Does Your Will Minimize Probate Time and Fees?

In order to avoid the time and expense of court supervised “probate” proceedings, many individuals have executed a “pour-over” will which may direct that all of their assets shall pass at death to the named trustee of a revocable trust. A change in New Hampshire law effective January 1, 2014 can help with avoiding the necessity of filing an inventory or assets and the posting of a bond by the administrator of a will, where a pour-over will and trust is in place at time of death. However, a “pour-over” will must take a particular form to take advantage of this new law. Unfortunately, many older forms of “pour-over” wills direct the executor to divide “tangible personal property” (household goods, jewelry etc.) equally among surviving children or in another manner.

Such a tangible personal property provision will generally prevent the will from qualifying for the benefits of the new law. This provision should be in the revocable trust, and not the will. Thus, you may want to have the form of your pour-over will and trust reviewed and amended to be eligible for the benefits of the new law. There should also be a bill of sale which “funds” the revocable trust with the tangible personal property, as discussed below.

A revocable trust contains directions for division and distribution of assets which historically would have been set forth only in a last will and testament. The revocable trust becomes irrevocable at death and the trustee carries out the instructions of the trust without bonding or any direct court supervision.

For a pour-over will and revocable trust to be fully effective to avoid probate at death (and guardianship in the case of lifetime incapacity), the trust must be completely “funded.” Funding means that all assets held in the name of the individual who makes the pour-over will and revocable trust must be “re-titled” in the name of the individual, as trustee of his or her revocable trust. If a revocable trust is fully “funded” with all a person’s assets, then there should be no contact with the probate court at death or need for a guardianship in the case of lifetime incapacity.

However, it is difficult to be certain that revocable trusts are fully funded with all assets standing in an individual’s name. Quite often some stray bank account or stock certificate remains in a decedent’s individual name. Until January 1, 2014, for persons resident in New Hampshire at time of death, probate proceedings have been necessary to allow such assets to be distributed pursuant to the terms of a decedent’s trust. Such proceedings require at least the filing of the will, the appointment of an administrator, usually the purchase of a fiduciary bond, and the filing of an inventory of assets. Six month after the appointment of the administrator, a motion for waiver of administration may be filed.

The opening filing fees for any probate administration are $250 (2014). Fiduciary insurance is issued only for a fee, and obtaining the required “bond” is not always a simple process. Given delays in obtaining necessary court orders, proceedings with the court from initial filing to grant of waiver of administration will be much longer than six months.

In some cases, full probate administration is appropriate and necessary. However, in the majority of “simple” cases with assets passing to children, steps should be taken to avoid probate proceedings to the extent reasonably possible. This now means insuring that the terms of the “pour-over” will name only the trustee of the decedent’s revocable trust as “the sole beneficiary of the estate.”

As discussed, having the “tangible personal property provision” in the will usually will prevent eligibility for the new exemption from inventory and bond requirements. Avoiding any inventory and bond is also possible where a will names a sole surviving spouse or only surviving child as sole beneficiary and such person is appointed as the administrator.

While there were reasons for older forms of wills to include the tangible personal property provision in the will itself, most such wills and trusts should now be amended to eliminate this feature. The same result might be obtained by use of disclaimers by children of personal property. However, it would be better to move the tangible personal property provision to the revocable trust from the will by amendment of the trust and the will.

As also noted, a bill of sale should be signed which transfers such property to the trustee of the revocable trust. For persons with only a will or without a will, they should consider putting in place a pour-over will and revocable trust with “funding” of the trust in order to avoid probate and obtain the advantages of a trust arrangement.