I Want to Avoid Probate…Right?

February 14, 2019

In my opinion, education is the most impactful aspect of my role as an estate planning attorney.  I often tell the story that when I first decided upon estate planning – over ten years ago – I excitedly told my husband that I had settled upon my specialty.  He responded supportively – “That’s great!” …So, what’s an “estate” and exactly how do you plan it?”

Probate is another one of those words many have heard (most likely right after the word “avoid”) but not many people have experienced or truly understand what it entails even if they know what the term means.  Probate is the legal word for the Court process of handling the assets and obligations of a person when he or she passes away.  Assets in a person’s individual name (without being survivorship assets or having a beneficiary designation) have to go through probate to transfer to the beneficiaries (as long as the value of those assets is over $50,000).  To give a very simple example – let’s say I own my own house (worth $51,000), and for simplicity sake, I own it individually, no one else is on the title.  It is my desire when I die, that my house transfer to my brother.  If I die with the house still solely in my name, probate will be necessary to give someone the authority to actually deed the house to my brother.

So – what does probate entail?  Probate can be formal (with lots of Court oversight) or informal (with little or no Court oversight).  The process for both formal and informal probate begins with an application for administration.  Informal is always preferred over formal for the simple fact that there is less cost, less oversight, and a shortened process.  That being said, when there is conflict sometimes Court oversight is required to effectively move the process along, and is typically the first step in a Will‑contest or a dispute about who should be appointed as Personal Representative. 

After an application for administration is filed and accepted by the Court, a Personal Representative is appointed.  The Personal Representative (other states call this person an executor) is the person who will put in the work:  publishing notices; informing creditors; filing an inventory; compiling and liquidating the assets; paying last expenses, outstanding bills, and administrative costs; and filing any needed tax returns.  After the work is complete and an accounting of the process put together, the Personal Representative can distribute the assets according to the decedent’s Will or, if no estate planning was done, according to Wisconsin’s intestacy statute.  After all of the assets are distributed, either the beneficiaries have to sign a receipt stating they received all that they were entitled to (informal) or the Court must sign an order approving the accounting and closing the estate (formal). 

Sounds easy, right?  Obviously the above is a simplified representation of the actual probate process.  A typical probate lasts about 12-18 months.  A contested process can take years.  There are also costs associated with probate, which include filing fees (.002 of the value of the assets), Court costs, attorney’s fees, and accountant’s fees on top of the ordinary costs of administration.  Finally, probate is a public process, which means creditors are more likely to come forward; beneficiaries are more likely to contest; and strangers are more likely to learn about your business.

Two final thoughts:  First, it is important to sit down and plan your estate.  Deciding not to have a plan, is still a plan.  Be mindful of what your actions (or inactions) mean and what the process will entail after you are gone.  Second, we cannot obviously force our loved ones to make their own plans.  If you find yourself in a situation where you are facing probate for a friend or family member:  Don’t panic.  We are here to help.  The register in probate can be very kind and helpful (especially in Marathon County!), however they are not allowed to give legal advice.  Questions about taxes, creditors, and even how to handle disgruntled beneficiaries should be addressed with an experienced probate attorney.   

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