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Most people leave behind an estate when they die. That estate consists of all assets, both tangible and intangible, as well as both real and personal property, owned by the decedent at the time of death. Probate is the name given to the legal process that eventually transfers those assets to the new owners.
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Most estates must go through some type of probate; however, the estate may not be required to go through formal probate. Like most states, Maryland offers a small estate alternative to formal probate for estates valued at less than $50,000 ($100,000 if the spouse is the sole legatee or heir) as of 2020.
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If the decedent died without leaving behind a Will, the estate is an “intestate” estate. Fundamentally, probating a testate estate is the same as probating an intestate estate in that the basic goals of the probate process remain the same. There are, however, a few important practical and procedural differences. If there is no Will, the court must appoint a Personal Representative (PR) to oversee the probate process. Typically, a family member petitions to be the PR. Furthermore, the Maryland intestate succession laws will determine how the estate assets are distributed if there is no Will.
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There are several reasons why avoiding probate is such a common estate planning goal. One reason is the amount of time it takes to get through the probate process. In the State of Maryland, creditors have six months to file claims against the estate. Consequently, it takes a minimum of about eight months to probate even a relatively modest estate. More complex estates can easily take more than a year to probate, meaning beneficiaries must wait that long to receive their inheritance. Another reason to avoid probate is the cost. Along with expenses, everyone involved in the probate process is entitled to a fee which can ultimately diminish the value of the estate that is passed down at the end of probate. Finally, probate is a very public process. Once the decedent’s Will is submitted for probate, it becomes public and may be viewed by anyone.
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Yes. When you co-own an asset, titling it jointly with rights of survivorship means that your interest in the asset will transfer automatically and directly to the surviving co-owners upon your death without the need to go through probate.
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A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also called a Maker, Grantor, or Trustor who transfers property to a Trustee chosen by the Settlor. The Trustee holds that property for the trust beneficiaries. The beneficiary of a trust can be an individual, an entity (such as a charity or political organization), or even the family pet. Assets held by a trust are considered non-probate assets, meaning they bypass probate. Many people choose to use a trust to distribute most of their estate assets because as non-probate assets they can be transferred to the intended beneficiaries immediately after the Settlor’s death or at any time thereafter.
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In fact, one of the most effectives strategies for avoiding probate is to convert as many estate assets as possible into non-probate assets. As the name implies, assets that are considered “non-probate” assets bypass the probate process altogether and can be distributed immediately to the intended beneficiary. Along with trust assets, common examples of non-probate assets include:
- Certain types of jointly held property (usually when held with “rights of survivorship”)
- Proceeds of a life insurance policy
- Retirement accounts
- Accounts designated as “payable on death (POD)” or “transfer on death (TOD)”
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Contact Us
For more information, contact an experienced Annapolis estate planning attorney at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.
