There are 2 triggers for probate in Minnesota.
FIRST TRIGGER FOR PROBATE IN MINNESOTA
The first trigger for probate in Minnesota is when you die with real estate in your name alone. For example, most married couples own their home jointly – as joint tenants with rights of survivorship. If you own real estate jointly with another individual, and you pass away, the title to that real estate will now transfer to the survivor as a matter of law. The survivor will need to file an Affidavit of Identity and Survivorship along with a certified copy of the death certificate with the county to effectuate this transfer of title. Other than filing those documents, there is nothing else the survivor will need to do to transfer the title to the property. As such, you essentially get a free pass to avoid probate at the first death if you own your property jointly with your spouse.
Once the first spouse has passed away, however, the real estate is titled only in the surviving spouse’s name. If the surviving spouse then dies, that spouse’s heirs will need to go through probate to transfer legal title to the house to the rightful heirs since it does not automatically transfer.
Where you need to file probate will depend on where the decedent was domiciled at the time of death. For instance, if the decedent owned a home and was domiciled in Dakota County and had a cabin in Washington County, filing probate in Dakota County would be appropriate. Filing probate in Washington County would not be appropriate. If the decedent owned real estate in another state in addition to real estate in Minnesota, an ancillary probate may be necessary in that other state.
A word of caution for spouses. It happens frequently where a married couple comes in for an estate planning consultation only to find out that their deed is in the name of only one spouse. Perhaps one spouse had purchased the property prior to the marriage, or maybe one spouse inherited that property during the marriage. If that is the case, or if you own your property jointly as “tenants in common”, this will require a probate at the first death to transfer the real estate to the surviving spouse. That is possibly the worst estate planning mistake you can make and it is easily avoidable with minimal planning.
SECOND TRIGGER FOR PROBATE IN MINNESOTA
The second trigger for probate in Minnesota is when you die with assets in your name alone that are cumulatively worth more than $75,000. In order for this to happen these assets must not designate who should receive them upon your death. In other words – assets that have a beneficiary designated will not require probate if the beneficiary designation is set up properly.
For example, if you have a checking account in your name alone worth $30,000 and a savings account in your name alone worth $50,000, and you die, your heirs will need to start a probate in order to collect those assets. On the other hand, if you have $30,000 checking account and a $50,000 retirement account that designates your children as beneficiaries, no probate is needed. The retirement account will automatically transfer to your children. The checking account will not automatically transfer. So how do your children receive that asset?
SMALL ESTATES IN MINNESOTA
In Minnesota, for estates where the assets in the decedent’s name alone are less than $75,000, the heirs can collect the estate assets using an Affidavit for Collection of Personal Property. This Affidavit is a sworn statement by the person providing it that no probate is ongoing or necessary, the decedent has passed more than 30 days ago, and that the person making the statement is entitled to the property.
In the above example, the children would take the Affidavit for Collection of Personal Property to the financial institution where the checking account was located and present it along with a death certificate. Once received, the institution is required to transfer the property to the affiant.
HOW TO AVOID PROBATE IN MINNESOTA
You should think through how your assets are titled and how your beneficiaries are designated. It is quite common for a retirement account, life insurance policy, or some other financial account to have no beneficiary designated or an improper beneficiary designation. If you list your “estate” as beneficiary, your heirs will need to go through probate for that asset. Likewise, if the beneficiary you designated is deceased, the plan document may specify that your estate is now the beneficiary. Lastly, if you designate a minor as a beneficiary, a Court will need to appoint a custodian over that asset until that beneficiary turns 18.
There are several ways to avoid probate in Minnesota. You can use properly set up beneficiary designations on your financial accounts. You can use a Transfer on Death Deed for transferring real estate in Minnesota. This acts like a beneficiary designation for your real estate. You can also set up a trust to own your property and transfer to your heirs upon death. Each option carries with it its own benefits and drawbacks.
Do you have questions about how your property is titled, how your beneficiaries are designated on your accounts, or how to avoid probate in Minnesota? Contact our office today at (952) 658-6503 for a free initial consultation. We will discuss your estate planning needs and counsel you on the most effective ways to avoid probate in Minnesota.
Zach Wiegand is a Burnsville, Minnesota estate planning attorney who also handles probate in Dakota County and other counties in the greater Twin-Cities area. Zach is the owner of Gold Leaf Estate Planning, LLC, which is a Minnesota estate planning law firm that handles probate and trust administration in Minnesota. Zach was named a 2017 and 2018 Minnesota Super Lawyer – Rising Star and he is a member of WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at firstname.lastname@example.org or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337.