What is Probate?
So let’s start with the basics – what is “probate”?
The court process of “probate” that we will discuss in this article only deals with a person’s “probate” property and the Massachusetts Probate Courts do not have authority over or even care to know about “non-probate” property in most circumstances. So, in order to fully understand probate, I think it is imperative we first understand “probate” versus “non-probate” property.
Generally, probate property is 1) individually owned, and 2) has no designated beneficiary. Probate property is often the surviving spouse’s real estate, or someone’s individual checking account, or a car (all individually owned). Retirement assets often have a named beneficiary, or the beneficiary is determined under the plan, and is therefore generally not probate property (because although it is individually owned, it has a designated beneficiary). A joint checking account between spouses or a parent and child is also not probate property (because the asset is not individually owned and immediately passes to the surviving account owner at death). Assets owned by someone’s revocable living trust are also not probate property (because the asset is not ‘individually’ owned).
At death, your loved ones will need to determine what “probate” property you own, if any. This will be pretty apparent as jointly owned property will be accessible by the surviving owner, assets with beneficiary designations will be distributed directly to the named beneficiary, and trust assets will be accessible by the successor Trustee. With probate property, your loved ones will, in a sense, hit a wall and be refused access to the asset. Someone (a bank teller, financial advisor, the registry of deeds) will hold up a stop sign and say – “STOP! You cannot proceed without court appointment or approval.” Once your loved one hits this ‘wall,’ they will immediately realize the need for court involvement (in other words – probate!).
The need for court involvement or probate does not have anything to do with whether or not someone has a Will. I repeat, the need for court involvement when someone dies with probate assets has nothing to do with whether or not she has a Will! I am a huge fan of the Wizard of Oz and I often think of probate as the yellow brick road. Who is traveling on the yellow brick road? Your loved ones – whoever would help administer your probate property at your death (maybe a spouse, child, close friend, or attorney). Where does the yellow brick road lead? Why to the Emerald City of course! And who is at the Emerald City? Oz…I mean, the probate judge. While traveling on the yellow brick road towards the Emerald City, which is the only route when dealing with probate assets, your loved one may encounter friends, allies, apple-throwing trees, maybe even a flying monkey or two. Who she encounters while traveling on the yellow brick road is dependent on many factors, such as whether or not you had a properly drafted Will, whether your family is contesting the Will, or whether you had no Will at all. So, although in any case your loved one is traveling on the yellow brick road to get to the Emerald City, how easy the path (how many flying monkeys swoop in to cause havoc), will be entirely dependent on your Will and your family (not to say that Oz never blows some smoke and fire into the mix).
So, what will your loved ones encounter on the yellow brick road? Well, if you have a Will, your nominated Personal Representative will need to file the Will with the probate court and request appointment through the court as the Personal Representative. If you have no Will, then someone with priority as determined under the law (such as a spouse or child), will request appointment as the Personal Representative. If there is little probate property (under $25,000 in cash, and/or a car), then your Personal Representative will travel on the yellow brick road at turbo speed and get to the Emerald City in no time! If there are more assets, or more complexities, then your Personal Representative will need to proceed with either an informal or formal probate. There are many factors that are involved when deciding which option (formal or informal) to choose. Personal Representatives often hire attorneys to assist in this process and ensure the yellow brick road is as bump-free as possible.
Once appointed, your Personal Representative will be given the authority to access your probate assets, and is tasked with administering them – paying your last bills, creditors, and then ultimately distributing the balance of your probate assets, if any, to those you have named in your Will (i.e. the devisees), or your heirs as determined by Massachusetts laws (if you have no Will). The yellow brick road is long, windy, riddled with unexpected turns, but your Personal Representative will eventually get to the Emerald City. It takes at least a year, but the road is often smooth and calm during that time. If you die without a Will, the probate path (the yellow brick road) may be more difficult for your Personal Representative, and who ultimately receives your property is determined by the laws of Massachusetts (i.e. your heirs). Your Will acts to override certain defaults in the law, but it does not avoid probate!
Over the next installments in this newsletter series on probate, we will go into further detail about whether we really want to avoid probate, how probate fits into your current estate plan, and what happens if you have no Will.
Please do not hesitate to contact me should you need assistance with probate or your estate plan. Because although the yellow brick road may be great at times….there’s no place like home.
Next: Do I really want to avoid probate?