Probate is Not a Four-Letter Word
Is probate as bad as it sounds?
Estate Planning articles often have advice saying to avoid probate at all costs.
Can it really be that bad?
The idea of probate is simple enough: Probate is the process where debts are paid and the ownership of certain property is transferred by the “Personal Representative” of a person who has died (this person used to be called the Executor of an estate). Some assets never go through probate because they are jointly owned, or have payable or transferable on death designation. Probate exists to transfer assets that are individually owned without any beneficiary designation.
Let’s Clear the Air
In Minnesota, probate is not horrible like it can be in other states. There are a lot of misconceptions about how long the probate process takes and how expensive it is. Minnesota does many things well, and our probate process is one of them. Probate in Minnesota is not as bad as you might imagine.
When it comes to probate, often the primary concern is for the time and expense of a probate administration. It is true that the probate process takes time, with most probate cases taking about 18 months to complete (while others close in less than six months).
Some people think that a trust will solve the “probate problem.”
However, the length of time that it takes to complete a probate can oftentimes be similar to the time needed to administer a revocable trust. Moreover, depending on the assets being transferred, the costs of administering a trust may be similar to probate. For example, the costs and fees of transferring real estate are similar for both trusts and probate administration.
When is Probate a Good Thing?
A positive thing about probate is that it offers solutions to many complicated issues related to a deceased person’s estate or property. If there are pre-existing title issues with assets, probate can provide a method to clear those issues
Likewise, if your children are going to fight over your estate, probate provides a Judge to settle any disputes. Where there are minor children, probate may not be avoided because the probate process is used to appoint a suitable guardian.
Probate also reduces the claim period for creditors. By going through probate, claims that are not timely submitted are barred (meaning the creditors cannot collect any more money). This is one specific way that probate may be more beneficial than a trust, since trusts are subject to longer statutes of limitations for claims.
Moreover, if someone is insolvent (meaning there are more debts than money), or if all of someone’s assets are exempt from creditor claims, then it is beneficial to go through probate so their children can get their assets without having to pay every creditor. This is particularly useful with credit card companies because after someone passes away, credit card companies often pressure survivors into trying to pay-off credit card debts first. However, credit cards are actually on the bottom of the probate repayment list, and the debt can be discharged without payment in estates with primarily exempt assets.
We Can Help
At Grabitske Law, we know that probate is not a four-letter word. We are happy to guide you through the process. If you have been nominated as someone else’s Personal Representative, we can help you understand everything that is required of you. For any help with probate or Estate Planning, contact Grabitske Law today! We can help!