What Is Probate?
Probate is the court process of settling the estate of a person who has passed away.
Probating a will begins by filing an application with the probate court.
Once this is done, the decedent’s property is gathered and inventoried. The decedent’s debts are paid out of those assets. Whatever remains is divided among the heirs.
Probate ends when all debts and taxes are paid and all assets are distributed.
If there is disagreement over the will, a probate judge will resolve the differences.
If there is a will, it will appoint a personal representative is responsible for “probating” the will. If there is no will, the court will assign someone to this role.
Minnesota law uses the term “personal representative” to describe the person appointed to administer the estate of a deceased person. This term includes an “executor,” who is appointed in cases where the decedent left a will, as well as an “administrator,” who is appointed when there is no will.
When Is Probate Necessary?
If the decedent was a Minnesota resident at the time of their departure, then Minnesota probate law applies to their estate.
Probate also applies to other states’ residents who own real property in Minnesota.
Having a will does not avoid probate. The need for probate depends on a number of factors:
- the amount of property owned
- the type of property
- and whether it was owned by the decedent alone or with others
Real estate must almost always be probated.
One exception is if the real estate is in a trust. In this case, the decedent was not the owner, the trust is! So the question is, who now owns the trust?
Another exception is if the real estate is is owned in “joint tenancy with right of survivorship”. This means that if one owner passes away, that owner’s interest in the property will pass to the surviving owner or owners. In this case, the change is ownership is automatic and does not involve probate.
If a resident of Minnesota owns real estate in another state at the time of their death, the probate laws of that state will apply to that real estate. Real estate is probated in the state where it is located.
If the estate is worth less than $75,000, the heirs may be able to collect the property without going to court by using an Affidavit for Collection of Personal Property. The personal representative should notify all of the heirs of the property that they can collect. Heirs may not take personal property until 30 days after death. If your personal property exceeds $75,000 or you own real estate in the name of the decedent alone, the estate must be probated.
What Items Are Not Subject to Probate?
Some kinds of property and assets do not need to be probated. These include:
- property owned as joint tenants
- jointly held bank accounts
- payable-on-death accounts
- life insurance proceeds to a specific beneficiary
- and pension benefits with a designated beneficiary
Joint Tenancy Property
Holding title to property in joint tenancy means that two or more people each owns an undivided interest of the property. In the event that one of the joint tenants should pass away, the the property is transferred to the survivors.
In the case of real property, this fact would be stated in your title documents. When a co-owner passes away, the surviving property owner(s) file a certified copy of the death certificate and an affidavit of survivorship with the county recorder or registrar.
Jointly Held Bank Accounts
As in joint tenancy of real property, two or more people may be listed as account holders of the same account. If one of the joint account holders passes away, the other joint account holders own the money in the shared bank account.
Payable-On-Death Accounts (PODs)
A payable-on-death account is a bank account in which the account holder has chosen a someone to receive the funds in the account upon their death. The beneficiary has no right to these funds until the account holder’s passing. When that time comes, the beneficiary are already named, bypassing probate court.
Life Insurance Proceeds
The proceeds from life insurance policies do not pass through probate as long as named beneficiaries are available to take the payout. If there are no named beneficiaries or they are no longer living, the proceeds will go through probate.
If the decedent’s pension provides survivor benefits, those benefits will be paid them to the person designated without probate.
How Is an Estate Probated?
Probate proceedings in Minnesota may be either formal or informal, depending on the complexity of the estate.
The personal representative of the decedent starts a probate proceeding by filing with the probate court. This is done in the county where the person lived at the time of their death.
Generally, proceedings must be initiated within three years after the the person’s passing. The services of an attorney may be necessary.
The informal probate process is initiated by filing an application with the probate court. In some counties, the application must be filed in person. When the probate registrar determines the application is complete, the registrar will issue a statement of probate and appoint a personal representative. In the informal process, this personal representative may pay debts and inheritances and may otherwise administer the estate without the court’s supervision.
Applications for informal probate should include the following:
- The applicant’s interest in the proceeding (i.e. spouse, child, attorney, personal representative, etc.);
- The decedent’s name, dates of birth and death, and the county and state of residence at the time of death;
- The names and addresses of the decedent’s spouse, children, heirs, and any others named in the will, and the age of any minors in this list;
- Statement showing venue if decedent was not living in Minnesota at time of death;
- The name and address of the person who is, or should be, named personal representative; and
- Statement of applicant’s knowledge of any probate or appointment proceeding concerning decedent filed in Minnesota or elsewhere.
If there is a will, the following also must be included in the application:
- A statement that the original will is in the court’s possession, accompanies the application, or an authenticated copy of a will probated in another jurisdiction is attached to the application;
- A statement that the will has been validly executed;
- A statement that the applicant is not, upon investigation, aware that the will has been revoked; and
- A statement that the time for beginning informal probate proceedings has not expired, which is generally three years after the decedent’s death.
The probate registrar may either accept or reject the application. It is not a final determination if the registrar rejects an application for informal probate, and any such rejection does not prevent the will from undergoing formal probate proceedings.
Formal probate typically involves complex estates where a judge is needed to settle the estate.
Formal probate proceedings are begun by filing a petition for formal probate with the court. The petitioner then must appear before a court at a hearing. Formal probate matters can be either supervised or unsupervised by the court.
In most cases, it is best to consult an attorney if an informal probate proceeding cannot resolve the estate.
If the court finds that the petition is complete, the court will issue an order for probate and appointment of the personal representative.
How Will the Estate Be Distributed to Heirs?
If there is a will, the personal representative should distribute the estate property according to the will. If there is no will, the estate property will be distributed according to state intestate succession laws. Click here to view a “Table of Minnesota Heirship.”
The law generally provides that, without a will, the estate will pass to the spouse, if still alive, but in situations where either spouse has children from other marriages, the share of the spouse may be less than the entire estate. If your spouse is not alive, the estate will pass to the decedent’s children in equal shares.
Sometimes relatives cannot be located or traced. In this case, assets of the estate that cannot be distributed are deposited with the county treasurer until claimed.
Determination of Descent
If a person has been deceased for more than three years, and the estate was not probated, an interested party must petition the Court for “Determination of Descent” in order to transfer the decedent’s probate property. This is done either in accordance with the decedent’s will. If there is no will, Minnesota’s inheritance laws.
What Taxes Must Be Paid?
Federal law provides that an individual can transfer up to a certain threshold amount to someone other than a spouse before incurring estate tax. This amount varies year to year. Visit the Internal Revenue Service’s website at www.irs.gov for the most current federal estate tax exclusion amount. If you are married, you can transfer any amount of property to a spouse during your lifetime or after your death without incurring federal estate tax. Individual state tax laws may vary, however, and you should review the tax laws of the states where you have property. The Minnesota estate tax is separate from the federal estate tax and applies to estates over $1,800,000. As of 2018, only estates with over $2,000,000 will be subject to the tax. There are various programs and deductions that can reduce an estate’s liability for the tax. For example, transfers between spouses are generally not taxable. Additionally, the State exempts certain types of farm property from the tax.