Death is a personal and private affair that affects the deceased’s close family and friends. However, there is at least one aspect of death that may require state oversight: probate.

Probate is the court-supervised process of either (a) carrying out the instructions laid out in the deceased’s will or (b) applying state law to distribute a deceased’s accounts and property to their family members if the deceased did not have a will. The main purpose of the probate process is to distribute the deceased’s assets according to the will or state law. Some assets, even some wills, avoid probate. Filing a will with the probate court does not mean a probate needs to be opened. However, most state laws require that a will be filed when the will maker passes away, even if the probate process is not necessary.

Understanding Probate, Wills, and Estates
Estates, wills, and probate are interrelated, but distinct, estate planning concepts.

• An estate consists of everything that a person owns, their personal possessions, real estate, financial accounts, and insurance policies. Virtually everyone leaves some estate when they die.
• A will is the legally valid instructions that a person creates describing how they want their estate distributed upon their death. Wills, although highly recommended, are not legally required. To be legally valid, a will must be properly executed in accordance with state law, by a personal with sufficient mental capacity.
• Probate is the legal process that formally distributes the probate assets in a decedent’s estate, those assets titled in the decedent’s sole name, without a beneficiary designated, with no joint owner, and not placed in a living trust prior to the decedent’s death. During probate, a decedent’s probate assets are identified and gathered, their valid debts are paid, and the probate assets are distributed to beneficiaries named in the will or the heirs as determined by state law.

Probate with a Will
If the decedent died with a valid will, here is how probate typically proceeds:

• The person nominated in the will to act as personal representative, sometimes called an executor, files the original will, a copy of the death certificate, and any required documents or pleadings with the probate court. If the person nominated in the will does not file these documents with the court, state statute will determine who has priority to make such filings (possibly another family member or even a creditor of the decedent).
• The court confirms the validity of the will and gives legal authority to the personal representative to carry out the decedent’s wishes, as specified in their will. This legal authority is conferred in a court-issued document called letters of authority, letters testamentary, letters of administration, or another similar name.
• The individual appointed as personal representative inventories the decedent’s estate assets, determines their value, and identifies any outstanding debts of the estate, such as expenses of the last illness, loans, and credit card debt.
• Once valid estate debts are paid, the remaining accounts and property are distributed to named beneficiaries, final paperwork is filed with the court, and the estate is closed, ending the probate process.

The length of the probate varies depending on factors such as the size of the estate, the type of assets, claims or contests, and state laws.

Avoiding Probate
In many cases, avoiding probate altogether can cut down on the costs of administration and amount of time it takes to wind up a deceased person’s affairs. There are also other reasons to avoid probate, such as keeping private details about assets and beneficiaries out of the public record.

Beneficiary designations, joint ownership, and trusts are common ways to avoid probate. Here are some examples of these probate-avoidance tools in action:

• Pensions, retirement accounts like 401(k)s, and other accounts that allow for designated beneficiaries may not need to be probated. Transfer-on-death (TOD) and payable-on-death (POD) accounts are generally treated the same as accounts that have a beneficiary designation.
• Accounts and property that are jointly owned and have a right of survivorship can bypass probate.
• Accounts or property held in a trust may also bypass probate. But trusts are not without administrative and cost burdens. If the deceased failed to transfer ownership of an account or piece of property to the trust, a pour-over will may be needed to transfer those accounts and property to the trust through the probate process upon the trustmaker’s death.
• Some states have laws that allow probate to be skipped if the value of an estate is below a specified value and does not contain any real estate (often referred to as a small-estate exception). The threshold value for qualifying for this exception varies by state.

Filing a Will versus Opening Probate
Filing a will with the probate court and opening probate are separate actions. A will can be filed whether or not probate is needed. Probate is needed only under certain circumstances, such as when the decedent passed away while owning probate assets. Further, not only can a will be filed with the court when a probate is not needed, some state laws, including Michigan, actually require it. Some state laws require the person who has possession of a decedent’s will to file it with the court within a reasonable time or a specified time after the date of the decedent’s death. The consequences for failing to file a will vary by state but may include being held in contempt of court or payment of fines. Additionally, the person in possession of a will might also be subject to litigation by heirs who stand to benefit from the estate under the terms of the will. Similar consequences may follow if the will-holder files a will but does not petition to open a probate estate. Failing to file for probate (when probate is necessary) prevents inheritances from being properly distributed.

These legal consequences are usually imposed only on a will-holder who willfully refuses to file a will. If someone you love has passed away and you have their will in your possession, you should work with an experienced probate attorney who can assist you in determining whether a probate estate must be opened and whether the will needs to be filed.

Avoid Probate Issues When Drafting a Will
Probate avoidance is often a major goal when creating an estate plan. You should also consider implementing tools in your estate plan to minimize issues that may arise if your estate does require probate. 

Your will may have been written years ago and might not reflect your current circumstances. You could have acquired significant new accounts or property, experienced a birth or death in the family, left instructions that are vague or generic, or chosen an executor who is no longer appropriate to serve. An outdated or unclear will can cause trouble when it is time to probate your estate, making it important to identify and address issues that could lead to problems, will contests, and disputes.

It is recommended that you review and update your estate plan at least every three to five years, or whenever there is a significant life change or a change in federal or state law. You cannot be too careful when expressing your final wishes. Schedule time with us and let us help you create an estate plan that can avoid possible complications.