mburkhardt@burkhardtlaw.com | (314) 518-1581

Burkhardt Law

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Ensure Your Estate Plan Avoids The Headache of Probate

Every year attorneys have the pleasure to updating their knowledge through continuing education. So this week it was my pleasure to sit through two days of extreme detail about probate court. I’m certain you are not reading this because you want to learn all about probate. However, what I want to communicate is that there was two days of material for an attorney (and there could have been more) demonstrating how complicated probate can be.

Even when it is not complicated, it is an administrative headache. An attorney is often required which is frequently the major expense of probate. But the expense is not the only problem. Probate also has many time constraints. Publication and notices are required unless the estate is under $15,000. Which introduces at least one month, if not over six months, of waiting. Opening a probate estate also creates an easy place for challenges and creditors. All great reasons to avoid probate.

Procedures and laws surrounding probate also affect how you plan to avoid probate. One of the laws mishandled frequently is that a spouse is entitled to at least 1/3 of the assets. This is extremely important in blended families when the spouses do not intend to leave all the assets to the spouse. In order to effectively do this a prenuptial or postnuptial agreement is necessary.

The other important provision regarding probate is that minors may not receive more than $15,000 without involving the probate court. Essentially, this means a trust is required to avoid probate when leaving money to minors.

If this sounds like something you want to avoid, then learn more about avoiding probate here.

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Do You Need a Will?

Many times a potential client calls asking about a will and when we sit down for a consultation, they’re shocked to find out a will doesn’t accomplish what they want. Because this happens on such a regular basis, I thought I would go over what a will does and doesn’t do and when you might need a will or when you might need something more.

First, a will does not avoid probate. In order for a will to be effective, the court must verify the will and give all potential heirs an opportunity to contest the will. As such, assets passing through a will must go through court and may take months to years before they can be accessed. If your goals are to avoid court and hassle, then a will alone will not do this and you want to consider non-probate transfers.

But, maybe most importantly, if you have minor children you need a will. This is because a will is the only place to tell the court who you want to be guardians for your minor children.

However, even if you do not have minor children, I often recommend a will for a few different reasons. While the will may not be your main device to leave money to your beneficiaries, it is a very important back up. If you forget to put a beneficiary on an asset or put an asset in a trust, it will go through probate and a will can make that process easier a few different ways. First, if your beneficiaries differ from intestate law, if will ensure your assets go where you wish. Secondly, no matter whom your beneficiaries are, it can allow probate to proceed more quickly by allowing independent administration and waiving a bond. A will also allows you to choose who is in charge of handling your assets and acting for your beneficiaries as the personal representative or executor.

So while there are a few situations where you need a will, there are many more where you may not need one, but it would be beneficial.

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What Probate Actually Means

Most people don’t understand what probate is and in most of my client meetings I explain what probate actually means. Very simply probate is the court proceeding assets go through to be transferred out of a deceased person’s name. That’s about the only simple thing about probate.

The first thing to know is not all assets must go through probate in ordered to be transferred effectively. If done correctly, an asset with another’s name on it or with beneficiaries listed should not have to go through probate. Beneficiaries are generally automatically done on retirement plans or life insurance policies, but most assets can have a beneficiary listed. On vehicles they’re called “transfer on deaths” (TODs) and on bank accounts they may be stated as “payable on death” (POD). Any asset that has a competent, living adult listed as a beneficiary or co-owner should (for the most part) avoid probate.

However, when plans haven’t been made and beneficiaries haven’t been listed, that’s when the probate court gets involved. Even if there is a will, those assets must go through probate.

There are many different ways for assets to go through probate, but the two I use most often are the small estate affidavit and the full probate proceeding.

A small estate affidavit can be used when the assets that do not have another person’s name on the title or as a beneficiary total $40,000 or less. This process has minimal expenses, but can take a few months to complete. If real estate is involved, any proceeds from a sale may be held in escrow for a year from the date of the deceased’s death. However, attorney’s fee and court fees are much less than full probate. A full probate proceeding, at a minimum, takes 7 months, but often time takes much longer. There are also minimum attorney’s fees based on the size of the estate.

In both proceedings, an attorney is required to file the initial paperwork with the court. Thus attorney fees and court fees start at the very beginning. For a small estate affidavit the assets must be listed in the initial filing and if the value is not known, an appraisal may be necessary. Once the court has accepted the filing, a bond may be required. A bond is like an insurance policy ensuring that the creditors and heirs or beneficiaries of the estate will receive what is legally theirs. The bond amount will be dependent upon the amount of assets and can be very expensive or hard to obtain for some families. If the deceased had a will, this requirement can be waived in the will.

In a full probate case, the next step is for the court to appoint a personal representative. This is the person, also known as an executor, who is responsible for selling and distributing assets. The court may grant independent administration where the personal representative may make some decisions without court approval or it may proceed with supervised administration where the court’s approval is required for any action by the personal representative. Supervised administration will often take more time and cost more in attorney’s fees. Independent administration can also be authorized through a will.

If the assets are over $15,000 of value, publication is also necessary to inform creditors and potential heirs of the probate estate.

Next in the full probate proceeding, the personal representative is required to file an inventory detailing all of the assets, which again, often includes appraisals. Once the inventory has been filed, assets may be sold. Six months and ten days after the first publication the estate may be settled by accounting for any debts that must be paid and the amounts owed to the beneficiaries of the estate.

In either proceeding, there are a ranging set of fees, due to the court, attorneys, bonds, publication, appraisals, etc. It’s generally worth avoiding when possible through advancing planning with an attorney. However, it’s obviously not always possible to avoid. So, if you’ve lost someone and have assets that are still in his or her name, probate in some form is likely necessary.

If you think probate is necessary, there’s often no rush (certainly not once the court is involved). The main date to note, is that a will must be admitted to probate within a year of death. So, if there is a will involved, I would recommend reaching out to an attorney well before that year has passed. However, for most families, probate may be considered on your timeframe. With that in mind, I recommend reaching out to an attorney with any questions, but waiting until you are certain there are no other assets in the deceased’s name before filing with probate.

Burkhardt Law Firm

Phone: (314) 518-1581
Email: mburkhardt@burkhardtlaw.com
Address:
2333 Grissom Dr., Suite 107
St. Louis, MO 63146