Probate: The Very Basics

Probate is very often misunderstood. This post seeks to provide a basic overview of Probate in Minnesota.

What is Probate?

Probate is the legal process whereby the decedent’s Will is presented to the court for validation and the Personal Representative is appointed and granted permission to act. If decedent dies intestate, or without a Will, Probate may still be required.  The Probate court would need to appoint the Personal Representative. Once appointed, the Personal Representative can then go about inventorying the decedent’s estate, paying debts and taxes and distributing assets.

Estates Subject to Probate

Not all estates are subject to Probate.  Estates that require Probate generally include those:

1. With Probate assets;
2. Naming a Guardian;
3. Naming a Custodian; and
4. Transferring certain real estate.

Probate assets are those titled solely in the decedent’s name.  Conversely, non-probate assets, including jointly owned property, life insurance proceeds, retirement plans and various other assets, pass outside of the Probate process based on survivorship rights or designated beneficiaries.  Non-probate assets automatically transfer upon decedent’s death.  Probate assets, however, pass based on decedent’s instructions in a Will or under state intestacy statutes.

If decedent leaves behind minor children or minors will inherit from decedent’s estate, the Probate Court must appoint the nominated Guardian and/or Custodian (if applicable). Further, Probate is required to transfer real estate that is neither jointly owned property nor transferred through a Transfer on Death Deed (TODD).

Probate Avoidance

With some thought and planning, it is possible to avoid Probate.  Probate is avoided when decedent does not own assets titled in his or her name alone and assets transfer automatically to beneficiaries. Common Probate avoidance tools include:

• Joint tenancy property
• Payable on death (P.O.D.) and transfer on death (T.O.D.) arrangements
• Beneficiary designations

With each of these tools, the surviving owner or named recipient automatically receives the asset.  Additionally, assets held in trust do not pass through Probate since the trust owns the assets and not decedent.

Disadvantages & Advantages of Probate

The disadvantages of Probate include time, cost and lack of privacy.  At a minimum, the Probate process will take 4 months due to the statutorily prescribed notice period. Beyond that, the duration of the Probate will depend on a variety of factors.  Probate costs include mandatory filing fees and attorney fees.  The extent of attorney fees depends greatly on the situation; for example, does the Will establish clear instructions for the Personal Representative, is anyone challenging the Will or certain dispositions, were decedent’s affairs in order and is it easy to locate decedent’s assets and liabilities. However, attorney’s fees for Probate in Minnesota are not statutorily prescribed as in some other states; and therefore, tend to be less cumbersome.

Probate is a matter of public record.  All documents filed are accessible should the general public wish to seek them out.  Therefore, if decedent desires the affairs of his or her estate to remain private, a trust should be used to avoid Probate.

There are, however, several instances when Probate is advantageous.  Probate is advised when:

• Family conflict or other challenges are anticipated
• Decedent’s estate is insolvent or facing significant credit claims

Probate protects the Personal Representative from personal liability since the court plays a larger role in the process.

Where does that leave me?

In Minnesota, Probate is not as big, ugly and scary as in many other states. Steps can be taken to make the process easier for loved ones.  First, be sure you have estate planning documents in place.  These serve as an instruction manual for your Personal Representative and heirs.  Second, organize all pertinent documentation regarding assets, liabilities, professional service providers, etc.  And third, if you anticipate family conflict consult an attorney and consider sharing your intentions and wishes with potentially disgruntled heirs and beneficiaries.

Photo:  J. Stephen Conn