Navigating Probate:  What is Probate and Common Concerns

It is not uncommon for people to come into estate planning saying they have heard “probate is the worst – what can we do to avoid it?”  Probate is the legal process for gathering and distributing assets after someone has died.  Below I explain more about the probate process and address some of the common concerns related to probate.

What is Probate:  A place to start is that when someone dies they will often have both probate and non-probate assets.  A probate asset is an asset the decedent owned solely in their name, without a joint owner or beneficiary designation; this is often a house and bank account.  Non-probate assets are assets that the decedent either owned jointly with someone else (house, bank account, investment account) or an asset with a transfer on death or payable on death designation.  Those non-probate assets are distributed according to the joint owner or beneficiary form and are not a part of the court probate process.  It is important to note the value of those non-probate assets is counted in the decedent’s gross estate – so we do need to know the date of death value for all assets in an estate.

Time Consuming:  One concern that comes up frequently is people thinking that the probate process takes too long, and they just want their assets to go to their beneficiaries immediately when they die.  While there are mandated timelines for probate matters, unless an estate is contested most estates move forward swiftly and we are able to make partial distributions of assets to beneficiaries during the probate process while also making sure your estate has sufficient assets to cover you final expenses, final income taxes and any administration costs that arise so your beneficiaries are not having to front those funds.  Another factor to consider is that many assets will be non-probate and distributed via beneficiary designation outside the probate estate so the beneficiaries will receive assets once a death certificate is issued and the probate can proceed with additional distributions.

Costs and Fees:  There are costs and fees associated with the probate process such as court filing fees, publication fees and potentially attorney and executor/personal representative fees.  These expenses are something to consider in the estate planning process, however, some of these fees are deductions from an estate income tax return, and may be the best option for a smooth transfer of assets upon death.  In Minnesota legal fees are not a percentage of the estate, and so the attorney fees will typically be on an hourly basis for the work the attorney does, not a fixed percentage regardless of hours worked.

Lack of Privacy: Probate proceedings do create a court/public record.  The probate application will contain details about the decedent’s beneficiaries and ballpark assets and liabilities.  Some people do not want any public records about themselves or their estate and so they look to alternative estate planning options like revocable trusts.  It is important to note even with a trust, if there is conflict in the trust administration process the court and a court record could still be involved.

Disputes:  Unfortunately, grief can alter behaviors; grief mixed with potential inheritances can bring out the best and the worst in some people.  Occasionally, the court and having a judge to argue to can intensify disagreements about estate distributions which delays the entire process and is emotionally exhausting for everyone.  If in the estate planning process you are considering an unequal treatment of beneficiaries I encourage you to discuss your estate plan and the why behind your decisions with your family members while you are alive so no one is surprised by the distribution provisions in your will.  Open communication, when possible, can minimize the surprise and related anger so your beneficiaries can move through the estate administration process with little to no conflict.

While probate is often viewed with apprehension, the process serves a crucial purpose in ensuring the orderly distribution of assets. While some alternatives exist to streamline the process, reduce costs, and maintain a level of privacy and control, not all the alternatives are suitable for many people. Consulting with an experienced estate planning attorney can help you tailor an estate planning strategy that best suits your individual needs and concerns, providing peace of mind for you and your loved ones.