"I'm giving her all she's got captain!"
Never was this statement so applicable as when the infamous starship Enterprise was attempting to pull free of a Black Hole in the blockbuster hit Star Trek The Future Begins. It took all thrusters firing and then some to escape.
Black Holes have a way of pulling you into darkness, with gravity fields so strong that not even light traveling at 186,000 miles per second escapes it. The last thing you want to do in space is lose your warp speed when approaching a Black Hole.
Welcome to probate.
Ok, perhaps the analogy is a bit harsh. Afterall, the probate Black Hole is not the crushing menace of the celestial kind. But it does pull you in, sucking time and money out of you. It's a dark place for first time travelers but eventually it spits you out on the other end, sometimes for the better. Experienced probate attorneys know this and are not intimidated as they routinely enter 'where no man has gone before' and escape to do it again.
But how does one get sucked into the probate Black Hole? By having a " I will get to it someday" mentality when it comes to estate planning, i.e., by drifting through life. What's needed is intentionality or, "thrusters" to propel you away from these Black Holes. I will introduce you here to five such thrusters in this article. Two are quite popular, two not so much and one is just plain odd.
With that let's get the two unpopular thrusters out of the way first.
Open "joint" accounts. When you die whomever you have listed on your accounts as "joint" will have access to the asset right away, without going through probate. But the drawbacks to this arrangement are considerable. A joint owner may withdraw a part or 100% of the assets, whether you are alive or dead. And even if your joint owner has stellar ethics, i.e., respecting your money, his or her creditors won't care. Creditors will now have presumptive access to your assets to pay for the other joint owner's bills. This is not a recommended thruster to use.
Die broke. Ok, this one's kinda' funny but not really. This is the equivalent to a starship never leaving the launch pad. You don't have to worry about encountering Black Holes if you never launch. In Minnesota, never launching means dying with less than $75,000 in "probate" assets. If that happens no probate is required so long as those probate assets do not involve real estate.
But you're a Johnnie or a Bennie. We don't die broke. Next.
Obtain a Revocable Living Trust. This is the most universally recognized way to avoid probate. Everything placed in your Trust during your lifetime or, after death via a beneficiary designation, will skip probate. But for this to work you must actually "fund" your trust. This is a common area of failure with Trusts. Obtaining a Revocable Living Trust will be your most costly option, costing two to three times as much as your Will option, but considering the savings of not having to pay for probate it could be viewed as a type of prepaid funeral plan.
Place beneficiary designations, at the institutions holding your money, and expressly name individuals or charities to receive your estate assets upon your death. Those assets will go straight to the beneficiaries within weeks of your death, without a probate proceeding.
Using beneficiary designations as a 'probate avoidance' tool is not failsafe, however. There are situations where probate will become necessary such as gifting to a minor, a wrongful death lawsuit brought on your behalf after your passing or, having a beneficiary die before you with no successor beneficiary named. Assets with no beneficiary designations at death are 'mystery assets' and are thus deemed "probate". Once 'mystery assets' exceed $75,000 (this amount & concept varies from state to state) going through probate becomes a must, no matter if you have a Will. You see, a Will is more a 'mystery solver' than a 'probate avoider'. A Will does not avoid probate, a Will controls probate.
A Will is not a Thruster
So, if you're thinking, I will skip getting a Will then, read further.
If one must enter a Black Hole a Will acts as the steering mechanism to get you through. It cuts down the time and expense of probate by designating "informal" and/or "unsupervised" proceedings with "no bond" being required, as examples. Bottom line, having a Will in place establishes a comforting back up plan for that looming Black Hole. Even a Trust is accompanied by something called a "Pour Over Will", a Will that picks up probate assets lying outside a Trust at death and "pours" them into the Trust.
And what about that odd ball Thruster #5?
This is the sure fire, 100%, guaranteed way to avoid probate.
Ok, Scotty, you can beam me up now.
Joe Field, Esq.
Joe Field, SJU class of '79, is the senior attorney & owner of Field Law, P.A. located in Anoka, Minnesota. Joe also published "Finding Joe Adams" in 2020, a memoir which details him finding his father for the first time in 2017 (they both appeared on national television) & his faith journey through trying times. Joe is now writing his second book dealing with the subject of avoiding probate.
Featuring Geordie Griffiths '93 of George Byron Griffiths Law, PLLC in Minneapolis
Do I need a will? What does it accomplish for me and my family/heirs?
Everyone has a Will, whether they realize it or not. Every state has laws of "intestacy" which dictate how a person's Estate will be distributed upon their death. The scheme provided by law may mimic what a person would want to have happen to their assets; but in many cases, it may not. In order to ensure that your Estate will be divided in the way you intend, then you must execute a valid Will. However, having a Will is only one part of the equation. While the Will dictates what will happen to a person's assets after they die, it's also important to execute two important documents that operate during one's life. A Power of Attorney document gives the legal authority to someone else to make your financial and legal decisions on your behalf, especially if you become incapacitated or incompetent. It's important that the person named be trustworthy and also have good attention to detail. You may name one or more persons to act on your behalf, and they may be named to act independently or to act jointly. A Health Care Directive gives the legal authority to someone else to make your medical decisions, only if you cannot communicate your wishes to a medical provider. This document also allows you to indicate if you wish to be an organ donor and if you prefer to be buried or cremated after death. A comprehensive Estate Plan will include a Will, perhaps a Trust, a Power of Attorney, a Health Care Directive, and a Digital Asset Authorization.
What is probate? Is it important that I try to avoid it?
Probate is the judicial process whereby a Will is "proved" in a court of law and accepted as a valid public document that is the true last Will of the deceased, or whereby the Estate is settled according to the laws of intestacy in the state of residence of the deceased at time of death in the absence of a legal Will. When there are minor beneficiaries to a Will, or when beneficiaries are arguing, Probate can be a beneficial process because it produces orders from a court that are binding on all parties. However, Probate can take time and money, and if beneficiaries are arguing, the more time and money it will take. Some of my clients wish to avoid Probate completely. One of the main reasons to avoid Probate is because it is a public process, meaning that all documents -- including one's Will -- become part of the public record. Some clients wish to maintain privacy for who will benefit from their Estate, and to accomplish that, they will have a "pour-over" Will which devises everything to a Revocable Trust. Then the Trust document, which is private, dictates how the Estate will be distributed. Another reason why it may be important to avoid Probate is when a person owns real estate in more than one state. If a person has a homestead in Minnesota, but also has a condo in Florida, then that person's estate could potentially be subject to Probate in both states upon their death. Deeding one's property, or properties, into a Revocable Trust is an effective way of avoiding Probate in the state(s) where real estate is owned.
*If you're an estate planning attorney or advisor who'd like to participate in the series, please contact Jim Kuhn at (320) 363-2116 or firstname.lastname@example.org