Probate in Minnesota
Long feared by financial advisors and the clients that believe them, the Probate process in Minnesota is generally not as complicated or as expensive as made out to be.
Probate is the legal process by which a deceased person’s property, known as the “estate," is passed to his or her heirs and/or devisees (people named in the will) after his or her death. Property which the decedent owned individually, items payable to the decedent or to his or her estate must pass through probate for ownership to pass to the heirs. Non-probate assets such as jointly owned property, property held in trust, transfer on death accounts, and the proceeds of life insurance, retirement accounts, and annuities pass to the surviving joint owner or properly named beneficiaries without the necessity of probate.
The probate court for the county in which the decedent was domicile at the date of death must appoint a personal representative to handle the decedent’s assets after death if the decedent’s probate estate is in excess of $50,000. If the decedent’s probate estate is below $50,000 a probate is not required and affidavits of collection may be used to transfer property from the decendent to heirs. The court will review the decedent’s will (testate) or Minnesota law (intestate) to determine whom to appoint as personal representative. Until a personal representative is appointed and issued Letters Testamentary or Letters of General Administration, no one has legal authority to pay bills or deal with the decedent’s property.
The probate of an estate commences with the filing of a Petition, a copy of the Will (if any), a certified copy of the decedent’s Death Certificate. The court may request a Bond posted for the faithful performance of duties by the personal representative. At the time of filing, a filing fee of about $325 must be paid to the probate court.
Notice and Order for Hearing
After the Petition and other documents are filed, the court issues a Notice and Order for Hearing on Appointment (formal adminstration) or a Notice of Appointment (informal administration). This is the Court’s order to the proposed personal representative to provide notice to all of the decedent’s heirs and devisees that a Petition for probate has been filed and to publish a notice in a newspaper in the county which the decedent lived. If charities are involved, a notice must also be sent to the Minnesota Attorney General. In addition, a copy of the notice must be served upon the Commissioner of Health and Human Services in Minnesota. The government may have a claim against the estate if the person received Medical Assistance while they were alive. The notice alerts creditors of the decedent’s death and states that interested parties who wish to object to the appointment of the personal representative have an opportunity to do so by filing a notice with the court by a certain date chosen by the court. If no objections are filed, the personal representative will be appointed. This process usually takes six to eight weeks from the date the petition has been filed with the probate court, although it can take longer.
Six months after the personal representative is appointed by the court, the personal representative must file an Inventory showing all of decedent’s individually owned assets held at date of death. This property should be appraised and listed on the Inventory at the date of death valuation. The Inventory is signed by the personal representative, filed with the court, and served upon heirs and devisees. There is no financial sanction for not filing the Inventory within this period, and, in some cases, the personal representative may wish to wait until he or she determines whether Minnesota and Federal estate tax returns must be filed before completing and filing the Inventory in final form. If the decedent’s gross estate exceeds certain limits, federal and/or Minnesota estate tax returns may be required. Estate tax returns must be filed within nine months of the date of death. If this deadline is missed and the estate is taxable, penalties and interest may apply. However, an extension may be filed so long as the estimated estate taxes are paid within the deadline. A final income tax return for the decedent must also be filed.
Once the Inventory and, if required, estate tax returns are completed and filed, and the creditor claims have been considered, the personal representative may proceed to make partial distributions to the decedent’s heirs according to the terms of the will or, if there is no will, pursuant to Minnesota law governing the succession of property. In the case of physical assets, the personal representative may sell property with the proceeds being distributed to the heirs or devisees.
However, the probate estate generally should not be fully distributed before one year from date of death because creditors may file claims against the estate for up to one year . Distribution to the beneficiaries of the residue of the estate typically occurs after both the IRS and Minnesota have issued estate tax closing letters accepting the estate tax returns. Depending on the situation, this can be anywhere from one to three years after the estate tax returns have been filed.
During administration of the estate, the personal representative must keep detailed records of all income received, interest earned, fees and expenses paid and distributions made since the date of death. These records are necessary for preparation of any fiduciary income tax returns which may be required to be filed and for preparation of accountings to be filed with the court. If the estate earns interest or dividends on any probate assets during the administration process, the estate needs to obtain its own tax identification number and a fiduciary income tax return must be filed for the estate.
A Final Account is filed with the court and generally the personal representative requests the allowance of the account. Notice must be given to all interested parties and they are given an opportunity to object. When the final account is allowed, the personal representative can make final distributions as reflected in the account and the estate can be closed. In most instances, the personal representative is discharged when the court approves the final account.