Fedele and Murray, P.C.

17 Walpole Street, Norwood, MA 02062-3318 - (781) 551-5900

Avoiding Probate

One concern that many people have and which can be very important is to arrange one’s estate in such a way that everything will "avoid probate" at death. Probate is sometimes talked about as if it were the most important thing you can do, because otherwise, it is said, the government will take everything! In fact, however, probate does not cause anything to go to the government in taxes or otherwise; rather "probate" is the generic term used to describe the administrative process whereby the court system determines the beneficiaries of those assets that are left in one’s sole name at death, i.e., those assets which on their "title page" do not have a named successor owner. Certain assets by their nature will avoid probate because they do have a designated successor owner. Such would include life insurance (payable to a named beneficiary), jointly owned assets (which pass by survivorship), pension plans and IRAs (which have named beneficiaries), and similar items. Assets, which will go through probate, would be such things as the cash owned by a person at death in a bank account that does not have a joint owner. (Even if jointly owned, the same asset will be a probate asset at the survivor’s death.)

Note that even if you have a will, you do not avoid probate. Your will governs the disposition of assets in your sole name. Upon death, your will is filed with the probate court and once approved and allowed, the Personal Representative nominated in your will is given the authority to collect your assets, pay any bills and debts, and then to distribute the assets in accordance with the terms of the will. If you do not have a will, your assets will be disposed of according to the laws of intestacy. Generally, your family will inherit your property by the laws of intestacy, but the amount that each family member may receive may not be the amount that you would wish to leave to them. It is preferable to have a will in place that spells out clearly how you would like your assets disposed of. The probate procedure for administering an estate where the person has a will and where a person does not have a will is virtually the same; in the first case the Personal Representative named in the will takes care of everything, while in those situations where there is no will a Personal Representative is also appointed who has the same basic job, i.e., collect any assets in the decedent’s name, pay any bills and debts, and distribute the assets (either to the "legatees" under the will or to the "heirs-at-law" in the intestate situation).

In any event, the reason to avoid probate is to avoid the delay, publicity, and expenses associated therewith. Because the fees payable to attorneys in probate are often a function of the time spent and because avoiding probate saves considerable time, avoiding probate minimizes the fees payable by your family for estate administration. Even those firms that still charge a percentage of the estate will receive a lower fee because the "non-probate" assets are typically valued at half their actual value in determining the base for calculating the fee.

More important than fees, however, is the simplicity and privacy with which your estate, if not involved in probate, can be administered. Your probate estate would be a public record into which anyone can peer without needing any reason other than curiosity. The world can see the extent of your assets, the beneficiaries to whom you are leaving those assets, and the terms on which you are leaving those assets. Add to that the simplicity that avoidance of probate can provide (by not requiring the extensive inventories, petitions, accounts, etc. that the probate court requires) and a very good case can be made for keeping matters out of the probate courts.

Avoiding probate can be easily achieved through the creation of one or more revocable trusts during lifetime. Avoiding probate thus becomes a simple matter. The assets you currently own would be transferred now into those trusts rather than simply waiting until death to have your will add assets to the trust. At your death you would not own any assets in your own name; instead you would have already given the assets to the trustee who is able to administer and dispose of them immediately at your death in accordance with the terms of the trust without needing any authority from a court. The authority comes from you through the terms of the trust. Even if you are named as trustee, as is typically done, death does not cause any court involvement because the co-trustee, if any, and otherwise the successor trustee, can serve automatically in accordance with the terms of the trust.

Thus, instead of you personally owning your assets, you would have your assets owned by yourself as trustee for the benefit of yourself during your lifetime. This places no restrictions on your access to the assets, but it does allow for the assets to pass on to your family or other designated beneficiaries without the probate court becoming involved at your death. In addition, in the event of your disability, the assets can be administered by a successor trustee without resort to the courts for the appointment of a guardian. That alone can save significant time and expense as well as much adverse publicity in the event of disability. (Appointment of a guardian requires publication of notices in the local newspaper.)

As noted above, funding the trust during lifetime avoids probate which keeps matters private at the time you die: nothing has to be listed at the probate court with respect to the ownership of your assets. Furthermore, because no court delays would be involved, your family would have total access to your assets immediately upon your death.

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