There is a Trust. Why is Probate Needed?

Probate is the legal process for recognizing the validity of a person’s will after their death and appointing the nominated decision maker. This person, also known as an executor or personal representative, administers the deceased person’s estate and ensures that their money and property are transferred to the beneficiaries specified in their will. If someone dies without a will, probate is the process by which a court declares who that person’s heirs are and appoints an administrator who will distribute the person’s money and property as required by state law.

Many people create an estate plan designed to avoid probate by using a revocable living trust because the probate process can sometimes be expensive and lengthy, and the details of the deceased person’s estate may become part of public court records. However, there are some circumstances in which a probate proceeding may still be necessary.

A Personal Representative Is Needed to Represent the Estate In Court

Sometimes, a personal representative must be officially appointed to defend the estate in a court action. For example, in Sander v. Commissioner,[1] Sandy and her daughter Leda were co-trustees of a revocable living trust that Sandy had created. In addition, Leda was nominated as the personal representative by Sandy’s will. When Sandy died, Leda became the sole trustee of Sandy’s trust. Leda’s attorney told her that there were no accounts or property that needed to be probated; as a result, Sandy’s will was never probated, and Leda was never officially appointed as the personal representative of the estate.

After Sandy’s death, the Internal Revenue Service issued notices of deficiency to Sandy for amounts it asserted that she owed in unpaid taxes. Leda filed a motion for redetermination of the amounts and sought to be substituted as a party for Sandy in the case. However, the tax court found that although Leda was the trustee of Sandy’s trust, she did not have the authority to act for her mother’s estate in litigation that did not involve trust property but instead involved only a redetermination of Sandy's income tax deficiencies for two years prior to her death. Rather, a personal representative needed to be appointed who could litigate the case on behalf of Sandy’s estate.

In similar circumstances, even when all or most of a deceased person’s accounts and property are transferred outside of probate, a probate proceeding may still be necessary to appoint a personal representative to represent the estate in court.

A Personal Representative Is Needed to Transfer Real Estate

Some types of joint ownership avoid probate by vesting full title of the real estate in the surviving owner upon the death of the joint owner. In addition, some states allow transfer-on-death deeds that specify a new owner and immediately transfer the title of the real estate when the current owner dies. Transferring the title of real estate to a trust that directs that title should be transferred to a specified beneficiary is another way to transfer real estate without probate. However, unless one of these estate planning solutions is implemented, a personal representative must typically be appointed to transfer real property in a probate proceeding.

If a personal representative needs to be appointed only to transfer real estate, it may be possible to petition the probate court for a simplified probate proceeding.

A Personal Representative Is Needed to Transfer Non-Real Estate Accounts

Ideally, a revocable trust is fully funded. In most cases, a trust contains a pour-over will that states that any assets not in the trust at the time of death be transferred to the trust. However, for those assets to be transferred to the trust, probate will have to be opened, and a personal representative appointed to transfer the assets to the trust.

Give Us a Call

Although it is often possible to avoid probate, probate proceedings are necessary in some circumstances. Give us a call today at 301.892.2713, or click here to schedule a complimentary Estate Planning Discovery Session to discuss if we can help you create an estate plan that will enable you to transfer your money and property to your family or loved ones in the most efficient way possible. Our priority is caring and establishing relationships with our estate planning clients and their loved ones.

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The information in this blog is for educational purposes only and should not be considered legal advice.

[1] 124 T.C.M. (CCH) 237 (2022).