What are the 3 types of Probate in Massachusetts?
Probate is a public court process that may occur after your death in order to settle your estate.
The probate process can vary depending on your situation. For example, in Massachusetts there are 3 types of probate:
(1) Voluntary Administration,
(2) Informal Probate, and
(3) Formal Probate.
(Please note: I did not include supervised administration in this article as a separate category because it’s technically only commenced in limited circumstances as part of a formal proceeding - i.e., you would elect supervised administration under a formal probate petition)
Voluntary Administration - voluntary administration is a simple, expedited procedure that can be done 30 days after the decedent's death. This option is only available if your probate estate is worth less than $25,000 (excluding the value of your car).
Informal Probate - informal probate is the next step up in terms of complexity. Unlike a more formalized process, informal probate is considered an administrative process - meaning there are no hearings and the documents can be approved by a magistrate (as opposed to a judge) as early as 7 days after the decedent’s death.
Once the personal representative is appointed and the will has been approved (if applicable), then a citation and proper notice must be given to the beneficiaries of the estate.
Formal Probate - Formal probate is where things get much less fun - unlike informal probate, you are going to have to issue a citation (notice in local newspaper) and wait for the hearing date to pass before a judge will review the file and sign the order to appoint a personal representative.
TIP: If minor beneficiaries are named in your will, then you have to do a formal probate. So, if possible, DO NOT name minor beneficiaries in your Will.
Once the personal representative (i.e., the executor) is appointed he/she is generally responsible for notifying heirs/beneficiaries and creditors, inventorying and appraising probate assets, paying creditors for estate expenses, funeral expenses, debts, and other taxes that may be owed, and finally distributing your probate assets in accordance with your Will (or by intestate succession laws, if you don’t have a Will).
How long does probate take?
The probate process can take anywhere from a few months to a few years depending on the complexity of your estate. For that reason, costs tend to vary drastically (generally, between $3,000 to $6,000) depending on the types of assets passing through your estate and the number of beneficiaries involved. (If litigation erupts, I’ve seen that figure jump to the hundreds of thousands)
Keep in mind that if anyone contests a Will or wants to create problems for the personal representative, then the sky is the limit for legal fees. The above fee range assumes there are no hiccups and everyone gets along. In other words, if you have just one person (like your crazy in-law) who wants to create trouble, then you will wish that you had a revocable living trust to avoid all the potential drama of dealing with a probate estate.
But, if you do find yourself in probate, then you should contact a probate attorney immediately to understand your rights and obligations. See What are my Rights as a Beneficiary of a Trust or Estate? for more information on what you need to know about being a beneficiary
When searching for a law firm that offers legal assistance with probate, you should ask how much of the time the attorney will be working on the case vs. a paralegal. Although administrative work is not supposed to be charged at the attorney’s hourly rate, if the attorney has to do the work (rather than have it delegated to a paralegal), then your probate legal fees could quickly balloon into the thousands for the simplest of tasks to be completed.
How do I reduce probate fees and make things easier for my family?
Fortunately, there are a few things you can do to reduce probate / attorney fees and cut down on the time it takes to settle your estate.
1. Update pay on death / transfer on death designations. By adding / updating beneficiary designations on your financial accounts (e.g., life insurance, checking/savings, retirement accounts, etc.) you can avoid those assets going through probate. Instead, the beneficiary will just need to fill out a death claim form and provide some basic verification information to receive the inheritance.
PLEASE NOTE: many financial institutions do not reach out to persons who are named as death beneficiaries on accounts, meaning you are responsible for letting your children / beneficiaries know which accounts you have and who is named on which account. Otherwise, your beneficiary will spend unnecessary time and expense trying to track down your accounts.
2. Re-title deeds. In some situations you may want to re-title assets. For example, it’s not uncommon for elderly parents to re-title their homes by creating a life estate and making their adult children joint owners.
However, I am not a fan of life estates for three reasons:
By adding a child’s name to the deed, you add a layer of risk to your home (the child’s creditors, divorce, or lawsuits may impact you).
When you add a person to your deed, you lose full control of the property because now you will need the child’s legal consent before your can sell / refinance it.
If you sell the home prior to death, you now have to split the proceeds with the child (based on their remainder interest), and that capital gain attributed to the child generally doesn’t get the benefit of your personal exemption - meaning unnecessary income taxes on those gains .
I’ve also had clients who, before speaking with me, added their kids to the deed as joint owners - if you do that then the three problems mentioned above are exacerbated. Plus your children just lost their full step up in basis on the property - meaning more income taxes on the sale of the property.
3. Revocable trust. You could create a living trust and re-title all your assets to the trust along with updating beneficiary designations so those assets automatically go to the trust upon your death. If done correctly, you may be able to avoid probate completely.
Revocable trusts are the most common approach taken because you get the benefits of both worlds - you are still in complete control of the property, there are no added risks to you, and it bypasses the probate process (plus your kids get a full step up in basis - meaning they could avoid hundreds of thousands in income taxes).
But if it’s too late to get a revocable living trust in place (because of incapacity or if your parents are already deceased), then having a well drafted Will in place can cushion some of the delays and expense related to the probate process.
A well drafted Will does the following 8 things :
Names primary and contingent personal representatives.
Gives your Personal Representative the power to sell real estate to avoid needing court approval.
Specifies waiver of bonds and unsupervised administration.
Appoint guardians/conservators for your minor children (if applicable).
Clarifies your intentions as to who should get what to avoid any uncertainty and delay, and plan for contingencies (any unplanned occurrences) in the event that someone you name is no longer living or is not able to directly receive the property due to age or disability.
Explains how expenses and taxes are apportioned and the order of payments.
Has a tangible personal property section and may include memorandum of wishes (external reference of personal wishes with respect to certain sentimental items).
Has a residuary clause to make sure nothing falls through the cracks.
Need help with your estate planning?
If you would like to review or update your estate plan, then give me a call at 781 202 6368, email jlento@perennialtrust.com, or click here to schedule your free personal consultation.
Joseph M. Lento, J.D.
Your Local Estate Planning Attorney
www.PerennialEstatePlanning.com
477 Main Street
Stoneham, MA 02180
