Probate property consists of those assets that a decedent owned in his or her sole name at death and property in which a will substitute or automatic succession of ownership fails. An example of such a failure is a beneficiary designation that names a person who has predeceased the owner. Real estate held in the deceased sole name or in the name of the decedent and another as a tenant in common is probate property. Additionally, if a life insurance policy, annuity contract or individual retirement account that is payable to the decedent’s estate or does not designate an individual or charity it is also probate property.

It is commonly said that everyone has an estate plan: either the one you design or the default plan set forth in the laws of the state in which you reside at the time of your death. For example in the Commonwealth of Massachusetts, if you are single your probate property without a will passes equally to your mother and father or the survivor. If you are single, with children at death, your property will be distributed equally to your children. However, if you are married with children at death, then your spouse will only inherit one half of the assets, while your children will inherit the balance. Since it may not be your wish that your property passes to the beneficiaries that Massachusetts designates for you, it is recommended that you specify who, and in what order, you would like your intended beneficiaries to receive your property. Please note that under the recently enacted Massachusetts Uniform Probate Code, have changed the default provisions.

If the deceased executed a valid last will and testament that nominated an executor willing or able to serve that person is typically appointed executor, and without a will the person is the referred to as an administrator. In some states an executor or administrator is referred to as a personal representative. A bank or trust company may also be appointed to serve. Once appointed the executor or administrator performs the following functions to properly administer the estate:

A. Publish a notice prescribed by the probate court in a local newspaper and give notice to interested parties (heirs at law, etc.) to provide information about the estate including the procedures required to object to the administration of the decedent’s estate and file claims.

B. Once appointed identify, gather, value and safeguard the decendent’s probate assets and provide an inventory of the property to the Probate Court.

C. Object to improper claims, and defend suits brought on such claims.

D. File income and estate tax returns and pay the taxes due.

E. Hire attorneys, certified public accountants, appraisers and investment advisors to assist with the estate administration.

F. Pay the expenses of administering the estate and valid claims of creditors of the estate.

G. Distribute specific property and the residue of the estate to the beneficiaries designated.

H. Wind-up the estate by providing a final accounting to the Probate Court and/or beneficiaries.

Death has significant tax consequences. The year of death marks the final tax year for filing an income tax return and a new tax entity is created – the estate of the decedent. Additionally, depending on the total value of the estate death taxes may be due. A final personal income tax return, Form 1040 is due on the date that the return would have been due had the death not occurred (typically April 15th) for the portion of the year that the decedent was alive. Additionally, to the extent the estate was taxable, Massachusetts and or federal estate tax return(s) must be filed, with payment made on any tax due within nine months. If more time is needed, an extension may be obtained but an estimated payment is required with the extension. In addition, income tax returns maybe required for each year that the estate remains open. To read more about Massachusetts and federal estate tax exemption amounts, click here.

If the deceased’s probate estate is less than $15,000, with one automobile, the process typically takes a sixty days or less. If the probate estate is in excess of such amounts, it takes months to administer. While the majority of the estate administration work occurs within nine months from the date of death, including the filing of any estate tax returns, the deceased’s creditors have the right to sue to recover funds owed for one year. Once this time period elapses and all allowed debts are paid, a first and final account will be prepared and filed with the Probate Court for review and approval, which may require further notice, including publication. A typical estate administration, however, may last up to two years depending upon the nature of the work involved.

The Massachusetts probate lawyer represents the executor or administrator in estate proceedings. Often a point of confusion, the probate attorney for the personal representative/executor is not the lawyer for the beneficiaries of a deceased’s estate. Since many legal issues arise involving several areas of law, even in a simple or small estate administration, engaging a qualified estate administration attorney to assist with the process is typically advised. Furthermore, if the executor or administrator does not properly administer the estate, he or she may be personally responsible to the beneficiaries for any harm they incur.

Generally a last will and testament may be contested if it is improperly drafted, executed, or witnessed. Will contests often include situations where the decedent did not sign the will, a beneficiary served as a witness, the person did not have capacity to sign it at the time, or the person was under duress, fraud or undue influence.

If these issues are present, typically a family member challenges the admission of a Will to probate or its provisions. A will contest needs to be based on legal grounds similar to those described above. Merely being unhappy with who is to receive the decedent’s property is not grounds for a will contest.

The probate process is often criticized for being a long and expensive process. Despite the fact that it is likely to run smoothly, the costs of probate (legal fees, court fees, executor fees) can be substantial, and all probate property is reported and valued in a public filing. In addition, the executor or administrator who is often a family member, is often burdened with a time consuming process of preparing and filing a significant amount of paperwork in a timely manner. In the cases where it does not run smoothly and conflicts do arise, the costs and time involved  increase dramatically. For more on estate planning, click here.

A trust or living trust is often confused with a Will. A trust is a separate entity that can hold property for the benefit of one or more persons. Assets held in trust avoid probate, provided such assets are transferred to the trust while alive. Often when a decedent created a living trust, his or her will directs their probate property to be paid to the trust. This is commonly referred to as a pour over will. The common uses of a trust include: (1) to avoid probate; (2) to provide for the long-term management of property held for minor children and disabled children; (3) to efficiently plan for taxes, more specifically to ensure married couples fully utilize federal and state tax exemption amounts; (4)asset protection planning; and (5) for Medicaid (MassHealth) eligibility. For these reasons, even people with smaller estates are more and more frequently utilizing trusts as the preferred vehicle to manage their assets during life, and when they are deceased. This is because even for a moderate estate, a trust can be used for privacy purposes and to avoid the expenses and delays associated with the probate process.