The Probate Process
When someone dies, certain assets may to pass to that individual's heirs free of court interference; however, many assets do not automatically pass to those heirs without a court process. That court process is called probate. If a loved one has died, it is a good idea to meet with an attorney to determine what specifically needs to be done to ensure title passes correctly and that the will is administered properly.
During the probate process, if the deceased person created a will during their lifetime, it is called a testate probate and the deceased individual's will is presented to the court and certain tasks must be performed. If the deceased person did not create a will during their lifetime, it is called and intestate probate and the court will direct distribution in accordance with state statute.
Certain debts and taxes of the deceased person must be paid, so it needs to be determined what the deceased person owned at the time of death, so that payment can be made. Thereafter, once all the necessary legal requirements have been completed, the property may be distributed as directed by a will or by state law.
Probate in the state of North Dakota or Minnesota can be relatively quick and inexpensive; however, it can also become lengthy and time-consuming. Probate can be formal or informal.
In an informal probate, the appointed personal representative or executor manages assets, pays any debts, files required tax returns and various court documents, and distributes the estate assets. In a formal probate, the probate judge must approve almost every detail of the estate administration.
Probate can be overwhelming, especially during a times of grief. The attorneys and paralegals at Sandin Law understand this and do what we can to bring peace through trusted advice. Our probate process provides our clients with an understanding of what to expect, a timeline with set goals and organizational tools to ensure the process stays on track.
If a loved one has passed away and you require probate assistance, the attorneys and team at Sandin Law can help.
Because probate can be a lengthy, expensive and public process, many people choose to avoid it. There are a number of strategies that will allow you to pass property to another person after death, without going through probate.
- Joint Tenancy with Right of Survivorship. Adding another person to your assets as a joint owner or "joint tenant with rights of survivorship" will allow your property to pass to them upon your death without going through probate. There are pitfalls to this strategy, however, to include subjecting such assets to any claims (such as lawsuits) against the co-owner and making them available to the co-owner's creditors - all while you are still alive and planning on using the assets yourself. Additionally, if you "add" a joint owner to property during your lifetime, there may be an obligation to file a gift tax return and create other gift tax implications.
- Beneficiary Designations. North Dakota and Minnesota allow Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts and the transfer of business interests at death, as well as allow Transfer on Death Deeds providing a beneficiary-like designation on your real estate. Beneficiary designations like these are preferable to joint tenancy in that they allow you to transfer property only upon your death without giving away current ownership. However, one of the drawbacks is that it can be difficult to obtain an equitable distribution of property among your heirs by utilizing beneficiary designations, plus it is difficult to provide contingencies in the event those listed individuals do not survive you like you intended. Additionally, it is important to keep in mind that if you have beneficiaries listed on your assets, those assets will be distributed upon your death to the listed beneficiaries, even if your will states otherwise.
- Revocable Living Trust. A Revocable Living Trust is a legal document that allows you to establish a separate entity (the trust) to "hold" legal title to your assets while you are alive, and to name trustees to manage those assets according to the trust terms during your incapacity and at your death. Typically, you serve as the trustee while you are alive, managing your assets for your own benefit. Upon your disability or death, the trust terms appoint your successor trustee who then continues to manage or distribute the assets held in trust. A properly drafted trust can accomplish many goals, including incapacity planning and probate avoidance for your estate and loved ones, as well as marital and creditor protection for your children.
Estate and Trust Administration
A properly drafted and funded trust will generally avoid probate. The trust need not be filed with the probate court. Nonetheless, there are still steps that need to be taken by the successor trustee to administer the trust, such as beneficiaries must be contacted, assets must be gathered, valued and managed, potential creditors must be notified, debts, taxes and final expenses must be paid, and lastly, any remaining income and assets must be distributed in compliance with the trust terms.
Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. Oftentimes, a corporate fiduciary (e.g., a trust company) is an excellent alternative to relying solely on a family member or friend to serve as trustee, who may not have the time or the knowledge.
The attorneys and paralegal team at Sandin Law can help your successor trustee(s) deal with the complexities of administering your trust. Please call our office, and we will be happy to schedule a consultation, whether or not our office has drafted the original trust.