Avoiding Probate
“Probate” is a court-supervised legal process that may be required after someone dies. If the decedent owned assets, such as bank accounts, investment accounts or real estate in his or her own name, those assets will largely be unavailable to family or anyone else until the probate process is initiated and a Personal Representative (someone who is typically nominated in a decedent’s Will) is appointed by a local probate court to administer the decedent’s estate.
Under Massachusetts law, there are a few different types of probate proceedings available. The vast majority are handled through Informal Probate, which is a simple, expedited process, initiated by filing specific forms and materials with the court. Once the Personal Representative is approved under this petition, the Personal Representative is free to administer the estate with little court oversight. This process is not available in all situations, such as when an original will cannot be located, there is a question about the validity of a will, or there is a question regarding heirs and beneficiaries. In such cases, a Formal Probate will be required, and is also initiated by filing specific forms with the court, and tends to involve more court oversight. There are other cases in which a Formal Probate will be advised, even if not required. Regardless of which process is initiated, the probate process causes some expense and delay, with a formal process taking longer than the informal. In Massachusetts, the probate process in general is not onerous—there are court filing fees and attorney’s fees, and a few weeks of delay—so some clients do not bother avoiding probate.
Probate proceedings are not always necessary, and the idea that a decedent’s assets would be available to provide for a surviving spouse or child with little or no delay might be attractive. Some assets avoid probate because they were not owned in the decedent’s name at the time of death, or they transfer automatically at the death of the owner without the probate process, and do not pass at death in accordance with a will. Some examples are:
Assets owned as joint tenants with right of survivorship or “tenants by the entirety”
Assets that comes with the feature of a beneficiary designation such as:
Life insurance benefits
Retirement plan and IRA benefits
Bank accounts with a payable-on-death (POD) feature
Investment accounts with a transfer-on-death (TOD) feature
3. Any asset titled in the name of the decedent’s revocable trust during the decedent’s life—the trust can contain all of the provisions governing how assets will pass at the decedent’s death.
A person can avoid the delay and expense of a probate process at his or her death by making use of joint ownership with right of survivorship and beneficiary designation forms. And, for assets that will not be jointly owned and that do not come with the feature of a beneficiary designation form, ownership of such assets can be transferred during the person’s lifetime to his or her revocable trust. If probate can be avoided because of one or all of these techniques, then the decedent’s will is not needed and never ends up being used. But we still recommend that everyone has a will, just in case the decedent ends up owning some assets at death and, despite best efforts to avoid probate, a probate proceeding is required.
If a Massachusetts resident owns real estate outside of Massachusetts, he or she should consider transferring the property to his or her revocable trust in order to avoid the need for a second probate (“ancillary probate”) in that other jurisdiction.
An individual funding his or her revocable trust usually does not result in loss of any control, because the individual usually serves as Trustee of the trust and still controls the asset; and in any event, the individual retains the right to revoke the trust and take back individual ownership of the trust assets.
Funding a revocable trust does not remove trust assets from exposure to the individual’s creditors because the individual has retained control. Similarly, funding a revocable trust does not remove trust assets from exposure to estate taxes at the death of the individual. Even when an individual avoids probate, there are still post-death administrative tasks such as collecting the decedent’s assets, paying the decedent’s debts, attending to the decedent’s income and estate taxes, and distributing the decedent’s property either in accordance with the decedent’s Will or, if the decedent left no Will, pursuant to state law.