Does Having a Last Will and Testament Mean You Avoid Probate Court?
Clients are often unpleasantly surprised to learn that having a Last Will and Testament means you can avoid Probate. They are also sometimes annoyed when they learn that even though they are named as the Executor in a Will, that alone does not give them authority to access the deceased’s assets. Yet both of these statements are true.
What Is Probate?
Probate is the judicial process whereby a will is “proved” in a court of law and accepted as a valid public document that is the true last testament of the deceased, or when the estate is settled according to the laws of intestacy in the state of residence of the deceased at the time of death, in the absence of a legal will.
How To Prove a Will?
The first step is submitting the original Will to the Court with a Petition. After all potential heirs are notified of the filing, the Court will make a determination on appointing the nominated executor. After someone is appointed as Executor, he or she can access the deceased’s accounts, pay bills and begin preparations for filing the paperwork with the Probate Court for the proposed distribution of assets as stated in the Will.
A Last Will and Testament provides the Court with the deceased’s wishes, with respect to the arrangement of the assets, and nominates who should be in charge of taking care of the estate (i.e., the Executor). Without a Will, the deceased’s assets will pass under a hierarchy of relatives, including spouse, children, parents, and siblings. While the Will allows the deceased to specify a different outcome, the distribution still requires Probate Court oversight.
What Assets Fall Under Probate Court jurisdiction?
The Probate Courts have jurisdiction to oversee the placement of certain assets owned by the deceased. The assets under Probate Court jurisdiction include any asset owned by the deceased in his or her name and do not have a beneficiary designation. Assets that the deceased owned jointly with another person pass automatically to that joint owner and do not pass through the deceased’s Will or require probate court involvement.
If the deceased completed paperwork, typically directly with the financial institution, to name a beneficiary or POD (“payable on death”) or TOD (“transfer on death”), that asset passes directly to the named beneficiary without the Will or probate court involvement. Assets that most commonly include beneficiary designations are life insurance and retirement accounts, such as IRA’s and 401(k)’s. All other assets, including individually owned real property, bank accounts and life insurance policies or retirement accounts that have no valid beneficiary designation, require probate court involvement, whether there is a Will or not.
The only way to avoid Probate Court involvement is to remove all assets from your individual name. That can be done in two ways:
- Appoint a joint owner – But, putting a joint owner on all assets can be risky because the joint owner’s creditors could put a claim on the asset. Moreover, the joint owner is often not the only intended beneficiary, but when the asset automatically passes to that joint owner after the deceased’s death, it does not pass to the deceased’s other beneficiaries.
- Prepare a Trust – The less risky way to remove assets from your individual name is to prepare a Revocable Trust and transfer the assets into the Trust.
It is no necessary to avoid Probate or advisable for everyone. It is important to meet with an estate planning attorney who seeks to understand your goals and concerns to recommend a plan that fits your needs and not turn into a cookie-cutter document that cannot analyze all of the moving parts.
If after reviewing your goal and concerns, you determine that a Will is a right plan for you (you might determine that having a Judge oversee your estate and make sure the right people receive the right distributions is not necessarily a bad thing), at least you will know that Probate Court involvement is required and hopefully you can provide guidance to your loved ones on that steps they will need to take after your passing.