When Is Probate Necessary?

Probate is a fairly complex process; as a result, people often have many questions related to the topic. Common questions include: Is probate necessary if there’s a will? Do all assets have to go through probate? Is an attorney necessary? We will address these common questions, and provide further information below.

Overview

When Is Probate Necessary

Probate is a legal process in court involving the distribution of assets from a deceased individual. Probate applies to the death of any individual with an estate of any size, with or without a will in place. If a will is in place upon your passing then it will lay down the ground rules for how and to whom your remaining estate is transferred. Without a will in place the court will point an administrator to determine who in fact will receive the remains of your estate.

The very first step in granting probate is the legal process of properly overseeing the estate of a deceased person. It involves resolving all the claims and then distributing the property under the will of the property holder.

When Probate Is Absolutely Necessary

Probate is almost always necessary in the following cases:

Title Transfer – This involved transferring the title of the decedent’s assets. (i.e bank accounts, real property, stock, etc)

Collecting Debts – In order to collect money owed to the deceased individual, Probate Court is generally required to receive these debts.

Ownership Disputes – Court is required to settle disputes among people claiming ownership of the deceased’s property.

Will Disputes – Solving disputes about the validity of the deceased’s will

When There’s No Will – In this case, it’s required for determining the beneficiaries and where to distribute assets of the deceased.

What Assets Require Probate?

It is important to understand that there is a difference between probate property and non-probate property. In general, assets that you alone own are probate assets while those owned jointly with others are often considered non-probate assets. Non-probate assets will automatically pass on to the joint owner upon your death. Another example of a non-probate asset is one that passes on to a named beneficiary automatically such as life insurance.

Is Probate Necessary With a Will?

The short answer is, yes, it’s generally necessary even if there’s a will. Probate is necessary In order to ensure assets are properly distributed to the named beneficiaries.

Additionally, probate is necessary when there’s problems with an existing will. For instance, issues may include: errors within the document, fraudulent execution of the will, if the will was drafted without informed consent by the deceased party, or any other challenges to the integrity of the will.

That being said, there are exceptions and cases where the process can be expedited or avoided. (see the next section for more information).

Can Probate Be Avoided?

As stated above, there are instances where this process can be avoided. It’s important to note, the process involves State Courts as opposed to Federal Courts; therefore, the process may vary from State to State.

For example, in Michigan, if the Courts legally consider your estate a “small estate,” you may qualify for a Simplified Probate Procedure, and, in some cases, avoid it altogether. According to Michigan Legislature (2017), an estate qualifies as a “small estate” if,

“The value of the gross estate, after payment of funeral and burial costs, is $15,000 or less. The court can order property turned over to the surviving spouse or heirs.” (Section 700.3982)

or,

“The value of the entire estate, less liens and encumbrances, does not exceed homestead allowance, family allowance, exempt property, costs of administration, and reasonable expenses of last illness and funeral. The executor can immediately distribute the estate’s assets without giving notice to creditors. (Michigan Legislature, Section 700.3987, 2017).

Most people believe drafting a will is enough to avoid probate but in reality this is not the case. Any and all assets that you personally own even if intending to pass them on to your beneficiaries are subject to probate. The process of probate is time consuming and tedious. The rules that each state follows vary, rarely is probate proceeded with in a timely manner. The process can take anywhere between three months to three years to resolve depending on the state and size of your estate. This is an exceptionally long time for your loved ones to wait to finalize your passing, especially if they need the income from the estate to settle your affairs in full.

The process of probate in itself is costly with various fees. Of course the larger your estate the more potential there is for expense. Smaller estates with properties outside of your state can become quite costly to settle. Taking this all into consideration there are steps that individuals can take to avoid the probate process. Having the following in place can help your loved ones to avoid the often lengthy process of probate.

1) Have a revocable living trust in place.

2) Convert personal accounts and individual retirement accounts to pay on death accounts.

3) Establish joint ownership for any and all property through any one of the following: joint tenancy, tenancy by the entirety and community property.

4) Distribute property to loved ones before you pass away. Gifts proceeding death do not undergo probate when you die.

5) Benefit from small estate laws and provisions. Reputable, local estate planning attorneys can help a great deal with this.

What About Business Assets?

Not always, If the person who passed away had any partnership or there was a co-owner of the business or property then there is no need for probate as the property will automatically and legally be owned by the co-owner. For example, if the deceased person owned bank accounts or property jointly with another person, the co-owner will now be the complete owner of these accounts.

That being said, if there’s a dispute among owners, or other complications, Probate Court will more than likely be necessary.

Do I Need An Attorney?

Yes! Even if the individual passed away with a will in place and it seems like a straightforward case, an attorney is recommended because a lot can go wrong.

Do not fall for DIY articles, cheap online services, or free services as these will provide little value, especially, if something goes wrong. In other words, if there’s an error within a document or something is done incorrectly at any point throughout the process, you and/or your loved ones may not receive the assets/inheritance you’re entitled to. Furthermore, an experienced attorney can help reduce the duration of the process or avoid probate completely.

Probate laws vary depending on individual state law; thus, it’s required to use an attorney that’s licensed in the state which the individual resides at the time of death. For example, if the legal residence of the deceased individual is Florida, then their property will go through the Florida probate process and they should retain an attorney that’s licensed in Florida to help with this process.

Conclusion

Here’s a quick recap to the question/article “When Is Probate Necessary?”

  • Probate is always necessary in the following scenarios: There’s no will, the will/trust is being disputed, assets need to be transferred to another person’s name, or for debt collection.
  • This process can only be avoided under certain circumstances if you have a solid estate plan in place
  • The laws vary depending on the State. It’s best to consult with an attorney who’s knowledgeable of the law specific to the State in question.

About The Author

Sean Nichols is a probate lawyer in Michigan with years of experience. His law firm is dedicated to helping clients avoid a hassle in Court. If you’d like to speak with one of our experienced lawyers, call our offices today (734) 386-0224