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Probate avoidance at all cost?

If you have spent any time in the court system you know that it is a hugely inefficient, time consuming and costly proposition. It doesn’t matter whether it is housing court, criminal court, district court or state or Federal court. It is often “hurry up and wait”. My elder law practice therefore devotes a fair degree of time and effort into avoiding court. The relevant court in my field is Hampshire Probate which recently moved from next to the Calvin Theatre to down near the Exit 18 ramp where the Clarion Hotel used to be.

Probate court is where they deal with guardianships, conservatorships, estates, divorce and adoptions. You can generally avoid probate guardianships by signing a Health Care Proxy. You can usually avoid Conservatorships by signing a Power of Attorney. Through a variety of strategies you can avoid your relatives having to probate (i.e., process through court) your Will. Methods to achieve this are: deed to your children reserving a life estate, annuities with residual beneficiary designations, life insurance, Revocable and Irrevocable Trusts. Keep in mind that there can be downsides to most of these strategies. There is no perfect bullet in estate planning.

There may be, however, instances where you actually do want probate. Take, for example an elder who names 4 nephews as direct beneficiaries of her $1,200,000 MetLife annuity upon her death. She names her nephew Michael as the Executor under her Will (now known as Personal Representative). At the elder’s death there are debts to be dealt with, Massachusetts estate tax issues and other “wrap up tasks” which may involve the beneficiaries kicking in towards the costs (such as accountants, clean up personnel, lawyers etc.)

At the elder’s death Michael seeks some funds from his cousins to chip in towards these costs. But they received their checks directly from MetLife and ran for the hills. There is no money at Michael’s disposition to satisfy the debts. If money had been left solely in the elder’s name then there would have been a “probate estate” via the decedent’s Will with which to pay these debts.

Another example is where an elder wants judicial oversight of his or her finances at their death. By leaving funds under a Will or through a Testamentary Trust the elder is saying “my estate will pass through the court and its attendant scrutiny and I’m ok with that.”

Lastly, there is only so far that MetLife will allow the elder to name contingent beneficiaries. She can name the 4 nephews and potentially provide for the possibility that a nephew may predecease her. However, once she says “well if my nephew Chris predeceases me then I would like his share held in trust for his children.” MetLife will likely not abide by this language; it is too complicated. The company will tell you at that point to name your estate, or write a Will or a trust.

So should you avoid probate “at all cost?” No, there are in fact instances where it is called for, however infrequent that might be.

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