If you’ve ever lost a loved one, chances are you’ve had a few run-ins with the probate court.
The goal of the probate process is to help the family of the deceased administer their estate and close out their final affairs after death. If he or she has a will, probate is a time when the courts check to ensure it is valid so that property can be distributed according to that person’s wishes. During this time, all of the individual’s assets need to be accounted for, and any debts and taxes must be paid before money or property is given to beneficiaries.
It actually sounds like a really great thing, until you take into consideration the delays, the legwork, and the steep costs.
Unfortunately, probate can take a very long time. At best, probate in Minnesota will take a minimum of three months (and that’s if everything is filed with the court at the first moment it can be), but more likely 6-12 months, although more complex estates can take years. During this process, beneficiaries are unable to access their inheritance, no property can be sold, and lawyers’ fees tend to mount up.
There is some property, however, that is not subject to probate in Minnesota. For example, there are types of accounts, like life insurance, that pay upon the individual’s death. Some savings and checking accounts can also be designated as payable-on-death. A probate lawyer can help with the details, or you can try talking to your bank to see what you can do about naming beneficiaries and keeping that money out of probate.
Other types of accounts, such as stocks, bonds, and mutual funds, can be set up to transfer upon your death. This strategy can even be used to keep vehicles and real estate out of probate. There are specific forms that need to be filled out for each type of account or property, but the process is not terribly complicated. As with the case of a payable-on-death bank account, beneficiaries do not have any rights to the money or property in a transfer-on-death situation until the current owner is deceased.
Naming beneficiaries is, in and of itself, a tool for avoiding probate for certain types of accounts. Retirement plans, for example, can skip the probate process when beneficiaries are clearly named. Upon your death, benefits automatically transfer to those beneficiaries. This approach can also be taken with various accounts (savings, checking, mutual funds) and certificates of deposit.
Property that is owned jointly may also avoid the probate process. That means that if a home is owned in both spouses’ names as joint tenants, it can automatically pass to the surviving spouse. Or you can choose to own property jointly with someone of your choosing to achieve the same goal. However, there can be a whole host of problems associated with this strategy, so talk to an attorney before determining if joint tenancy is right for you and/or your loved ones.
A final helpful tool for avoiding the probate process is the living trust. An estate planning attorney is the best choice for setting up this kind of documentation. When done correctly, the cost is negligible when compared to the time and expense of probate. In simple terms, you declare a trust that holds your properties. While living, you (and possibly your spouse or other designated people) act as the trustee and are able to control all of the property within it. Beneficiaries are named for the trust, which avoids the need for probate.
Probate can be a hassle, so knowing what you can do to avoid it is to your benefit. Likewise, it works in favor of your beneficiaries, as less of your estate will go to pay for probate lawyers and other legal fees. If you’d like to explore all of your options for avoiding probate in Minnesota, our law firm is here to help you. Just call our office at 763-244-2949 or click here to schedule an appointment.