By Lauren Weliver

In talking to clients over the years, I have found that probate is one of the most misunderstood concepts in estate planning. In fact, when I first meet with a client, they often tell me that their primary goal is to “avoid” probate. I then ask what it is about probate that they are particularly concerned about, and many times they shrug and tell me it’s just something that they heard from a well-meaning friend or financial “expert” on TV.

The well-meaning friend and pundit may or may not be right when it comes to your particular circumstances. It is important to know that not all assets pass under the probate process when someone dies and that the probate process varies from state to state. So, an anecdote from a friend who lives in California may not be instructive when it comes to how to design an estate plan in Maine.

For example, in Maine, a Personal Representative appointed to administer an estate (i.e., what people think of as an “Executor”) can be paid a reasonable fee for their services, which often means getting paid on an hourly basis for the work that they actually do, whereas in many other states, Personal Representatives are paid a commission based on the value of the estate, regardless of their efforts. The commission structure can get quite costly and it is often wise to come up with a different plan.

Overall, whether probate serves your goals is personal and should be a decision made with an attorney who knows your family, your assets, and your concerns. But in the meantime, here are some of the most common misconceptions we encounter about the probate process in Maine that may be helpful to dispel as you consider your situation.

Having a Will does not avoid probate.

I have heard this one so many times, “I want a Will because I don’t want my kids to have to go through probate.” A Will, however, is designed for probate. A Will does not have any legal effect until a probate court declares it to be the last will and testament of the person who has died.

But, to make things confusing, having a Will does not necessarily mean that your family will have to use it, depending on what the assets are and how they are owned. These types of assets include certain jointly owned assets, assets with certain beneficiary designations, and assets owned by a trust. These assets are called “non-probate” assets and transfer to your beneficiaries by other means.

This is why It is so important to discuss your situation with an attorney who can advise on what happens at your death to your specific assets and what solutions make sense for your family.

A personal representative cannot act under a Will until appointed by the Probate Court.

When creating a Will, you will nominate someone to act as your estate’s Personal Representative, who will be responsible for administering the estate after your death. But the Will is merely a nomination, and the person cannot begin acting for the estate until they accept the nomination and file the necessary paperwork with the Probate Court to get appointed by the Probate Court to serve.

The original Will alone is not enough to show legal authority to act on behalf of an estate.

Wills are public record.

Probated Wills are not private. In fact, probated Wills become public documents that can be viewed by anyone online. However, it’s important to note that an individual’s Will does not get filed with the probate court until after their death – not as soon as it’s signed.

There is a filing fee to use the probate process.

I often hear that my clients want to avoid probate so that their loved ones don’t have to pay a “tax.” Probate has nothing to do with estate taxation. In general, the estate tax relates to the value of all property someone owned, regardless of how it transfers at death.

Probate does, however, have a cost in the form of a filing fee. The filing fee is based on the value of the assets transferring under the process and is not particularly exorbitant in Maine. For example, the current filing fee for a $2 million dollar estate is $950. The filing fee schedule can be viewed online for anyone with concerns about the cost of the process.

Total probate avoidance, without a plan, may lead to problems.

As mentioned above, not all assets someone owns at death pass under a Will.

Upon learning about this, some people are tempted to convert all of their assets to “non-probate assets” so that everything either passes by right of survivorship or through beneficiary designation. This strategy can make asset distribution to your loved ones faster than the probate process, but it also has a major drawback.

How do your final debts, taxes, and expenses get paid if the estate has no assets? Who pays them and how? This can lead to major conflict and problems if there is not a plan and the beneficiaries will not cooperate voluntarily.

Timely and efficiently satisfying your final debts, taxes, and expenses is an important component of a thoughtful estate plan, in addition to making sure your hard-earned assets get distributed to your intended beneficiaries. The plan does not have to include probate, but this should be addressed so that it is not left to the beneficiaries to figure out (or not).

Ultimately, the best estate planning solutions vary from person to person, so consulting an estate planning attorney who can help guide you through the process is a great starting point.