I have Dad’s Will so Why do I have to File a Probate?

Why, why, why? We thought this was covered!

There is a widely held belief that if there’s a Will, then there’s no need for probate. Unfortunately, that’s not the case.

To simplify things, a Last Will and Testament is sort of like a formal set of instructions to the Judge in a probate action. The Will doesn’t avoid probate, it controls the probate. Of course, if the Will isn’t properly drafted or executed, it can be set aside by the Court in the probate action, and then the heirs are stuck with the intestacy (I.E. “intestate” means without a Will or other testamentary instrument) laws.

Exceptions and Alternatives to Probate

Probate can be avoided under certain circumstances and using legal tools that are specific to the jurisdiction where the estate resides. For example, if a husband passes away and his wife needs to take his name off the residence, in Idaho, an affidavit of heirship can be used but only in certain jurisdictions. Some counties in Idaho do not recognize an affidavit as a valid transfer. Utah has a similar instrument with similar limitations.

In the case of an estate having no real property (I.E. Land, house, apartment, condo, cabin, etc.) a probate may be avoided if the full value of the property needing to be transferred is less than one hundred thousand dollars in value. In that case, where there is typically a single heir, a small estate affidavit may be used. However, if there is resistance from a financial institution or there are multiple heirs, this can run into complications or simply be ineffective.

One predominant exception from the need to probate an estate lies in the form of jointly held property or accounts with designated beneficiaries, such as life insurance policies, retirement accounts, and "payable on death" or "transfer on death" accounts. This can allow assets to directly pass to the named individuals outside the purview of probate court. There is one caveat that bears mentioning… unless the financial institution won’t allow a transfer under their regulations without a court order appointing an executor or personal representative or estate administrator.

To break it down, an estate may not need probate unless one or more of the following circumstances exists:

1.      There is “real property” involved that does not have an alternative method of transfer such as an affidavit of heirship or a JTWROS designation (“Joint Tenants With Right of Survivorship) for instance;

2.      The assets to be transferred are worth more than $100,000 or some other statutory limit set by the estate’s jurisdiction (This makes a small estate affidavit ineffective.);

3.      There are multiple heirs or beneficiaries (Generally, affidavits, jointly-held property or small estates are not effective for complex transfers.);

4.      There are a sufficient number of debts of the estate that may require court intervention to settle or disclaim (Probate can actually set aside certain debts and preserve a spousal or family share under certain circumstances.); or

5.      The rules or regulations of a financial institution require a court order (I.E. They just won’t release it to the heirs without that appointment of executor or personal representative or administrator.)

Methods for Avoiding Probate Ahead of Time

There are two essential methods for avoiding probate. The first is simply transferring the property to the heirs prior to passing away. While this seems simple and straightforward, it has serious risks and implications. Consider the following items: First, if you transfer your property away from yourself, you no longer own or control it. Your heirs could lose it through a lawsuit, bankruptcy, accident or several other actions. You would also lose benefits like your “homeowners” exemption on your residence, cannot control the insurance on it or even make investment decisions of a transferred asset. The key to remember is that once you transfer it... It’s no longer yours.

(Additionally, you must be solvent and remain solvent for some time prior to and after transferring the asset or you could face a fraudulent transfer lawsuit to unwind the transfer at your and your heirs’ cost.)

The other typical method for avoiding probate is a property prepared trust instrument that has been fully funded prior to your passing. A trust acts as a go-between mechanism that allows you to maintain control of your assets while automatically transferring them to your heirs following certain events as determined by you. There are very stringent steps that must be taken to ensure the trust will be effective. “Quickie” trusts and “cookie-cutter” funding can land you and your heirs in legal jeopardy. (I.E. Invalid or fraudulent transfers, violations of the Garn-St. Germain Depository Institutions Act, etc.)

Always consult with and utilize an experienced estate planning attorney to get it right.

Curry Andrews, Attorney at Law