How Do I Avoid Probate?

This question is often asked when a new client visits with us after a recent death of a friend or family member. "Is there any way around this?" "Do I really have to go through this process?" 

Probate is often required under the law. See this link to understand what a probate administration entails. The state of Minnesota simply wants to ensure that the decedent's property goes to the appropriate heirs or beneficiaries. Sometimes, a probate proceeding is required to help determine who the heirs are and what they should receive of the deceased person's assets.

Let's use the following example to outline a couple of ways probate can be avoided. Bob passes away and has no other assets other than (1) jointly held bank accounts with his spouse Jean, (2) Bob's retirement accounts has Jean named as the primary beneficiary, and (3) Bob and Jean own their home jointly (called the "primary homestead"). All of these assets are considered "non-probate" because they have an identifiable beneficiary -- Jean. 

1. Affidavit of Collection of Personal Property: When The Total Value of "Probate" Assets are less than $75,000. If we change the above example just a bit and add an asset, e.g. an investment account worth $70,000 that is held in Bob's name alone and has no named beneficiary. This is considered a "probate asset" because Bob has not named who he wants to receive this account. This alone would not trigger a probate, however. Jean, as the surviving spouse, would be able to "avoid" probate by having her attorney draft an Affidavit of Collection of Personal Property. The state of Minnesota permits heirs to collect assets without the need for a full-blown probate proceeding if they can prove their right to inherit and provide this signed affidavit along with a certified copy of the decedent's death certificate to the financial institution where the account is held. 

2. Summary Distribution: When the Only Probate Asset is the Primary Homestead. There are a number of legal requirements that must be met to qualify for this type of proceeding which I will not go into here, but it is available at times when the only asset is the decedent's primary place of residence. If Bob owned the home in his name alone (Jean is not on the title with him) and there are virtually no other "probate assets", then there is a shortened administrative proceeding that can be used to get the home transferred to Jean because the homestead is considered an asset that is exempt from all creditors (except for any mortgages on the property). 

3. Proper Planning Prior to Death! This is a bit tongue-in-cheek, but if one takes the time to consider where they want their assets to go at their death then it takes very little additional effort to make the necessary changes to avoid the need for a probate. If we again adjust the original example above and add in Bob's investment account but assume it has $100,000 in it rather than $70,000 (and remember that this account is held in the Bob's name only and has no named beneficiary), then that account becomes a "probate asset" and a probate proceeding is required under the law. If Bob and Jean had discussed their goals  (e.g. avoid probate!) and financial inventory with an estate planning attorney and financial advisor before Bob's death, they would have learned that this asset needed a beneficiary designation in order to be considered "non-probate". 

Please remember, this post provides educational information only and in no way constitutes legal advice.