ALLEN HAUGRUD

WHAT IS PROBATE?

Probate is the legal court process for paying a person's debts and expenses and distributing a person's property after that person’s death. In a probate matter, the person who has died is called the "decedent," and his or her property is called the "estate." Usually, a decedent's debts are paid from the estate and any property remaining is divided among heirs or beneficiaries, according to a Will or according to state law.

 DOES HAVING A WILL HELP AVOID PROBATE?

Not necessarily. Probate is the process of determining the validity of the Will. If property needs to be administered or taxes paid, the existence of a Will does not avoid probate or increase probate expenses. It may decrease expenses, and assures your property will pass to your intended beneficiaries.

When an owner of property dies, the probate court must decide that the Will is valid or determine who receives the property if there is no valid Will.

With or without a Will, your estate can end up in court.

If all property is held jointly or in trust, probate may not be necessary. However, probate avoidance may increase expenses and taxes and may not be desirable. The advice of a lawyer can help you decide the best plan for your situation.

 WHEN IS PROBATE NECESSARY?

Minnesota probate law applies to people who lived in Minnesota when they died and to residents of other states who owned real estate in Minnesota. Whether an estate is "probated" depends on a number of factors, including the type of property and the nature of the ownership of that property. For example, unless real estate (a home, a cabin, a farm, etc.) was transferred into a trust or was owned as "joint tenancy" property with a right of survivorship, it usually is subject to the probate process. If you are considering a Will, we should discuss the ownership of any real estate and whether there are advantages to certain types of ownership.

 

For personal property, an estate must be probated if it is valued at more than $50,000.00. If the decedent's estate is worth less than $50,000.00, the decedent's legal heirs may be able to collect the property by affidavit, which does not require probate court involvement. Collection by affidavit keeps the costs of administering the smaller estate low.

 WHAT PROPERTY DOES NOT NEED TO BE PROBATED?

Non-probate assets include property owned as joint tenants, jointly held bank accounts, payable-on-death accounts, transferable-on-death accounts, life insurance proceeds to a specific beneficiary, and pension benefits with a designated beneficiary. Minnesota law also provides for transferring a car title without involving probate.

Transferring joint assets does not necessarily occur automatically upon a person's death. For example, to transfer real estate to the surviving owner, an affidavit of survivorship must be filed with the county recorder where the property is. Other jointly held assets require filing specific forms and usually require a certified copy of the death certificate. Consult your attorney about how best to handle transfer of property at death.

 WHAT DOES PROBATING AN ESTATE INVOLVE?

Generally, a probate includes:

1. Opening of the estate: A determination to proceed and the opening of a court file for the probate proceedings.

2. Appointment of a personal representative to manage the estate.

3. Gathering of assets, payments to creditors and distributions to heirs or devisees.

4. Closing of the estate: The court may choose to review the personal representative’s actions throughout the probate process, or choose to evaluate whether or not the estate was handled according to the decedent’s wishes and Minnesota law after the personal representative has settled the estate. In either case, the court will close the probate after the personal representative has appropriately paid creditors and distributed the estate assets.

A personal representative is an individual or entity who is responsible for administering or "probating" the decedent's estate. Usually, if a person dies with a Will, the decedent has named a personal representative in the Will. If there is no Will or the decedent's Will did not name a personal representative, the court will appoint a personal representative from those who are nominated to serve as a personal representative.

 HOW DOES THE PERSONAL REPRESENTATIVE KNOW WHICH TYPE OF PROBATE PROCESS IS APPROPRIATE?

The following are some of the factors to consider when deciding the type of probate procedure to use:

Size of the estate

Nature of your assets

Complexity of issues in the estate

Disputes among heirs, beneficiaries, or creditors

Real estate to be distributed

Beneficiaries who are under 18 years old

Estate insolvency

Out-of-state personal representative

HOW WILL THE ESTATE BE DISTRIBUTED TO HEIRS?

If a valid Will exists, the personal representative should distribute estate property according to the terms of the Will. If there is no valid Will, then the property will be distributed according to specific Minnesota laws about inheritance. Minnesota law creates a default plan for distribution of the estate’s assets.

WHAT HAS TO BE DONE TO CLOSE THE ESTATE?

In many, but not all probate estates, the personal representative must prepare an inventory of all of the assets and liabilities of the estate. The inventory must include all property of all kinds including real estate, vehicles, other personal property, stock and bonds, bank accounts and other financial interests including any liens on such property such as mortgages.

In addition to the inventory, a final account must be prepared. The final account is like a balance sheet in that it shows the assets of the estate and all administration expenses such as personal representative’s fees, attorney’s fees, funeral expenses, and distributions to any devisees.

HOW MUCH DOES IT COST TO PROBATE AN ESTATE?

The cost of probate depends on the specifics of the situation involved. Attorney’s fees should be based upon the amount of time involved, not as a percentage of the estate.

Contact me today for a free consultation

 

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