There’s paper, more paper, and then probate
By Erik Honkanen
HTF Columnist
Everyone knows of a probate nightmare; a family deeply divided, fighting about who gets what as the attorneys get rich. Charles Dickens wrote about such in “Bleak House,” whose plot involved a family thrown into litigation for generations. Probate proceedings, in my opinion, are highly formalistic and procedurally-based; however, as I have practiced law, I have come to appreciate the process and to understand why it is the way it is. A proper estate plan always contemplates how probate will be involved, if at all.
The probate process, generally, has five main questions to resolve: 1) What is the proper will to use (if multiple wills exist)?; 2) Who administers the estate?; 3) What is the size of the estate?; 4) What bills need to be paid, and; 5) Who gets what? Additionally, notice requirements are very important. Potential interested persons and creditors must be notified, so that they have an opportunity to contest the proceedings or to solidify their claims against the estate. That’s why publication in the paper is necessary to begin the probate process.
Capacity to create a will is also a significant consideration. Was a testator to a will unduly influenced to sign something that he or she did not want? This is why we have witnesses to a will, so that at least two people can attest to the fact that a person knew what he or she was doing. This is especially important when people are signing or changing wills on their death beds. A court must decide if the person was of sound mind, which is a fact question, and fact questions require a trial. Thus, the expense…
Determining what is probate property versus non-probate property is also a major consideration for the court. The probate court only deals with property owned by the decedent at the time of death. If a house is in joint tenancy with another person, that property is not probate property because it passes to another person at death. The court cannot consider it in the estate. But if the same house has a tenancy-in-common, then that percentage owned by the decedent (person who died) is within the estate and can be distributed in the probate process. This is where titling issues can have a major impact on the process, and those titling issue, combined with the effect of an inheritance, also raise major tax issues, which most people do not consider when they are doing their own estate planning.
Big, big family fights can begin over anything; from which will to use to what the value of the home should be. Litigation ensues, and eventually, a party prevails or everyone comes to a settlement. All the while, attorney fees are accruing against the estate. But all this being said, probate necessarily formalizes the process to determine what the dead person’s wishes were. Of course, proper planning and execution can prevent this and using an attorney to plan for this will curtail many issues. Although the do-it-yourself, online form methods are available, do you really want to have your beneficiaries’ financial future incumbent upon whether or not you created and properly executed the correct legal document? Do you really know all of the terms of art that are used in wills and their effects on the estate? The probate nightmares that I have been involved in revolved around do-it-yourself documents. It is important to understand an investment in estate planning may seem to have a high sticker price, but it is an investment and the returns can be great by way of savings in attorney’s fees, other professional’s fees, and taxes. This doesn’t even gauge the emotional strain you are saving your family from.
Erik J. Honkanen, Law Office of Erik J. Honkanen, S.C., U.S. Bank Plaza, 230 1st St. South, STE 101, Virginia, MN 55792, 218-749-3047, erik@ honkanenlaw.com.
