The probate process of distributing a person's assets after death can be a complex and daunting task, often taking several months or more to complete and costing thousands of dollars in legal fees. It can be exhausting for the grieving family members. Fortunately, not every estate needs to go through that process.
In an effort to limit backlogs in probate courts, Minnesota has created a law that exempts small estates. This allows for the probate administration process to be bypassed entirely. The statute provides for the heirs or personal representatives (executors) of certain qualifying estates to collect the decedent's property without court approval.
Who
might benefit from this provision?
A large number of people leave modest estates when they die. More people than ever are renting today and they choose to not own real property. Many have fewer personal assets, perhaps a couple cars and some household goods. These kinds of estates will often fall within the definition of a small estate in Minnesota.
A
little background:
A person's estate consists of personal property, real property, cash, bank assets, life insurance and other payable-on-death instruments, stocks and bonds, and retirement instruments such as a 401(k), IRA, and pensions. The probate estate comprises that part of the estate which is distributed after death by means of a Will in the process of probate. It's this latter probate estate that we will be dealing with in determining the small estate.
How it works:
There are two main requirements that must be met for your estate to qualify for the small estate exemption. First, the total value of your probate estate (minus debts) must not exceed $75,000. Second, there must be no real property in your name alone in your probate estate.
Estate-planning tip: If you own real property, consider a Transfer on Death Deed (TODD) to help keep your estate outside of probate. Then, if your total remaining personal property is valued at under $75,000, your estate will qualify as a small estate. Also, if you have sizable bank assets, you may choose to set the accounts up jointly or name a payable-on-death beneficiary to keep the assets from tipping the estate beyond the $75K limit.
Under
the Minnesota Statute, your personal
representative can use an Affidavit for Collection of Personal
Property along with a certified
copy of your death certificate to access your personal property assets. The Affidavit cannot be used until at least 30 days have passed after the date of your death.
These personal property assets can include your bank accounts, securities, contents of safe deposit boxes, motor vehicles, and
other property. In addition,
the Affidavit allows your personal representative to collect money or property
owed to you. The Affidavit only applies to property in your name only, and doesn't
apply to jointly-owned property, or property with a named beneficiary.
The non-probate small estate carries some risks. With no probate administrative process to watch over the distribution of the estate, there is more room for error--and more room for improper actions. This is why it is very important to have a well-crafted will in place, and to nominate a personal representative you can rely on, regardless of the size of your estate. The will must provide careful guidance for the personal representative to properly follow through with your wishes.
It is always prudent to have a well-crafted estate plan in place, to ensure that all of your assets will be passed on to your loved ones in the manner you wish. A qualified estate planning attorney can help you get started.