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“The process of probate is in place to provide protections, but there are also some drawbacks that go along with it. This is why people often choose to implement probate avoidance strategies.”

RAYMOND J. GERMAN NORTH DAKOTA AND MINNESOTA ESTATE PLANNING ATTORNEY

PROBATE IN MINNESOTA

CAN IT BE AVOIDED?

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Before we look at the subject of probate avoidance, we should explain some things

about the process itself.

If you pass away in direct possession of personal property, this property becomes

probate property.

The last will is the most

commonly utilized vehicle of

asset transfer in the field of

estate planning. When you use a

last will to direct the transfer of

your personally held property,

the heirs to the estate don't

receive their inheritances right away. The executor or personal representative that

you name in the last will must admit the will to probate before any distributions will

be forthcoming.

Probate is the legal process of estate administration. The executor is empowered

to administer the estate, but the administration is supervised by the probate court.

The process of probate is in place to provide protections, but there are also some

drawbacks that go along with it. This is why people often choose to implement

probate avoidance strategies.

PROBATE DRAWBACKS

Probate can be a time-consuming process. Each jurisdiction is going to have a

different caseload, and different states have different laws. Generally speaking, a

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relatively uncomplicated case will pass through probate in perhaps eight months to

a year.

Remember, the heirs to the estate do not receive their inheritances until after the

estate has been probated. At best, this is a significant inconvenience; at worst, the

delay can create hardships for inheritors

who were depending on the decedent for

support.

Another one of the drawbacks of probate is

the loss of privacy. When an estate passes

through probate, the probate records can

be accessed by the general public.

People generally like to conduct their financial affairs confidentially. The way that

you decide to distribute your assets after your passing can be a sensitive subject to

your extended family.

Lastly, there are probate expenses that can consume a noticeable portion of the

estate. These would include the executor's payment, legal fees, filing fees,

accounting charges, appraisal expenses, and liquidation fees.

AVOIDING PROBATE

When you are planning your estate, you can proactively implement probate

avoidance strategies. There are a number of different ways to go about it. The

optimal plan will depend on your unique personal situation.

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If you are not exposed to estate taxes,

a revocable living trust can be a viable

option if you want to avoid probate.

With this type of trust you as the

grantor retain complete control while

you are alive and of sound mind. It is a

revocable trust, so you can rescind the

trust at any time and recapture

personal possession of the property.

The anatomy of a trust involves a

trustee who administers the trust, and

a beneficiary who receives monetary distributions from the trust. While you are still

living, you can act as the trustee and the beneficiary. You name a successor

trustee and a successor beneficiary to take over these roles after you die. (It

should be noted that you could name multiple beneficiaries.)

When you are creating the trust you decide on the terms. The successor trustee

will follow these instructions to distribute assets to the beneficiary according to

your wishes after you pass away.

Probate is not a factor when you utilize a revocable living trust to facilitate asset

transfers to your heir or heirs. The monetary distributions will be made directly

outside of the process of probate.

FLAWED SOLUTIONS

You may hear about some so-called “simple solutions” that you can implement to

German Law Group Probate in Minnesota: Can It Be Avoided? 5

bypass the probate process. One of these is a payable on death or transfer on

death account.

It is possible to open this type of account at a bank or brokerage. You simply name

a beneficiary when you open the account. This person would assume ownership of

the assets in the account after you die. The transfer would not be subject to the

probate process.

If you go this route, what about the rest of the people on your inheritance list? You

could tell the beneficiary to distribute the assets in a certain way, but nothing is

legally compelling the beneficiary to honor your wishes. The beneficiary may have

other ideas.

It is possible to add multiple beneficiaries in some instances, but you typically have

to allow for equal distributions. This may not be consistent with your wishes.

These are just a couple of the problems with payable on death accounts.

Joint tenancy is another flawed solution. A joint tenant is a co-owner of property.

You could make your child a joint tenant of property that you own. However, when

you do this, you are surrendering ownership of half of the property immediately. If

your child was to run into financial problems, the property could be attached by

creditors or the tax man.

Plus, you would need the joint tenant's approval if you wanted to sell the property.

INCAPACITY PLANS BEGINS WHEN YOU WANT IT TO

The creation of an incapacity plan should be something that is high on every

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adult's to-do list. The reality is that, no matter how young, healthy, and secure you

are, you can never know what tomorrow holds. Will you be prepared should the

unexpected occur? Will you be able to rest securely knowing that you've done

everything you can to protect yourself and your family?

If you haven't taken the time to create an incapacity plan you cannot confidently

answer these questions. If you want to answer them, and know that your wishes

will be respected, you will have to create an incapacity plan.

The attorneys and staff at the German Law Group have years of experience

guiding our clients through the incapacity planning process. We know what issues

you will have to consider, the decisions you will have to make, and can explain the

options available to you. Yet all of our knowledge and experience means nothing if

you do not make the choice to contact us.

We can help you craft your plan and prepare for the future, but we cannot force

you to start. That decision is up to you.

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CONCLUSION

Probate is a legal process that comes along with some inherent drawbacks. It is

possible to implement probate avoidance strategies.

Each case is different, and the optimal course of action will depend on the

circumstances. If you want to avoid probate, discuss your options with a licensed

Minnesota estate planning attorney.

REFERENCES

Legal Dictionary http://legal-dictionary.thefreedictionary.com/probate Nolo http://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter0-4.html

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About the Author

Raymond J. German

As an attorney in Minnesota and North Dakota, Raymond

J. German provides a wide range of estate planning

services to his clients, with a primary focus on helping

them provide for the security of their loved ones, reduce

estate taxes and avoid or at least minimize the costs and

delays of probate, all with a well-crafted estate plan. Mr.

German defines the mission statement for German Law

Group, PC as "Helping one family at a time pass on values,

beliefs and finances, which can be shared for generations

to come." Mr. German is well aware of the growing

importance of estate planning and dedicates himself to informing the public of the

need for careful attention to their specific situations. He is a frequent speaker on a

variety of estate planning topics, regularly presenting educational seminars for the

public as well as private groups.

Raymond J. German approaches each challenge with not just solid expertise, but

also remarkable enthusiasm and vigor. By constantly seeking simpler, better, and

more effective ways of doing things, he continues to make a real difference in the

lives of families and on the way estate planning is practiced by attorneys around

the country.

German Law Group, PC www.GermanLawGroup.com

GRAND FORKS 2650 32nd Avenue South, Suite O

Grand Forks, ND 58201 Phone: (701) 738-0060

Toll Free: (800) 774-7576 Fax: (701) 738-0064