Q: Before my mother died she added my sister and I as
beneficiaries on all her accounts so her estate would not
have to go through probate. However when we were going
through her papers we found out that she also owned some
shares of stock and had another small bank account that was
just in her name. Does this mean that we have to probate
her estate? I’m worried about the cost because the total
amount involved is less than $3,000.
One of the objectives of estate planning for many clients is
to avoid probate through a variety of planning techniques
such as beneficiary designations, joint ownership, or the
creation of a trust. The assets that are subject to probate
are those that a person owns solely in their own name at the
time of their death. The probate process is the process by
which legal title is transferred to the person’s heirs (if
they died without a will) or to the beneficiaries named in
their will. Your mother’s stock and the bank account will
have to be probated. The time and expense involved in
probating an estate depends on a number of factors,
including the complexity of the decedent’s financial
affairs, whether someone is contesting any aspect of the
estate, and to some extent on the size of the estate.
Fortunately there are special procedures for small estates
such as your mother’s that greatly reduce the time and
expense involved in the probate process. If the total value
of the assets that are subject to probate, minus funeral and burial expenses, is less than
$22,000 (for persons who died in 2016), it is possible to
file a petition in Probate Court and get an order assigning
the assets to the heirs on the same day. There are several
requirements that must be met in order to use this
procedure.
The “Petition and Order for Assignment” form is available
from the probate court. The petition must be filed in the
probate court for the county where the decedent was living
at the time of death. The petition should be signed by the
surviving spouse, if there is a surviving spouse. Otherwise
the petition can be signed by the person who paid the
funeral and burial expenses or by one of the heirs.
The information that is required on the form includes the
names and addresses of all of the heirs; their relationship
to the deceased; an itemized list of the assets and the
value of each asset; the amount of the funeral and burial
expenses; whether the funeral and burial expenses have been paid
and, if so, the name of the person who paid them. A copy of
the funeral bill and, if the bill has been paid, a copy of
the receipt, and a copy of the funeral contract must be attached to the petition. For real
estate, the legal description must be listed as well as the
street address since the form will have to be recorded with
the Register of Deeds in order to transfer the real estate.
The petition must list the gross value of the real estate,
not the equity value. A tax statement showing the SEV or an
appraisal must be attached. If there is no appraisal the
court will use twice the SEV as the value of the real
estate. For bank accounts the petition should list the name
of financial institution and the last four digits of the
account number. It is very important that all of the
information be complete and accurate.
In determining whether the estate is under $22,000 the
funeral and burial expenses can be deducted from the total
value of the assets in the estate. For example, if the value
of the estate is $25,000 and the funeral and burial
expenses are $8,000 then, for purposes of the small
estate procedure, the value of the estate would be
$17,000.
Keep in mind that the staff at the Probate Court cannot give
you legal advice. If you have filled out the petition
properly you can receive the Order Assigning Assets
immediately. The Order (which is on the reverse side of the
petition) will state that the assets must first be used to
pay or reimburse payment of funeral/burial expenses and the
balance (if any) is assigned to the surviving spouse, or if
there is no surviving spouse, to the heirs. The heirs are those persons who would
inherit if the decedent did not have a will. In your case,
if your mother was not married at the time of her death, her
heirs are her children. If you and your sister are her only
children each of you would be entitled to one-half of the
remaining assets. However if you had a sister or brother who
died before your mother did and who had children, then
those grandchildren would also be considered as heirs and
would divide their parent’s share.
You will need to take a certified copy of the Order to the bank to obtain the
funds in the account. As for the stock you can call the customer service
number listed on the dividend statement for assistance. A brokerage firm can
also assist you in transferring or selling the stock. You may also be able
to obtain the necessary forms on the website for the corporation or its transfer
agent.
There are several other types of small estate procedures
which we will discuss in subsequent Questions & Answers, including a
procedure where the only asset in the estate is a motor
vehicle.