“We will be done with all of this soon, right?” That’s the question I often hear when working with a client who has been appointed as the Personal Representative (PR) of the estate of a loved one who has recently passed away. My answer is to view the administration of an estate as a marathon, not as a sprint. You will reach the finish line so long as you put one foot in front of the other, but it may take some time and there will be periods when more of your energy is required depending on the obstacles in front of you during the probate process.
The administration of an estate in Massachusetts typically takes a year or more. One reason is that under Massachusetts law, creditors have one year from the deceased’s date of death to file a claim against the deceased’s estate for the payment of a debt owed to the creditor, such as an outstanding balance on a credit card. This often means that as PR you will need to carefully manage and hold the majority of the estate assets for at least a year before final distributions can be made to the estate beneficiaries (those inheriting money from the estate).
It will feel like much of your energy will be expended during the first few months of the estate administration when you are marshalling the assets of the deceased. While it may seem tedious and difficult to methodically discover, document, consolidate, and manage the assets of the estate, you will be fulfilling your fiduciary obligations, and avoid liability to the beneficiaries and creditors of the estate for mismanagement. Your careful approach will benefit you later on when you easily handle other PR responsibilities, such as filing final personal income tax returns, estate tax returns, and fiduciary income tax returns.
All your hard work will pay off at the end of the estate administration process when you account to the beneficiaries by documenting the amounts received by the estate and the expenditures of the estate under your management, and the beneficiaries happily receive distribution of their inheritances from the estate.
Everyone tackles marathons differently, however, in all cases it is beneficial to have support and guidance; training is essential, too. At Samuel, Sayward & Baler LLC we are happy to run the marathon with you, providing support and guidance every step of the way through the probate process. Read more of our articles, attend our seminars, and do not hesitate to contact us when it is necessary for you to embark on the probate administration journey – it will seem like you are crossing the finish line in no time at all.
© 2018 Samuel, Sayward & Baler LLC
Q: My mom passed away a few months ago. She had a will that leaves everything to me and my sister equally. That means we don’t have to go through probate, right?
A: I wish I could get a hold of the person who started this tale: “If you have a will, you do not need to go through probate.” This is one of the most common misconceptions among our clients. I am happy to dispel this rumor once and for all!
The concept of ‘going through probate’ actually has nothing at all to do with whether or not you have a will. A will is simply a document that outlines who you would like to receive your assets when you pass away. A will states who you would like to serve as your personal representative (formerly known as executor), whether you have specific instructions about the distribution of certain assets and if you have minor children, who you would like to serve as guardian for those children. If you do not have a will, the Commonwealth of Massachusetts has one for you. This is called the intestacy statute. However, you may not agree with what the intestacy statute says—sometimes its terms are surprising. Having a will overrides the intestacy law and allows you to state clearly what your wishes are once you pass away. It can also make the probate process run more smoothly as it allows you to make certain elections in the document (such as a waiver of surety on a bond or license to sell real estate) which can often expedite the whole process.
The answer to your question lies not in the having or not having of a will but rather what assets a will controls and what processes you have to go through to gain access to certain assets when a person passes away. This is where probate comes in. A will only has control over probate assets—these are assets that are held in the deceased person’s sole name with no joint owners and no named beneficiaries. Most IRAs, 401Ks, life insurance policies and investment accounts give the owner the ability to name a beneficiary. This beneficiary designation takes priority over the terms of the will with respect to that particular asset. Even better, the beneficiary often has immediate access to the asset upon providing a death certificate. Likewise, assets titled in the name of a trust are non-probate assets which pass according to the terms of the trust and not the decedent’s will. Therefore, these assets are not subject to the probate process either.
So, the act of going through probate is only required if the deceased person has probate assets (remember—assets with no joint owner, named beneficiary and not held in a trust). The will is the roadmap that determines how the probate process will play out but having a will, in and of itself, does not avoid probate. There you go—this myth is BUSTED!
