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Probate is a process which provides an orderly method of paying debts, distributing assets and managing the settlement of an estate. Minnesota has adopted the uniform probate code which does avoid some of the problems that existed before its adoption. However, because it is a court and attorney driven process there are inherent delays and costs.

The process typically follows most if not all of the items listed below.

  • Find and interpret the Will.
  • Appoint a Personal Representative (the administrator of the estate - often a surviving spouse or a family member).
  • Determine the extent and value of the estate (probate assets, as well as non-probate assets).
  • Find and pay creditors of the deceased.
  • Deal with minor children.
  • File tax returns for the deceased (income tax) and for the estate. And if the estate is large enough, file estate tax returns (federal and state).
  • Pay legal, accounting and other expenses of the probate estate.
  • Determine who the heirs are.
  • Distribute the assets to the heirs.

Some assets will are not subject to the probate process, except that they may be counted towards the value of the estate for estate tax purposes, and they may be used to pay creditors if there is not enough probate assets available to pay legitimate claims. Examples of non probate assets include jointly owned property (the survivor automatically receives the asset) and assets that pass by beneficiary designation like life insurance. Small estates, with probate assets of less than $20,000 are not required to complete the probate process.

The basic problems with probate are that the process is:

  • open to the public (not usually an issue except in small towns - or for people whose celebrity or wealth would induce others to peer into the court files);
  • one that may delay access to and distribution of assets (a typical probate takes a year from start to finish);
  • costly; and
  • control rests in the judge.

If you have assets in your individual name, your estate will be subject to the probate process, unless the fair market value of those assets are less than $20,000. Couples with will based plans may sometimes avoid probate at the first death. If most assets are held in joint tenancy, like their house or a bank accounts, or if they are payable by beneficiary designation to the survivor, those assets are not subject to the probate process. But, typically at the second death the survivor would hold his or her wealth individually and a probate would be required.

Even without a probate there will be some expense and delay incurred. Bankers, brokerage houses and life insurance companies need a lot of 'i's dotted and 't's crossed. But, a little planning can avoid much of the expense and delay. For information on probate avoidance see the section on Revocable Living Trusts.

Law Offices of Richard Jensen

Rick Jensen, Attorney and Counsellor at law

(952) 944-0406 or rickj@jenslaw.com


 

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