In 1789, Benjamin Franklin famously wrote “… in this world, nothing is certain except death and taxes.” Although probate wasn’t included in Mr. Franklin’s wise list of life’s unavoidable certainties, for some families it may feel painstakingly otherwise. The prospect of probate, when left unconsidered during one’s lifetime, can unintentionally lead to a costly and time-consuming process for loved ones.
Talking openly about end-of-life decisions and ultimate disposition of assets isn’t easy - especially when it is about your own life and your own assets, with your own family. It is safe to say that most people would prefer that their passing not place an undue burden on their loved ones and heirs, or even on a non-family member who they designate to control their estate. However, avoidance of such burden necessitates thoughtful planning, by you, during your lifetime. You have the power to exert control and guidance over the final disposition of your assets. Absent such specific instructions you may ultimately lose this control, and cause your heirs to be subject to the constraints of the Massachusetts probate process. Even with the best-intentioned attorneys and court personnel, it is still an administrative, and sometimes judicial, process which is inherently fraught with time delays, expense and often frustration, typically borne by the same people who will still be coping with your loss.
You have the ability to control this situation and ensure your estate, and your loved ones, avoid this onerous process. There are most certainly situations in which probate is impossible to avoid (i.e., a contest of a will), and may become necessary or even preferable (i.e., the Court’s supervision is of benefit to the family and/or to the Personal Representative of the Estate). As an experienced estate administration attorney, seldom do I believe any family would choose to endure the probate process if given the choice not to. Rather, I believe they would choose to grieve without the additional burden of a probate process.
When working with your estate planning attorney and/or financial advisor, here are four simple steps you can take to create a more robust and well-defined plan to avoid probate for your estate:
1. Make a list of all of your assets. Don’t assume anyone else somehow just knows what they all are. Memorialize them in writing, store the list or file securely, and make sure someone besides you knows where it is. Do your best to capture everything, from large to small, so that there is a complete accounting of what you will leave behind. Include real estate, cash, and intellectual property – all of your tangible and intangible assets. If you don’t include something important, don’t assume someone else will know to do so on your behalf.
2. Understand how each asset is currently owned. Never assume anyone will simply “know” who is going to get what once you pass. As you assemble your list of assets you should identify how you own it. For example, is your checking account solely in your own name? Or is there a joint owner on the account with you? Does this account have a beneficiary designation or is it a “Payable on Death (POD)” account? You should understand that if you are the sole owner of an asset that does not have a beneficiary designation, it will likely be subject to probate upon your death.
3. Re-title assets currently owned solely in your individual name. There are a number of different options you can discuss with your estate planning attorney in this regard. For example, like many of my clients, you may consider utilizing a trust to ensure that you can retain control over certain assets during your lifetime, while optimizing certain tax planning opportunities, and again ensuring that assets in the trust will not be subject to probate. Alternatively, you may transfer the asset to a different investment vehicle which allows you to name a beneficiary. In certain situations, you may choose to re-title an asset jointly with the person whom you ultimately want to inherit the asset.
4. Consider lifetime gifting. We’ve all heard the saying, “You can’t take it with you.” So why not give it away while you can? Gifting assets while still alive gives you complete control over who will receive them. You can make a one-time gift or set up a gifting program. In addition, you may be able to take advantage of significant tax benefits available through gifting. This is a discussion you should have with your estate planning attorney.
Sometimes probate is unavoidable, despite our very best efforts and even when we think we’ve “covered everything.” For example, a statement for a dormant bank account is discovered, a letter from the MA Abandoned Property Division is received that identifies a check for dividends from stock sold over ten years ago that was never cashed, or a notice is received in regard to an old retirement account that fails to list a beneficiary and, by default, is going to pay out to the estate. All of these situations happen and, when they do and a probate is required, it is important to have a qualified attorney there to hold your loved one’s hand and guide them through the probate process. Death and taxes may still be inevitable, but probate, along with the time and cost it entails, is not.
Catherine Watson is an Associate in the Estate Planning & Administration Practice Group at Tarlow Breed Hart & Rodgers, P.C. in Boston, Mass. Attorney Watson can be contacted at (617) 218-2062, or via email at email@example.com.