In 2012, the Commonwealth of Massachusetts adopted the Massachusetts Uniform Probate Code which outlines the laws and procedures for probate proceedings for deceased residents of the Commonwealth. “Probate” is the administrative process by which assets of a deceased person’s estate are accessed and transferred to the recipients of those assets specified in the deceased’s Will, or if there is no Will, to the heirs of the deceased as determined by law. The person with authority to access and transfer the deceased’s assets is an appointed “administrator” of the estate called the Personal Representative, formerly known as the Executor. Probate administration includes identifying all the decedent’s probate assets (known as “marshalling the assets”) and debts, filing taxes and paying estate expenses, and ultimately distributing the estate assets.
Probate typically takes at least one (1) year from the deceased’s date of death because creditors have that amount of time to file claims against the estate to collect on the deceased’s debt. Additionally, the complexity of the estate assets, expenses, and relationships between the surviving loved ones can lengthen the time it takes to completely administer an estate. Probate can be avoided through the preparation of an estate plan that best fits your needs and goals.
In general, probate assets are any assets (checking accounts, savings accounts, investment accounts, stock, savings bonds, tangible personal property such as furniture, jewelry or a vehicle, and real estate) owned in the decedent’s individual name which do not designate a beneficiary or co-owner. In Massachusetts, the types of estate assets, their values, and the family dynamics inform which one of the three main avenues of probate are appropriate.
- Voluntary Administration:
Voluntary Administration is the simplest, quickest, and least expensive probate process. If a decedent’s estate consists of a vehicle and other tangible personal property and financial accounts valued at no more than $25,000.00 (in addition to the value of the vehicle), and all of the decedent’s loved ones are competent, reasonable, and communicative adults, then a voluntary administration is the favored option. The appointed Voluntary Personal Representative has limited authority to receive payments of debts due the estate, access and receive the identified tangible personal property and financial accounts, and sell or distribute those estate assets after the payment of outstanding estate expenses and debts. A Voluntary Personal Representative does not have authority to administer real estate property. There is a filing fee of $115.00 to file the Voluntary Administration Statement with the Court.
- Informal Probate:
Informal Probate is the amenable “middle child” of probate and accommodates a wide variety of situations. If the decedent’s estate is over $25,000.00 in value, the probate options are immediately narrowed to informal and formal probate. Informal Probate is commonly a good choice if all of the decedent’s loved ones have those qualities mentioned above, the estate has a number or variety of financial accounts or similar assets, and when the estate owns real estate. The appointed Personal Representative of an informal probate has full authority to take action in accordance with the laws of Massachusetts, which includes selling real estate. There is a filing fee of $390.00 to file the initial Petition for Informal Probate pleadings with the Court and obtain “Letters of Authority” appointing the Personal Representative. Note that there are additional fees to publish notice of the pleadings in the decedent’s local newspaper as required under the laws of Massachusetts.
- Formal Probate:
Formal Probate is the most expensive process and takes the most time relative to the previous options. Formal probate is required if the estate owns real estate that is “registered land,” if an heir’s residence is unknown, or has since died or is incapacitated due to physical or mental disability. It may be warranted when the decedent’s loved ones have poor to nonexistent relationships, or in the event there are numerous or unusual estate assets to probate. The appointed Personal Representative has full authority to take action in accordance with the laws of Massachusetts, which includes selling real estate. There is a filing fee of $405.00 to file the initial Petition for Formal Probate pleadings with the Court and obtain “Letters of Authority” appointing the Personal Representative. Notice of the pleadings must be published in the newspaper at additional cost.
Note that the above filing fees do not include the fees to provide associated legal advice and preparation of the required probate pleadings.
If you are the loved one of a family member who recently passed away, it is important to carefully consider your family member’s assets and your family’s dynamics to determine the best avenue to properly probate the estate. Working together with a knowledgeable attorney to select the most beneficial option and navigate the probate process will ensure the process goes as smoothly, quickly, and cost-efficiently as possible.
© 2017 Samuel, Sayward & Baler LLC