to find out who is inheriting money.They will have the addresses of your beneficiaries and will contact them.
Probate Can Be Expensive
An estate that avoids probate should also be less expensive. With court fees, attorney fees, executor fees, and other related expenses, the price tag for probate can easily reach into the thousands of dollars, even for small or “simple” estates. These costs can easily skyrocket into the tens of thousands or more if family disputes or creditor claims arise during the process.This diverts the money away from where you want it to go the most – to your beneficiaries.
Probate Takes Time
It’s not unusual for estates, even seemingly simple or small ones, to be held up in probate for twelve to eighteen months, during which time your beneficiaries may not have any access to funds or assets. This delay can be especially difficult on family members going through a hardship who might benefit from a faster, simpler process.It also can create problems if there is real estate that needs to be sold to create liquidity in the estate to deal with taxes, debts and expenses.
The good news is that with properly funded trust-centered estate planning, you can avoid probate for your estate, simplify the transfer of your financial legacy, and provide lifelong asset and tax protection to your family.
How can you avoid this probate court problem? Read pages 12-16 of our Estate Planning Guide.