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Trust and Estates Attorneys

To Probate or Not to Probate

By Trusts and Estates Attorney Kerri Castellini

I find myself in a number of initial estate planning meetings defending the underdog:  Probate.  Clients tell me that their sole goal for estate planning is to avoid the dreaded P word.  When I inquire further for the reasons in wanting to avoid probate, I receive a litany of answers, but most often the following three:  (1) “I don’t want my money tied up in the courts for years” (2) “I don’t want the state to take my estate” and (3) “everyone told me to do it.”  So what is this probate that so many seek to avoid?

Probate is the term used to describe the court process of administering a decedent’s estate.  Probate, or the “proving of the Will,” often requires at minimum the filing of the original last will and testament with the Court.  Whether any additional estate administration is required, will depend on the assets that remaining in the decedent’s sole name on the date of death.

The term probate and mystery surrounding the process itself often garners the circulation of misinformation.  Foremost, that probate can be avoided after someone passes away.  While avoiding probate may be a goal for many, planning to avoid probate occurs while an individual is alive.  Once an individual passes away, any assets remaining in his or her sole name without a joint owner or beneficiary designation will be subject to the probate process.

Secondly, probating an estate does not mean that the state is going to automatically take the assets of the estate.  Estate assets only escheat to the state when no heirs exist or an heir cannot be located.  Most risk for assets escheating to the estate can be avoided by preparing an up to date last will and testament.

Finally, often the probate process does not have much bearing on the length of time that it takes to administer an estate.  While the probate process does require certain filing deadlines, often the process of administering an estate, regardless of probate, takes at least one (1) year.

Probate can be beneficial in certain cases. Probate in Maryland and the District of Columbia can be a streamlined process if up to date estate planning is prepared by the decedent prior to death.  In addition, probating an estate can shorten the statute of limitations on certain claims, as well as provide some court oversight to the Personal Representative’s actions.

The process of probate can often trigger action by a grieving family after the death of a loved one. Because action is necessary to access assets, other deadlines, such as the filing of income tax returns, or the nine (9) month estate tax return deadline are more likely to be on the radar of the duties required by the Personal Representative.

While I am not opposed to the probate process, it is not without some of the shortcomings that have given the process its ugly reputation. The probate process is a public process, more so in some jurisdictions that others.  Any filing with the court becomes part of the public record, and can be available to see by anyone who requests copies of the docket.  This may mean that details regarding assets, heirs, and even the decedent’s Last Will and Testament are available for view by anyone that requests the information.  In addition, probate can be difficult to navigate by those not familiar with the process.

For those that are still not convinced that probate is not so bad, a frequently used method to avoid probate is signing and funding a revocable living trust.   A revocable living trust allows any assets that have been pre-funded into the trust to avoid the probate process.

However, it should be noted that the assets have to be actually retitled into the name of the trust prior to the decedent’s death to avoid probate. This means that real estate needs to be deeded, account names need to be changed, and beneficiary designations need to be coordinated for the trust to control the disposition of assets.

Another common misunderstanding is that while a revocable living trust may remove assets from a decedent’s probate estate, it does not remove assets from their taxable estate.  Assets titled in the name of the revocable living trust may still be subject to state and/or federal estate tax.

The major takeaways regarding probate include:  (1) Probate gets a bad reputation because of misinformation, (2) The discussion regarding avoiding probate, and how to properly do so, is one that may be had with your estate planning attorney, and (3) If probate is required, all is not lost.  An attorney can assist with navigating the probate process and the administration of the estate.