Where there's a Will, there's a Probate

Many clients come to our office with the goal of creating a Last Will so that they can be assured assets go where they want without hassle. What many do not realize is that the Will is only used if probate is needed. This document expresses your final wishes, and tells everyone where you probate assets must go. However it is just a set of wishes until submitted to the probate court. Once the court agrees that the Will is valid it is admitted by the court, and is now the set of the rules that your Executor must follow.

Since many people try to avoid probate, how do you know if it is needed? Having a Will does not avoid the need for probate. Instead, the question hinges on how your assets are held. For example, if an asset, such as a car or checking account, is co-owned with another person then the surviving co-owner keeps it. It does not get inherited per your Will. Real estate is the exception to this rule. Unless real estate is “in survivorship” it will not be absorbed by the co-owner. Instead, the deceased owner’s portion of the property goes into their estate. Spouses almost always co-own their home in survivorship, so most people do not face this situation.

Another way that assets will not go through the Will in probate is to have beneficiaries listed directly on accounts. This way you can be the sole owner while alive, but ensure the account transfers quickly to the new owner. When you open an IRA or a life insurance policy they will typically ask you to name a beneficiary, and maybe a backup. But this can be done for any account! Any CD, brokerage, or
checking account can have a beneficiary.

The third way to have assets avoid time in probate is to have them inside of a trust. Any type of trust, will accomplish this particular goal. Many people will place real estate in a trust because that is the only way to effectively name a beneficiary on real estate. This is particularly useful when the owner does not want co-owners on the house while they are still alive, which can cause unintended consequences if
the new co-owners (often the children) get sick, sued, or in other circumstances beyond their control.

The Executor’s job is to collect, inventory and protect your estate assets until they can be disbursed to your beneficiaries. This job does not start until after you have passed, the Will is submitted to the court, and accepted by the nominated Executor. For this reason, the person you name in your Will has no official position until then. They have no authority over anything until after you have passed away and the probate court ratifies the nomination. This process is frustrating, because it means there will be a gap between passing away and anyone having permission to handle your estate. But this is important, in case circumstances have changed and the person you originally hoped would do the job is no longer fit for, or interested in, the work.

The Executor has an often thankless job to do. Choose whoever is best with paperwork. Most work can be done through the mail, so they also do not have to live locally. Still, families often choose the eldest child simply because of their age. So for all those middle children, be thankful you aren’t the eldest for once!