Probate - What is it anyway?
Probate is a legal process that manages a person’s property after they die. Probate affects both people who die and have a will (testate) and those who don't (intestate). It includes:
• proving in court that the will is valid or notifying the court that there is no will
• appointing a Personal Representative
• identifying and inventorying the deceased person's property
• valuing the property
• paying the decedent’s bills
• paying any estate taxes
• distributing the remaining property as the will instructs (or by statute, if there's no will)
The will identifies a “Personal Representative” (formerly known as an executor) who manages the process. In Minnesota, the Personal Representative gets papers called “Letters Testamentary” to show they have court approval to manage the estate. Probate includes paperwork and court appearances. Personal Representatives hire professionals such as attorneys, accountants, appraisers, and/or tax preparers to complete the process. It can take anywhere from a few months to a couple of years to close somebody’s estate.
The costs and court fees are paid from estate property. In Minnesota, some property or assets identified by statute can be protected from sale to pay probate costs. Property held in the decedent’s name only go through probate. This can include real estate that is titled solely in the decedent's name or held as a tenant in common. It also includes personal property, such as jewelry, furniture, and vehicles.
Probate does not affect non-probate assets, although the Personal Representative often ends up managing them, too. Non-probate assets include jointly held real estate or bank accounts. They also include property or bank accounts with “payable on death” (POD) or “transfer on death” (TOD) designations, life insurance, trusts, and retirement accounts. Some of these assets are included in the decedent’s taxable estate, even though they do not go through the probate process.
Whether you are a Personal Representative or doing your own estate planning, it’s important to understand what probate is and what property it affects. A good estate plan coordinates probate and non-probate assets to achieve the client’s goals.