Today, I decided to look at a few commonly asked questions surrounding the probate process. I have attempted to ask questions that I think commonly come up when people think about estate planning and the administration of their estate following their death. I hope this question and answer format is a useful format for conveying this information to you, the readers. If you have a specific topic you would like to see addressed in the future, please contact me with your suggestions.
Q. What is Probate?
The legal process that the Court uses to prove the validity of your Will, read the Will and implement the provisions in your Will is called “probate.” Therefore, when someone says your Will needs to “go through probate” or they say your Will needs to be “probated” they are referring to this process under Court supervision to determine your heirs and distribute your assets.
Q. Where does the Probate process take place?
The probate process generally takes place in the county of the state in which the decedent was domiciled at their death, and may also need to be conducted in any other counties where the decedent owned property that passes under the terms of their Will. This means that if someone owns real property in multiple states, and if that property is passed according to their will (as opposed to under the terms of a Trust or by the language of a deed) that property will need to go through probate in the county and state where the real property is located.
Q. What sort of assets go through the probate process at your death?
Any asset that you own at death, which does not pass under the terms of a separate contract, will need to pass through probate, in order to be distributed to your heirs. For some people, this means all or nearly all of their assets will need to go through the probate process. Other people, either through careful planning (such as the use of a Revocable Living Trust) or just by the nature of their possessions, may have very few or no assets that must go through probate upon their death.
Common examples of items that are passed under your Will include:
Photos and mementos
Checking or Saving accounts titled in the deceased’s name
Any real property (real estate, land, buildings) titled in the deceased’s name
Automobiles, boats, or other vehicles titled solely in the deceased’s name
All other assets owned by the deceased, or any interest in real or personal property held by the deceased, which are not distributed “non-probate” under the terms of a separate contract
Q. What sort of assets commonly pass non-probate (or outside your Will) to your heirs?
Let’s take a moment here to think about financial assets you may own in addition to your physical “stuff” like clothing, jewelry, furniture, and cars etc. Things like retirement accounts, insurance policies, and brokerage accounts. These are all assets that can be passed under your Will, but if you have planned ahead can also be passed outside of your Will, or what we call “non-probate.” When we say that certain assets can pass “non-probate” we mean that these assets can be passed to your heirs according to the terms of the contract between you and the company who holds your insurance policy, brokerage account, or retirement account. This does not involve a court at all, because the contract between you and the financial institution dictates who owns the account or insurance policy.
For instance, when you open a retirement or brokerage account, your financial institution will give you the option to designate beneficiaries for that account. It is important to fill out the proper beneficiary designation form, as this will take primary importance in case of your death. Only if you have not filled out the proper beneficiary forms, will such accounts be distributed with the rest of your estate under your Will.
Your home may also be passed “non-probate” according to how title to the property is held. In Wisconsin, if you hold title to your home with your spouse as “Survivorship Marital Property” your spouse will receive your undivided one-half interest in the property automatically at your death. In Minnesota, married couples may hold title jointly to their home as “joint tenants with rights of survivorship.” This form of ownership passes the one-half portion of the home to the surviving spouse automatically upon the first spouse’s death. Structuring the deed to hold title to your home in this way can be beneficial, as it can allow you to pass your home “non-probate” to your spouse upon your death.
You can think of your Will as a large net, which captures all the items you own in whatever form and names who will get those items, if and only if there is not another contract, deed or title which separately names the owner of such items. For some people who have diligently filled out their beneficiary designations and/or transferred assets during their lifetime, this means their will may only dictate who will receive their personal property (Ex: clothing, books, furniture) and perhaps the home in which they live. For other people who have made little or no use of beneficiary designations, the Will may dictate the transfer of almost all their financial assets and personal and real property.
Q. Why bother to fill out beneficiary designations on financial accounts and insurance policies?
Why not leave these beneficiary designations blank and just let your Will designate everything? This is a good question, and could work for some people, however there are drawbacks. In order to understand, let’s examine the word “probate.” Probate is the formal process through which your estate (“your stuff”) is distributed to your heirs upon your death. In most states, there is a process for formal and informal probate. Both informal and formal probate requires the involvement of the Court, but informal probate is designed to be slightly less complicated so that an ambitious person can go through the process without an attorney if they so desire. Formal probate generally requires a hearing before a judge, and it is not often recommended to attempt this process without the help of an attorney.
If there is a valid will in place, if the will names an Executor or Personal Representative (administrator of the estate), and none of the heirs dispute the will, informal probate may be a good option. However for people who die without a will (this is referred to as dying “intestate”) formal probate may be required to determine who the heirs of the deceased are and how the deceased’s estate should be distributed. Even for people who have a valid will, formal probate may be required in order to sort through the affairs of the estate, or settle a dispute over the will. There is nothing wrong with the probate process; however you should understand that it involves the court system, there are fees involved and it can take significant time to complete. Therefore, a quicker and more efficient way to pass certain “non-probate” assets, is to fill out the beneficiary forms for your life insurance, brokerage and retirement accounts. This ensures that these assets will not have to go through the probate process at your death, and will likely be distributed to your heirs much quicker following your death.
The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For advice regarding a specific legal issue, please contact Attorney Thomas B. Burton or another attorney for assistance