Is Probate Required?
One of the first questions to consider is whether Minnesota law requires a probate. Not all property owned by a decedent must be transferred through probate. To determine whether probate is required, the decedent’s property must be listed and categorized as either probate or nonprobate property. All property can be categorized in one of these two ways. The form of ownership of the property determines whether an asset is classified as a probate asset or a nonprobate asset. Once the asset is classified, the legal process required to transfer title of the asset to the appropriate persons becomes clearer.
A nonprobate asset is one in which title to the property passes without the necessity of having a court’s help. The most common types of nonprobate assets are those created by contracts, property law, and trusts. Examples include:
- 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.
It is generally not necessary to obtain the assistance of a court to transfer title to these nonprobate assets. This typically results in a much faster settlement of the estate and a savings in the cost of administration. However, caution needs to be exercised to avoid ignoring important issues in the transfer of nonprobate assets. For example, although title to joint tenancy property automatically passes to the surviving joint tenant upon the death of one of the joint tenants, the recording or delivery of documentation proving the decedent’s death is required to complete the formal transfer of title. Other documents may be required as well. Additionally, when handling the transfer of nonprobate assets to the appropriate beneficiaries, it may be necessary to address other important issues including state and federal tax returns, calculation of the tax basis in the property, and resolution of creditors’ claims.
A probate asset is one in which title to the property does not transfer by operation of law upon the death of the owner and therefore requires court involvement. Typical probate assets include:
- Property titled solely in the decedent’s name.
- Tenancy in common property.
- Assets designating the beneficiary as “the estate.”
- Assets with a deceased beneficiary and no successor beneficiaries listed.
- Property without title, such as personal property.
These assets can only pass to the appropriate heir or beneficiary by legal action.
It is important to consult with an attorney to categorize the decedent’s property. Some property can fall into gray areas and careful consideration of all the facts and applicable law is required to determine the status of the property. Failure to properly classify property may result in transfers of the property to improper individuals and may cloud the title to the property such that it is impossible to sell it without further, often expensive, court involvement.
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