People who truly understand probate often have widely differing opinions about its merit. While there is no question about its importance in ensuring that a decedent’s property is properly distributed to his or her heirs, the probate process can sometimes evoke strong negative emotions for the family members who endure it. Many of them become frustrated due to the time and cost involved in the process, which is just one reason why so many people try to use estate planning to avoid probate altogether. The good news is that there are some simplified solutions that can help some estates to avoid that process. The question is simple: do I need probate? The answer can depend upon a variety of factors.
Assets that May Need Probate
Though there are many people who seem to assume that they can avoid probate by making a will, that’s not exactly how the system works. In both theory and practice, probate affects all assets that have no automatic means for transferring ownership. Your will doesn’t transfer anything to your heirs; it merely allows you to state your intentions. The actual transfer of ownership can only be achieved using processes set forth in the legal code – including probate.
Of course, that means that any assets that don’t automatically transfer to heirs when you die may have to go through probate before they can be distributed. As a rule, that typically means property that you own in just your name, with no transfer or beneficiary designations. They include:
- Bank accounts in your name that have no beneficiary designations to direct transfer of ownership when you die.
- Real estate owned solely by you.
- Insurance policies, if you’ve failed to name beneficiaries.
- Stocks and bonds that have no other means of transferring ownership.
- Testamentary trusts, since they are only created when the will is probated.
- Household belongings, vehicles, business interests, and similar assets.
Informal Probate Options
Of course, there are many estates that are so simple that it would just be a waste of resources to subject them to the probate process. To help families settle those estates without lengthy and costly probate proceedings, Michigan laws provide simplified processes that either proceed without the involvement of the probate court or with just minimal involvement. To qualify for those settlement options, the estate needs to meet certain qualifications.
To begin with, the total value of the estate must be no more than $22,000 if the deceased passed away between 2014 and 2016. That amount changes periodically, however, so it’s important to check with a probate attorney to see whether your loved one’s estate qualifies. The process for these small estates involves transfer by affidavit or assignment of property. The former requires an heir to present the deceased’s death certificate and an affidavit to the entity that holds the deceased’s property. The latter requires the probate judge to execute a review of the property so that he or she can approve the transfer.
The transfer by affidavit option is not available for real property like real estate or business interests, but it can be used for the type of property that is held by entities like banks or stock brokerage companies. To use this process, the heir need only present the proper documents to whichever entity has possession of the assets in question. No court involvement is necessary.
The assignment process can only be used by an heir or by the person who was responsible for ensuring that the funeral bills were paid. To use this process, that person must have knowledge of the deceased’s property. He or she must also be able to identify all the deceased’s heirs. The judge needs to be presented a list of all the property in question, along with its estimated value. The petition for assignment of property needs to be filed with the court of the county where the deceased lived prior to death.
The Easy Way to Avoid Probate
If you’re an heir looking to avoid probate, having those simple settlement options can be a tremendous benefit. However, those options are only available when the estate meets those asset limits. So, what happens when the estate is too big to qualify for those simpler options? Obviously, that estate needs to go through probate. If you’re wondering how you can help your heirs avoid that process, there are some things that you can do.
- Use transfer-on-death provisions with bank accounts to enable those accounts to pass directly to an heir without the need for probate. With this provision, you assign a beneficiary to the account, and when you die that account can be claimed by the heir without any court involvement.
- Utilize joint tenancy for real estate and other properties. You and the person you want to receive your property are both listed as joint tenants, with rights of survivorship. When one of you dies, the asset passes automatically to the surviving tenant.
- Create trusts. With a living trust, you can serve as trustee during your life, and assign a successor trustee to ensure that your assets are distributed to your heirs when you die. Since those assets are owned by the trust and there is a system in place to transfer them when you die, no probate will be necessary.
If avoiding probate is a priority for you, there are many ways to accomplish that goal. The key is to rely on an experienced estate planning and probate attorney to help ensure that the strategies you use work to achieve your desired ends.
At Biddinger, Bitzer & Estelle, PLLC, our probate experts can help you to make sense of your estate resolution options and determine the best strategy for your individual and family needs. Whether you are wondering whether your loved one’s estate can take advantage of simplified probate procedures or simply want to structure your estate so that your heirs never need to deal with those questions, our team has the answers. To discover how we can assist you with your estate planning and probate needs, contact us at our website or call us today at (989) 872-5601.