Probate is the legal process for paying a person's debts and expenses and distributing a person's property after that person’s death. In Minnesota, the person who dies is referred to as the "Decedent" and the remaining property is called the “estate."
When someone dies, the first step for the family in administering the estate is to find the will, or learn if a will is somewhere out there. If the Decedent passes without a will, they are deemed to have died "intestate" and Minnesota law will dictate the Decedent's heirs-at-law and how the estate will be distributed. Otherwise, the estate will likely be administered and distributed persuant to the Decedent's will.
As with any area of law, disputes are prevalent in the probate system. Conflicts during the administration of the decedent's estate can create situations that require the assistance of an experienced probate litigation attorney.
Brian has years of experience successfully handling all of the following types of conflicts:
- Will contests
- Trust disputes
- Disallowed creditor claims
- Conservatorship and guardianship disputes
- Life insurance beneficiary disputes
- Spousal elections
- Removal of trustee or personal representative
What is probate?
Probate is the legal process of settling a decedent's estate. The decedent's property and assets are inventories and debts may be paid, and the remaining assets are distributed amongst the decedent's heirs. The personal representative is responsible for managing the estate and ensuring that it is administered in accordance with the decedent's wishes and applicable law.
The probate process begins by filing a petition with the probate court. The process is complete when all debts required to be paid are satisfied and all the remaining assets are distributed. The personal representative will prepare a final accounting of the estate. In certain types of probates, a petition to close the estate will also need to be filed with the court. Other probates may be able to be closed administratively.
When is probate necessary?
The need for probate depends on what property the decedent owns at the time of death and how those assets are titled.
Real estate is the most common asset that would generate the need for a probate. Unless real estate is own in joint tenancy with right of survivorship, or owned in trust, it must be probated under Minnesota law. If the decedent owns real estate outside of Minnesota, it may be required to have a open a separate probate in that state.
If the decedent's estate is worth less than $50,000, heirs may be able to collect the property without going to court by using an Affidavit for Collection of Personal Property. This process saves significant time and money over the traditional probate process.
What assets are subject to probate?
Not all property owned by a decedent must be transferred through probate. Assets are categorized as either probate or nonprobate property:
A nonprobate asset can generally be transferred upon the death of the owner without the need for court intervention.
- Annuities, life insurance, and retirement plans with beneficiary designations.
- Property titled in joint tenancy.
- Property with transfer on death or payable on death designations.
- Assets within a trust.
Title to probate assets do not transfer by law upon the owner's death. Transferring these assets typically requires court involvement to title the assets with the proper person or entity. Probate assets generally include:
- Property titled solely in the decedent’s name.
- Property owned as tenancy in common.
- Assets designating the decedent's estate as beneficiary.
- Certain personal property.
These assets can only pass to the appropriate heir or beneficiary with a probate action.
What happens if someone dies without a will?
There are misconceptions about what happens to a person's property if he or she dies without a will. If someone dies without a will, he or she is deemed to have died intestate and the property will pass to the decedent's heirs at law.
Under Minnesota intestacy laws the decedent's surviving spouse would be entitled to the entire estate if the decedent has no children, or if all of the all of the decedent's surviving children are also children of the surviving spouse, and the surviving spouse has no living children with anyone other than the decedent.
Otherwise, the surviving spouse would be entitled to the first $150,000, plus one-half of any balance of the intestate estate, if all of the decedent's surviving children are also children of the surviving spouse and the surviving spouse has one or more surviving children who are not children of the decedent, or if one or more of the decedent's surviving children are not children of the surviving spouse.
The surviving spouse may also be entitled to certain exempt property such as the homestead, some personal property, and a family allowance.
Any part of the intestate estate not passing to the decedent's surviving spouse, or the entire intestate estate if there is no surviving spouse, passes in the following order:
- to the decedent's descendants by representation;
- if there is no surviving descendant, to the decedent's parents equally if both survive, or to the surviving parent;
- if there is no surviving descendant or parent, to the descendants of the decedent's parents or either of them by representation;
- if there is no surviving descendant, parent, or descendant of a parent, but the decedent is survived by one or more grandparents or descendants of grandparents, half of the estate passes to the decedent's paternal grandparents equally if both survive, or to the surviving paternal grandparent, or to the descendants of the decedent's paternal grandparents or either of them if both are deceased, the descendants taking by representation; and the other half passes to the decedent's maternal relatives in the same manner; but if there is no surviving grandparent or descendant of a grandparent on either the paternal or the maternal side, the entire estate passes to the decedent's relatives on the other side in the same manner as the half;
- if there is no surviving descendant, parent, descendant of a parent, grandparent, or descendant of a grandparent, to the next of kin in equal degree, except that when there are two or more collateral kindred in equal degree claiming through different ancestors, those who claim through the nearest ancestor shall take to the exclusion of those claiming through an ancestor more remote.
Only if there are no takers does the decedent's property pass to the state - this is very uncommon.
If a decedent dies intestate and a probate is required, the estate must be administered formally (versus informally), which may significantly raise the cost of the process.
What property of a decedent is exempt from creditor claims?
Minnesota and federal laws protects certain property of a decedent from access by creditors and other claimants.
Minnesota defines a homestead as the house owned and occupied by decedent as the decedent’s dwelling place, including the land upon which the house is occupied.
If the homestead passes by descent or will to the spouse or decedent's descendants or to a trustee of a trust of which the spouse or the decedent's descendants are the sole current beneficiaries, it is exempt from all debts which were not valid charges on it at the time of decedent's death (i.e. mortgage or other pre-existing lien) except that the homestead is subject to a claim filed for state hospital care or for medical assistance benefits.
In addition to the right to the homestead and exempt property, the decedent's surviving spouse and minor children whom the decedent was obligated to support, and children who were in fact being supported by the decedent, are allowed a reasonable family allowance in money out of the estate for their maintenance for up to $1,500 per month for 18 months. The family allowance is exempt from and has priority over all creditor claims.
If there is a surviving spouse, then, in addition to the homestead and family allowance, the surviving spouse is entitled from the estate to property not exceeding $10,000 in value in household furniture, furnishings, appliances, and personal effects. The surviving spouse is also entitled to one automobile, if any, without regard to value.
If there is no surviving spouse, the decedent's children are entitled jointly to the same property as would be available to the surviving spouse, except where it appears from the decedent's will a child was omitted intentionally.
This property is all transferred outside of any creditor claims.
Employee-sponsored retirement plans, including 401(k)s
Generally, 401(k)s and other employee-sponsored retirement plans will have a beneficiary named on the account that will make it a nonprobate asset. Upon the death of the owner of the account, the funds will transfer by operation of law to the named beneficiary, outside of probate and outside the access of any creditors. Federal law protects the beneficiaries of 401(k)s and other employee sponsored plans from creditor claims through the Employee Retirement Income Security Act (ERISA).
Individual Retirement Accounts (IRAs)
In Minnesota, Individual Retirement Accounts (IRAs) are treated differently than employee sponsored plans. Although many of these accounts will have named beneficiaries, and pass outside of probate, the funds do not carry the same level of protection as accounts covered by ERISA. In 2013, up to $69,000 plus additional amounts reasonably necessary for the support of the decedent’s spouse or dependents is exempt from creditor claims. This amount may be adjusted periodically to reflect the consumer index.
Any funds transferred from an IRA over the exempt amount may be subject to creditor claims.