What Exactly Is Probate?

Probate is a court that deals with familial and life and death matters of the individual rather than individuals against one another. This is a more family focused process that everybody is going to go through. They deal with marriages, divorces, the probate of a will, disposition of assets, determining the length and the viability of creditors to collect on those assets, and all of those sorts of things. The probate court would deal with the intestate laws if you don’t have a will or a trust or look at the will and use that as the dispositional vehicle. There is also living probate and that is one you don’t want to go through. That’s the guardianship and conservatorship type probate where you could live for decades and be under conservatorship. You could also be under guardianship and the expenses involved in that can be phenomenal because of the legal fees.

If you didn’t name any one in a trust, didn’t have anyone out there in a family, and you have a big estate then the judge says, “You have plenty of money and I’m going to appoint an attorney to manage your estate.” Then, very shortly, legal fees are will cause your estate to dwindle. That is not an optimal situation by any means. First of all, you’ve got strangers doing it. You’re spending a lot of money that you didn’t plan to spend and not getting exactly what you need. I don’t like probate, but it serves its purpose. For example, we had a client who lived out of state but his sister was in Massachusetts and she’s passed away. We were helping him with the estate but she lived in a three-family home that she owned. She had a neighbor downstairs who had whittled his way into her trust.

He had gotten it so that he was supposed to get that part of the house and he was clearly taking advantage of that woman. But she adored this guy and he was not reputable. The client was afraid that the neighbor would bring action. In that case we suggested that we go through the court because we wanted to protect our client from the neighbor. The neighbor had been able to change the trust over. She had given him the power of attorney to make the changes. We got the neighbor out of the trust and did this under the protection of the court. It does have a role to play at times, but for the average person, you don’t want to go there if you don’t have to.

What Factors Set The Stage For Probate To Occur?

There are a few circumstances that might to cause a probate to occur. With a living probate it would be someone who has not set things up for themselves and then becomes incapacitated. It could be a physical reason that wouldn’t allow them to do certain daily activities. More often it might be a form of cognitive decline where they would need help. That’s one type of probate involvement that could arise. Another is when a person passes away. If there is a will or if there is a living trust that’s been funded those would be helpful because you don’t have to go through probate. When someone dies you will have delays.

For example, I had a client, a lovely older woman whose main asset was her house. She came to me to do her estate planning; a will in this case. I helped her with the will but I was trying to encourage her to do more. Especially after she told me she wanted to get a reverse mortgage on her home. This was because she had very little income, around $1000 a month, and in Massachusetts it’s very difficult to live on a $1000 a month and even just to pay your property taxes. She had a house worth roughly $800,000 and decided to get the reverse mortgage. I recommended she put house in a trust. She didn’t want to pay the little extra money to put the house in a trust. Then she became ill, briefly ended up in a nursing home for rehab, and then passed away. Thankfully, she didn’t end up in the nursing home for a long time because that whole house would have been gone. What happened was, there were children who we weren’t able to locate right away. It was very difficult to locate them, get them to the court, then getting the court to give us dates for different things stretched the process out, and then they couldn’t locate people, and the house needed repairs before it could be put on the market. They almost lost a lot of money. Thankfully, she had a son who was handy. He moved into the house and was able to start making some of the repairs. If he hadn’t done that then they would have had to sell the home at a much lower rate. Then because of the delay, the bank started foreclosure proceedings because with a reverse mortgage they can do that after a six month wait. We weren’t able to sell the house because they couldn’t hire a realtor until someone was appointed by the court. So that delay caused a lot of problems. She could have lost the house. Fortunately we were able to sell the home the very day the bank was going to proceed with their foreclosure. We made it, but had it been a day later the bank would have started proceedings. A lot of the equity in the home would have been lost.

That’s one of the reasons why I like to avoid probate. It’s a very good example of why a living trusts can be useful over a will and the probate process. The probate process is about disposing of assets and making sure that they are titled properly upon their disposal.

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