Who is in Charge? The Downside of Avoiding Probate

When you die, you want your assets to pass to your loved ones as easily as possible, right? Many people think that means avoiding probate. In some cases, however, avoiding probate creates more problems than it solves.

A common way to avoid probate is by naming "payable on death" beneficiaries on all your assets and accounts. In Minnesota, you can name beneficiaries on real estate, cars and financial accounts. When you die, these assets pass directly to your named beneficiaries without a probate. The downside with using beneficiary designations, however, is nobody in charge.

If there is no one in charge, who will pay your final bills? Will each of your children pay his or her share from the money received by beneficiary designation? And if you name several children as beneficiaries on your house, then they each have equal say about the decisions involved in selling your house. If any of your children are married, their spouses must also be involved in selling the real estate.

In some families, the adult children can cooperate to pay the final bills and sell the assets. In other families where the adult children do not get along, there are problems if no one is in charge. What if one of your adult children is disabled or struggling with addiction or mental health issues? There are many reasons why adult children cannot work well together when nobody is in charge.

Probate is seldom a "big deal" in Minnesota. Most probates involve no court appearances. The advantage of a probate is the court appoints an executor (or personal representative) to gather the assets, pay bills, sell assets such as real estate or cars, and then distribute the remainder according to your Will.

The personal representative named in your Will has authority to handle only those assets without beneficiaries. If you have named beneficiaries on all your assets and accounts, there will be no personal representative and, thus, nobody in charge. If your children cannot cooperate to deal with your final bills and your assets, they may end up in court.

Before you rush to add beneficiaries on all of your assets and accounts, speak with your estate planning attorney about what is advisable in your situation. Each family is different. In some cases, avoiding a probate with a Trust is better than relying on beneficiary designations. In other cases, doing a Will and letting there be a probate upon your death is the best option to preserve family peace.

Attorney Jill Adkins, with the Gries Lenhardt Allen law firm, has 30 years of experience in estate planning, probates and trust administration, and can advise you on avoiding conflict in your family after your death.

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