Avoiding Probate in Bethesda

Often, probate gets a bad reputation. It is common for potential clients to indicate that they would like to avoid probate entirety. Probate, generally in the State of Maryland, is not an onerous process, and there are some benefits to probate which include transparency and accountability.

In some cases, probate can reduce the statute of limitations for claims to be presented against the estate assets. However, avoiding probates in Bethesda generally means that an individual has passed away with no assets in their sole name. If your loved one has passed away with no assets in their name, it is crucial that you consult with an experienced probate attorney to explore your options.

Passing of Assets

At death, assets pass four ways.

  • They pass by the beneficiary designation such as life insurance policies and retirement accounts
  • They pass by ownership such as joint accounts or houses or real estate that has been held by a tenant by the entireties, or by a joint tenant with rights of survivorship
  • They pass by trust provisions if those assets have been prefunded into a trust
  • Any assets that remain in the decedent’s sole name pass pursuant to the decedent’s last will and testament or to the laws of intestacy if there is no last will and testament

In the last instance, that is subject to probate administration in the State of Maryland. For Bethesda, the probate court would be the Orphans’ Court for Montgomery County and often individuals will be filing their pleadings with the Register of Wills for Montgomery County.

Revocable Living Trust

A common misconception about probate is that it can be avoided after death in Bethesda. The reality is that the proper estate planning needs to be in place long before somebody passes away to avoid probate at death if that is a goal. This is highly recommended for an individual. A common way to do that is the creation of a revocable living trust. A revocable living trust is a common estate planning tool that is created and established during individual’s lifetime.

During the individual’s lifetime, all income is taxed using the person or the grantor’s social security number. The assets of the trust are held for the use in the benefit of the initial grantor and then, after death, they would pass on in whatever provisions the grantor provided for. A revocable living trust usually can be revoked, amended, or changed. Assets can be added to it or withdrawn from it at any time during an individual’s lifetime while they are alive and maintain capacity.

Once the grantor loses capacity or dies, the terms of the trust are often irrevocable. The benefit of a revocable living trust is that it does avoid probate in Bethesda, but some of the misunderstandings of a revocable living trust is that it does not cover all assets of an individual. It only covers the assets that have been re-titled into the name of the trust.

For example, it is not uncommon for individuals to have a revocable living trust drafted and executed. Clients may then fail to fund the trust. In such cases, the trust document becomes more of an administrative burden rather than an assistance because of all of the assets under that individual’s sole name will still have to go through the probate process.

Understanding Trust Assets

The assets that are prefunded into a revocable trust do avoid probate in Bethesda.  It is common for there to be assets that have not been funded into the trust, whether because a grantor purchased new assets in their sole name and forgot to move them into the trust, or there was a small refund that came in in the name of the decedent after death such as for insurance or health care.

Sometimes, there is a vehicle owned by the decedent which does require some level of probate administration as well. While it is common for individuals to have the goal of avoiding probate in Bethesda, a discussion of whether avoiding probate is helpful or recommended is something that should be undertaken on a case by case basis by completing a full review of the individual’s goals in their assets and what their wishes are for the disposition of their assets at death.