What is Probate?
Probate is a legal process that happens after a person has died. It’s a court-supervised procedure in which a will is validated so the assets of the deceased can be distributed as the will directs. Probate court also verifies who the personal representative (also known as an “executor” or an “administrator”) will be as stated in the will or, if there’s no will, the court will appoint a personal representative. The purpose of probate law is to prevent fraud after someone’s death and also to give creditors an opportunity to make claims against the estate.
Is There a Way to Avoid Probate?
Probate in Massachusetts is a lengthy, expensive, and often confusing process. However, our Woburn trust attorney can prepare a living trust (also called a “revocable trust” or a “revocable living trust”) that bypasses probate and ensures your assets transfer to your heirs quickly and without the fees of probate.
The probate process evaluates and inventories an estate’s assets, pays the estate’s outstanding taxes and debts, and transfers what remains according to the instructions in the decedent’s will (or according to the Massachusetts intestate succession laws if there is no valid will).
Why is Avoiding Probate Important?
You’ll want your heirs to avoid probate for three main reasons. The first is the length of the process. In Massachusetts, the estate must stay open for one year to give creditors and others an opportunity to make claims against the estate. Probate can tie up an estate for months, often more than a year.
A second reason to avoid probate is the cost. The expense of probate can substantially reduce the value of an estate.
A third reason to avoid the probate process is the lack of privacy. Probate is a court proceeding, so everything is on the public record, and anyone can see what your loved ones have inherited. If maintaining privacy is important to you, then avoiding probate also becomes important.
What Makes Probate So Complicated and Costly?
Probate consists almost entirely of legal paperwork. There’s no probate dispute in most cases, so probate seldom requires a lawyer’s research or courtroom skills. Instead, probate lawyers complete a mountain of paperwork, meet filing deadlines, and satisfy other legal requirements.
If you don’t plan ahead to avoid probate, your estate must pay attorneys’ fees, an executor’s fee, court costs, and additional expenses. However, probate is relatively easy to avoid. Alternatives to probate include:
- Revocable living trusts
- Joint property ownership
- Payable-on-death accounts
- Gifts
What is a Revocable Living Trust?
Preparing a revocable living trust is a popular and sure way to avoid probate. A Massachusetts living trust attorney can prepare the revocable living trust that is right for you, your loved ones, and your estate.
The properties and assets you transfer into a revocable living trust don’t have to go through probate. Upon your death, a revocable living trust lets your trustee transfer those properties and assets to your heirs quickly and without probate interference.
In some ways, a revocable living trust is comparable to a will. In both documents, you designate the party or parties who will inherit your assets and properties after your death, but a revocable living trust does more.
What Else Does a Living Trust Provide?
Your living trust actually works during your lifetime, while a will only goes into effect once you pass away. You can name a successor trustee to manage your trust in the event you become incapacitated.
You may modify or cancel a living trust for any reason and at any time. If your trust hasn’t been recently reviewed in the last few years or was prepared in another state, it’s time to review and update it.
Our Woburn trust attorney can review your current living trust or help you create the living trust you need.
How Does Joint Property Ownership Avoid Probate?
In Massachusetts, when a property has two or more owners, two types of joint ownership offer a way to avoid probate upon the first owner’s death:
- Joint tenancy with the right of survivorship: Property that is owned in joint tenancy passes automatically and without probate to the surviving owner or owners.
- Tenancy by the entirety: Tenancy by the entirety is comparable to joint tenancy, but in Massachusetts, it’s allowed for married couples only. It also offers the right of survivorship.
However, a surviving owner would then need to do some estate planning, like a revocable living trust, to ensure the property passes smoothly to their heirs.
How Do Payable-on-Death Accounts Avoid Probate?
To convert your retirement and bank accounts to payable-on-death (POD) accounts, you complete a form at your bank and name one or more beneficiaries. A payable-on-death form can be updated by you during your lifetime. The assets will pass to the beneficiaries in equal shares unless your paperwork indicates otherwise. Upon your death, the beneficiary shows the bank a valid, unexpired government-issued photo ID and your death certificate and receives whatever remains without probate interference.
A transfer-on-death (TOD) form allows you to name one or more beneficiaries who automatically inherit the assets in your stocks, bonds, and investment accounts upon your death and without the need for probate. The assets will pass to the beneficiaries in equal shares unless you specify otherwise. You may update a transfer-on-death form at any time during your life.
However, a POD or TOD may inadvertently conflict with your other estate planning documents. A will or trust may designate one beneficiary for a particular asset or property, while the POD or TOD form names someone else. In these cases, the POD/TOD account usually overrides the will.
It’s a wise choice to have a Massachusetts estate planning attorney assist you with your estate planning documents to ensure no ambiguities or conflicts.
Can You Reduce the Cost of Probate by Giving Away Your Assets?
Giving away your assets and properties before you pass away can reduce the cost of probate, saving more in your estate to pass to beneficiaries. The more an estate is worth, the more probate costs. However, there are some stumbling blocks with this idea.
Giving away assets could impact your financial situation if you need access to those funds later in life. Also, if you ever need MassHealth long-term care coverage, MassHealth will look back five years from the date of application for any large transfers. If they find any large transfers, they will impose a penalty of a disqualification period on your eligibility, regardless of the purpose of the gift. The length of the disqualification period will depend on the amount of the gift. Penalties can be “cured” by the return of the gift to you.
What About Smaller Estates?
Smaller estates in Massachusetts may avoid probate or qualify for a simplified probate procedure called “voluntary administration.” A Massachusetts probate court may direct an estate’s executor to transfer the estate’s assets to the heirs without the full probate process in these circumstances:
- The decedent was a Massachusetts resident.
- The decedent didn’t leave real estate, and the estate’s property is valued at or below $25,000 (excluding one vehicle’s value).
- 30 days or more have passed since the decedent’s death.
- The person who tries to start the legal process (the petitioner) must be 18 years of age or older and an interested person, such as an heir, potential heir, or creditor of the deceased or devisee (person named in a will to inherit real estate). The petitioner doesn’t have to be a resident of Massachusetts.
- No other probate proceeding can be pending.
Who Should Prepare Your Living Trust?
Proper estate planning requires wise choices to ensure your instructions are followed and to protect the value of your estate. When you’re preparing a living trust or any comprehensive estate plan, you should have the advice and services of our qualified Massachusetts living trust attorney, Matthew Karr, at the Heritage Law Center.
We know that our clients have unique goals and needs. We also know it’s essential to protect the assets you have worked for so they pass to your loved ones without excessive costs or complications when that time arrives.
We can’t know the future, but we can prepare for it. Establishing a revocable living trust may be your first step. Call 617-765-9307 to schedule a consultation with our estate planning team at the Heritage Law Center, and let us help you protect your assets and loved ones.
