What Are The Options To Avoid The Occurrence Of Probate?

There are a few options to avoid probate. One option is for you to give away everything before you die. For most people that’s not an option they want. Another way to do it is to put your assets into a trust where you still have some access to them. There are various types of trust, some are more flexible than others. If the trust is fully funded; meaning the title has been transferred to your assets then you’re going to avoid probate in that case. Another means is through transfer on death accounts that you can put in a beneficiary designation that says if I pass then give it to this person. Some older people like to put a child on the account so if something happens to them the account automatically passes to that child. There’s some problem with these types of transfers that don’t involve the trust that I have encountered.

One problem is if you put a child on an account and there’s a creditor situation against that child or divorce then there could be an issues with your assets being considered attached. That’s one negative about not protecting them properly. For example, we had a case in which another type of a creditor came in. The client was a well-educated man; a professor at an esteemed university. He became ill. This woman became friendly with him. He had four children who, for 40 years all of his planning documents indicated that he had wanted his children and grandchildren to obtain his estate with the exception of one asset he wanted to go to this woman. She didn’t think that was enough. She found ways to whittle her way in and start changing the beneficiary designations on the assets. A lawsuit evolved and it was very sad because it was very clear that this man had no idea what was going on with this woman.

Again, the avoidance of probate can occur in various ways but the best way is to set up a trust and name someone that you trust as the trustee to manage your affairs and make sure that problems, such as creditors and predators, aren’t able to whittle their way into your life and take away your hard-earned money or disrupt what you’ve planned to give to your loved ones, family, charities, and whomever you want to give your money to.

What Actually Happens During The Probate Process?

When talking about the probate process I assume were talking about a will. To describe all of these processes would take quite a bit of time. Let’s just talk about the one that most people think of as probate which is disposing of assets upon death via a will or other method. You have to file a petition with the court if you have a will that will get deposited with the court. Then the court will send out a citation and that citation will have to be served upon all interested parties in the estate which includes heirs, devisees etc. Interestingly, at least in Massachusetts, you still have to post it in a newspaper; the court tells you which one. This gives a timeline in which you provided that proper notice. In a formal process in Massachusetts that time frame is roughly a year in which a creditor has the right to bring a claim against the estate if there is an outstanding debt. During that process the person appointed as the personal representative has a job to do; they need to accumulate all of the assets, determine what they are, file a report with the court originally to the inventory of what the person owned at death, determine who all those creditors are, then pay out the assets according to the right of every individual involved including the creditors and the heirs are.

In looking at the creditor rights there are priorities of creditors. Who can get paid first, last, and everything in between. Then you have the issue of the creditors outnumbering the money. In that case it could be a petition for insolvency that might have to be filed; that doesn’t occur too often.

Ultimately, the process is the determination of what is included in your estate, where it goes, and how it gets there. A personal representative takes on some liability. Those periods of time that they’re in the formal process is important. They might want to be careful about what they pay until they understand what debts are there. I advise people to be a little bit conservative. If they knew the person really well and knew that they had no or little debt then they’re safe after about six months to start making distributions to the heirs. The most conservative thing is to wait the period and then make your distributions because the creditors have to file a claim in court to have their debt perfected. Meaning that it becomes a legitimate debt to protect the personal representative from having paid that debt.

For example, if the personal representative had a bunch of bills that came in and they decided they were going to pay all these bills. Then a creditor comes on day 364 of the year and files a claim in the court. It’s a valid claim but the personal representative has paid everything out. That could be a problem for the personal representative if there are no more assets, that was a legitimate claim, and they paid money to people who didn’t enforce their claim properly, then it could cause personal liability for the representative. You have to be very careful.

There is an informal process in Massachusetts where that time frame is stretched out to three years. The process is very easy. You don’t have to file all the inventories and accounting with the court; it’s much easier in a lot of ways. That’s a great plan for estates where there’s not a lot of debt, there are no creditors, and there’s no real estate.

The other issue is real estate. In Massachusetts you can do the formal process with real estate because there’s no determination of heirs in an informal process. Essentially, the process is filing a petition, gathering assets, determining where those assets go, waiting the time period if you think there might be an issue of outstanding debt somewhere, and then distributing everything in accordance with either a will or state law. If you have a trust you don’t have any of those issues.

For more information on Avoiding Probate In The State Of Massachusetts, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (617) 924-0300 today.