Probate is the legal process of settling your estate after you die. Your debts are paid and your remaining assets are distributed to your beneficiaries or heirs. Your personal representative is responsible for probating your Will. If you have no Will; or you have a Will but you did not nominate a personal representative, or your nominated personal representative is unable to serve, the court will appoint one.
Minnesota probate laws
apply to the estates of people who were Minnesota residents at the time of
their death, and it also applies to real property in Minnesota owned by out of
state residents. Having a Will does not enable your estate to avoid probate.
The need for probate is dependent on the amount and types of property you own,
and whether you own it alone or with others.
Probate vs Non-Probate Assets
The probate
estate consists of property that is not held in joint tenancy with
another person, and does not have designated beneficiaries. If you have
property in your name only, or in tenacy-in-common with someone else (no right
of survivorship), that must be probated. Your personal property items are also
part of your probate estate.
Some types of property
are not subject to probate. This includes real property held in joint tenancy
with right of survivorship (such as between spouses), joint bank accounts,
payable on death (POD) investments, insurance policies and pension plans with
designated beneficiaries. You can also use a transfer on death deed (TODD) to transfer title of real property to a beneficiary without probate.
Certain small estates--those that do not include real property and which consist of
personal property with an aggregate value of under $75,000 are not subject to
probate.
Informal vs Formal Probate
Informal probate is initiated by filing an application with the probate court. Once the probate registrar determines the application is complete, the registrar issues a statement of probate and appoints a personal representative. The PR may pay debts and administer the estate without court supervision.
Formal probate typically involves complex estates that require a judge to make determinations. Formal probate proceedings are commenced by filing a petition to the court. The petitioner must appear at a court hearing. Formal probate proceedings can be either supervised or unsupervised by the court. Formal probate can become complicated for someone unfamiliar with the process, and it's usually a good idea to consult a qualified probate attorney.
Some considerations for deciding whether to file for formal probate:
- The size of estate.
- The types of assets, including real property.
- The complexity of estate issues.
- The likelihood of disputes among heirs.
- Significant estate debts.
- If any heirs are minors.
The Probate Process
Your personal representative initiates probate by filing an application or petition with the probate court in the county where you lived at time of your death.
The major steps in the process include:
- Identifying your assets and debts,
- Collecting and protecting your assets,
- Paying taxes and valid debts, including expenses related to estate administration,
- Accounting for all assets collected and all debts and expenses paid, and
- Distributing the remaining assets to your intended beneficiaries according to your Will, or by the laws of intestate succession if there is no Will.
Taxes
The paying of taxes depends on the size of the estate. Minnesota has a $3 million estate tax exemption per person, and the IRS exemption is $11.58 million per person. If the value of your estate exceeds those exemptions, there are some ways to reduce your tax liability. Marital transfers, charitable donations, family limited partnerships, and certain types of trusts are possibilities. In such cases, it would be prudent to seek the advice of an experienced accountant or tax attorney.