What is Probate Court? [video]

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Hello, I'm Stephanie Burnham. I'm an estate planning and probate attorney licensed in New Hampshire and Massachusetts. Today, I wanted to talk to you about probate court and why there's so much information out there about avoiding it and what it is. Probate court is a process designed to help people move assets from the ownership of someone who dies to the next generation.

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It was designed because when people had assets in their own name, like a car or real estate, and they were the only person of able to actually sign the car title or sign the real estate deed, we would get stuck. How would we be able to move something if the person who was authorized to sign dies? Probate was designed to appoint someone, to make someone be able to actually sign documents on behalf of a person who died.

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So it was designed with a really great purpose in mind. We're trying to get assets from somebody who passed away to maybe the next generation, friends and family, wherever it needs to go next. The problem is that probate court also comes with a lot of responsibility and a lot of jobs and duties and paperwork and things that go into it in order for it to completely handle every aspect of someone's estate.

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So the purpose was about transferring assets, but there's a process. The process starts with petitioning the probate court. You have to ask the court for permission to be appointed, to be authorized to be that person to sign these documents in order for assets to get transferred. Well, in order to petition the court, you have to fill out paperwork.

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You have to send them death certificates. And if the person had a last will and testament, you need to send that last will and testament to the court. The probate court then will review those documents. They'll validate and make sure that the will is valid, and then they will appoint the person that has petitioned to act as administrator or executor, and that person will get the paperwork.

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They need a very fancy piece of paper with a little seal on it that says, you are now appointed to be able to act on behalf of the estate. The problem is, it's not an instantaneous process. As you can imagine, people pass away all the time, and there are lots and lots of different filings that go to the probate court.

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So it takes a while for someone to get appointed. Currently, this year in 2023, it's taking almost 90 days for someone to get appointed, to be able to administer an estate. And that's because there's lots of paperwork involved in it and lots of things going on with the court. So for 90 days after the person passes away, there's really no one that's authorized to do anything.

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You can't sign checks out of the bank account. You can't sign over a card title and transfer a car. You can't close on a real estate sale until you have that piece of paper. And if it's taking 90 days, you're now waiting three months for that process to happen. that's probably one of the biggest reasons why people don't care for probate so much is because it does take a while.

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The initial paperwork only taking 90 days. But then there's additional things that you have to do during the course of probate, and you're not authorized to close probate right away. So once you get the fancy piece of paper, you can't always just wrap it up immediately. You have inventories to file where you explain to the court all of the assets that the person who passed away owned and how much they were worth when they passed away.

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Then you have to wait for a creditor claim period to run, and creditors have the ability to make claims against a probate estate for up to six months after the person is appointed, not after they pass away, but after the person is appointed. So that's already almost nine months since the day you filed the petition. Before you can start getting ready to pay the bills, and you can start getting ready to settle the affairs and finally close the estate.

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So on average, it takes almost a year, sometimes more than a year, to actually fully administer a probate estate. And that's just one of the many reasons why people don't actually enjoy probate court and don't want to do it, how long it takes. The second reason why people tend to not like probate so much is the costs.

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There's always a cost. Yes, there's a filing fee. Everyone expects there to be a cost for a filing fee for the court. But there are other costs as well. Costs that aren't always measured on a check. And in black and white, there's the cost of the extra fees, interest and late fees that can be assessed against credit card bills that are outstanding or a mortgage that needs to be paid on that real estate, that no one has access to the bank accounts to pay.

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There's the cost of change in value of investments. The house market may go up, the house market may go down, stocks change in value and no one's authorized to go ahead and instruct a financial advisor or to handle the transfer or transaction with respect to stocks. Changing value until, again, someone is appointed by the court. And that's three months potentially longer, depending on what the court needs from you.

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There's also the costs to the the assets themselves. If you're dealing with livestock or farms or ongoing business, in probate, if you are actually in probate with that business, then that can be a huge detriment to that business. And what's happening with that business. If you have a sole proprietorship or you have a small business where the people that own it and are authorized to sign on the business are actually the people that pass away, and they don't have the proper planning in place for that limited liability company or that small business, and that business finds itself in probate trying to get someone authorized, to get someone to be able to sign documents on

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behalf of the business. That business may find itself shut down for three months, and that will certainly hurt business and certainly hurt the going entity, as that happens. So there's a cost to what can happen to these assets by having to wait through the probate court process. And that's before you even get to a circumstance in which people decide that they're not going to agree.

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And when people don't agree, then it's even longer, because now people will file motions with the court saying that their way is the right way, not the way that's proposed. And the court has to schedule a hearing to hear both sides of what is reasonable and not reasonable. And during the entire time we're waiting for that to get scheduled, nothing is happening.

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And so those assets sit and sit. So there's that hidden cost to probate. You can lose a significant amount of value in businesses and in assets just by having them delayed through administration. There's also the fact that it's a public process. Well, most of us don't necessarily mind and don't think it's that big of a deal because we're not of the estate.

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That would make the news. You know, we're not famous. We don't have millions and billions of dollars. So therefore our estate is not necessarily going to grab the attention of any of the paparazzi. That doesn't necessarily mean that you want all of your business out there in the public eye. Probate is completely public, and that means that that nosy neighbor you have can go right down to the probate court.

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When they find out you passed away, and they can read your will, and they can look at the inventory and see how much you were worth, how much your assets were worth, where they are, they'll find out the name and address of all of your beneficiaries. They'll find out the name and address of your administrator. They'll be able to read all of this information.

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And while in most cases, maybe it's just a sense of curiosity that has them down there, sometimes that can open a probate estate to fraud. And the idea that someone may decide that this is the perfect estate because everyone's out of state to take advantage of the situation and make a creditor claim that's fraudulent. They may say that they painted the house last summer because they figure if they charge $2,500, it's probably not enough for you to hire an attorney to fight it out.

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And it might be worth it to for them to just get that check and say, yep, I just made $2,500 by lying. So the publicity and the public nature of it can expose it to fraud. It doesn't happen often, but it has happened and it can happen. So those are some of the reasons why people try to avoid the probate court process.

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As I mentioned earlier, the probate court process happens anytime someone owns an asset in their own name. And that's important to remember because a lot of times people will say, well, I have a last will and testament, and as long as I have a last will and testament, doesn't that mean I'm all set for probate? And the answer to that is no.

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A last will and testament is a very fancy letter to a probate court judge telling the judge who you want to be in charge and where you want your stuff to go, but it doesn't actually matter until a probate court judge reads it, determines its value, make sure that it's actually valid, and then issues that appointment to the person you named so that that person can go ahead and administer the assets you had in your own name.

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So a will is not enough to avoid probate, but it is enough to make sure the right people get your assets and the right person is in charge. Thank you so much for taking the time to sit down with me about probate court. This presentation should not serve as legal advice to you as your circumstances may be very, very different.

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So please seek out and speak with an estate planning or probate attorney near you about your particular situation. Again, thank you and have a great day.