Probate is a legal process in Maryland by which property in your individual name gets to your beneficiaries. You often hear that Probate is something to be avoided, but why? What’s so bad about Probate? In order to understand why you should avoid Probate, let me give you a brief summary of the requirements of opening an estate in Maryland.
When a person dies in Maryland and he or she leaves assets, we must first determine the probate assets vs. the non-probate assets. Generally, non-probate assets are those that are owned jointly with someone else with rights of survivorship (for example a husband and wife), payable upon death or beneficiary-designated accounts or policies, such as bank accounts, IRA’s or life insurance, or assets owned by a Trust. The reason these fall outside of probate is because their title dictates what happens to them. They are no longer in your name when you die.
That means that if you die with your name alone on a house, account or other property, this would be a probate asset. So, now that we know what is being probated, let’s see how they get from your name to your heirs. In Maryland you either die with a Will or intestate (without a Will). Either way, you must go through Probate. A Will does not avoid Probate.
If you have a Will you probably named someone as your Personal Representative, (Executor), and you have beneficiaries, maybe your children. The Personal Representative will have the job of opening the Estate. He or she will go the Register of Wills office in the county in which you resided when you died and file a Petition. Once the estate is opened and the Personal Representative is appointed, this starts the clock. There are deadlines that have to be met and things that have to be filed with the Court.
The critical deadlines are: creditors have 6 months to file claims against the estate to satisfy your debts, the Personal Representative has to file an Inventory of all the assets in the estate within 90 days of appointment, and a First Account within 9 months of appointment.
The costs associated with Probate can be minimal to extensive. If you have a small estate (under 30k) you may only have to worry about newspaper publication costs. If you have a regular estate (over 30k), you will need to pay those publication costs, but also a probate fee depending on the value of the estate, there may be bond fees depending on if you have a Will or not and the value of the estate, and it may be in the Personal Representative’s interests to hire an attorney, adding more expenses. There are other ancillary costs, such as appraisal fee if there is real estate or significant personal property, final tax returns, fiduciary tax returns, estate tax returns, etc.
The fastest a regular estate can close in Maryland is 9 months. That is if everything goes smoothly. That is rare. So your beneficiaries must wait for their distribution and their share will be depleted by all of the costs I mentioned.
I like to think of Probate as taking the back roads to a destination. And I don’t mean rolling hills and sea views, but rather, factories and construction zones. You have people cutting you off, causing you to swerve or take a detour, or you have toll after toll. Not to mention that your family is calling you incessantly asking when you are going to be there. Wouldn’t it be nice if you could take the fastest way possible? Think teleportation.
Our firm believes in probate avoidance as an important key to your estate plan. Be sure to attend one of our next estate planning seminars to find out how this can be achieved. You can find them posted on our website www.sinclairprosserlaw.com
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