How to avoid probate with estate planning

How to avoid probate with estate planning?

Many people ask our law office they should conduct Minnesota estate planning. Or, another common question is: what is estate planning?

At a minimum, most clients have some desire to avoid a legal process called “probate”

Estate planning to avoid probate

Attorneys use the term “Estate Planning” to describe process of how to deal with a person’s debts and assets when they die. Common estate planning tools include: Wills, Health Care Directives, Powers of Attorney, and some form real estate deeding.

Why is estate planning done this way?

The answer is simple: to avoid probate. Proper estate planning can do this. (As an aside, probate is not necessarily the worst thing in the world and, at times, it can be helpful). In an estate, law wants to know want to deal with your assets and debts. The easiest way to deal with a person’s debts and assets during life is to put it in writing and have it witnessed. Most people know this process is called making a “Last Will and Testament”.

Furthermore, Minnesota law tells us that, without a Will, you are assets will go to your heirs at law in, more or less, the following fashion: to your spouse pursuant to elective share laws, to children. If no children and no spouse, to your parents. If your parents are deceased, your estate would go to your living siblings.

If none of this applies: the Minnesota table of heirship tells us that your assets will go to first cousins by blood and on down the line. Some people do not want assets to pass this way. Again, it all depends on your situation. The Minnesota table of heirship is logical, but may not be aligned with what many people want.

To avoid the Minnesota table of heirship, a Will and/or Trust is the process or vehicle by which you pass on your estate. However, just having a Will does not necessarily avoid probate. The issue for avoiding probate is having all of your money are under $75,000.00. Minnesota law, so that no court involvement is necessary, no supervised court administration, and no bonds are required. No probate is necessary. Instead, your assets pass quickly to the the people that you want them to pass to. You need to consult with a qualified estate planning attorney to ensure this is done properly.

Avoiding probate: What to do?

As discussed above , to avoid probate, you do need to have estate planning. Not only do you need to have a Will and estate planning, you need to be concerned about titling. As an estate planning attorney, this is the number one issue that non-attorneys do not understand.

Minnesota law tells us that beneficiary designations, pay on death designations, and other beneficiary designations and titling designations are going to be honored before looking at a person’s Will. This means that if you have beneficiaries on account, for example, Minnesota law states that those beneficiary designations trump what you said in your Will.

This same issue applies to titling on real estate. If you have a home lake cabin somewhere in Minnesota, you need to be concerned about titling of your real property.

Titling a real property?

Transfer on death deeds and other proper deeds avoid probate on real estate. A Minnesota probate or estate planning attorney should be consulted to discuss this. Again, proper titling and “estate planning” avoids probate.

It should be noted that automatic transfers do not mean that personal representative does not need to do things like file a deceased person’s law tax returns or pay their debts. Again, “avoid probate” does not mean that the deceased’s debts won’t have to be paid. At a base level, the probate process was created so that there was a uniform legal process by which a person’s estate is taken care of. I have seen more than one instance where, due to automatic title transfers, a personal representative “forgets” pay a deceased’s debts. This could make them personally liable not paying. It is important to understand these issues so that your children are not personally liable for your debts.