Why do you want to avoid Probate Court?

First of all, what is Probate? “Probate” is the generic term used to describe the  process where the court will determine how your assets are transferred to certain beneficiaries of your estate.  These beneficiaries can either be appointed by you ahead of time, in a will; or, they will be determined by the laws of Massachusetts.  Certain assets will avoid probate because they have a designated beneficiary after you pass. A general guideline is that any asset that has a listed beneficiary, like life insurance, jointly-owned assets, pension plans, accounts that are “POD” (payable-on-death) and IRAs will not go through probate.

A common mistake people make is thinking that their estate won’t go through probate because they have a will.  This is not true. Just because you have a will – it does not mean that you will avoid “probate” – in fact, a will does not protect you from the probate process at all. Your will governs the disposition of your assets. In other words, you can dictate who will get your property. You can also name an executor and if you have young children, a guardian for them.  Your will, once filed at the probate court, becomes a “public document” for anyone to review.  All of these affairs will be supervised by the Probate Court, at some level. If you do not have a will, your assets will be disposed of according to the laws of intestacy, this process is also supervised by the Probate Court.

There are three main reasons why one might wish to avoid the Probate process:
1. Expense
2. Save Time — Facilitate the Transition of Assets
3. Privacy

1. Expense

Any court process can be expensive; however, Probate Court is full of hidden cost and fees. Your heirs may have to pay filing fees, place a bond to secure the assets, legal fees, and many other hidden costs. Click here for a list of Probate Court Fees in Massachusetts.

2. Save Time & Ease of Transition

I believe that the time spent is the biggest inconvenience when it comes to filing with the Probate Court.

This is one example of the difference between using a Will and using a Trust to transfer assets:

USING A TRUST

a woman, Jill, passes away and leaves her home to her daughter via trust. While Jill is alive, the Trust actually owns her home and she is the beneficiary and Trustee – so  Jill is effectively the owner, but not in name. When Jill passes away, the Trust still owns her property; however, the daughter is the backup beneficiary. This means that there is no waiting or paperwork needed to transfer ownership of the home. The daughter is immediately free, as backup Trustee and beneficiary, to sell the property or live in it or to do whatever else she pleases.

USING A WILL

If Jill leaves the house to her daughter via a will, there is no easy transition. When Jill passes away, the ownership of the home becomes in question – to be resolved by the Will. The daughter must file an action in the Probate Court. In the mean time, someone has to pay for the upkeep of the house, condo fees, mortgage payments, gas, heat, electric, etc. The daughter cannot sell the house without special approval from the Court. Even if the Court gives her the special approval to sell, she has to wait for the original Will filing to be processed and only then can she request a court date for the judge to hear her motion to sell. She will likely wait two or three months for that court date, and then after she sees the judge, she has to wait again for the judge’s decision to be mailed to her. Then, only if the judge says yes – may she put the home on the market for sale. In the mean time, she has likely paid many thousands of dollars out of pocket, with the house just sitting there unable to be sold.
This is just one example, but there are many more. Using Trusts allows for an ease of transition that you just do not get with a Will.

3. Privacy

A Trust will keep your personal matters private. The Trust does not have to be recorded nor publicized anywhere, unlike a Will. People do not have to know how you are disposing of your estate, nor the amount of your assets.  This can be particularly important to parents of children with substance abuse issues.  They may not want that child to inherit with no strings attached, since the child could use the money to further their substance abuse.  The parent can have another sibling hold the money, in Trust, for the troubled child.  By using Trusts, this does not all need to be made part of the public record.  By using a Trust and staying out of Probate Court, you can keep your affairs private. Trusts are private documents. Even with a Realty Trust, only the Certificate of Trust needs to be filed with the Registry. Your schedule of beneficiaries remains private information.
Contact one of our experienced attorneys today to learn more.

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