After twenty some years as an estate planning and as an administration attorney, and after considering keeping an oxygen bottle, a bottle of bourbon or some other medical treatment in my office to revive clients after I inform them that we need to probate their loved one’s estate, I want to take a moment to consider whether anything objective and advantageous to a client can come from a probate proceedings.
Before answering this question; however, it is important to recognize that for many estates a probate proceeding may be absolutely required, which is the case if the deceased had a Last Will and Testament as their only estate planning vehicle and the assets in the estate are the type that would require a probate. Instead, the question I am posing is whether there can be any other objective and measurable advantage or benefit to the estate and/or beneficiaries as a result of a probate proceeding.
I am sure it may come as a surprise to many but the answer is often ‘yes’.
Let me explain. One of the basic misunderstandings of probate is that it is a timely, expensive, judicial process with the sole purpose of implementing the deceased’s estate plan. What clients don’t understand is it also has the purpose of allowing the estate to resolve claims against the estate. And if used wisely and strategically, it can create absolute advantages for clients that their loved one did not otherwise possess.
When a person is alive, they enter into agreements, contracts, relationships, as well as having accidents and other life events all of which often create liabilities and claims. As most people are aware, these breaches, obligations and claims are subject to statutes of limitation. For example in Oklahoma, if a person causes a traffic accident, the opposing party generally has two years to initiate legal proceedings against the person, and if they fail to their claim is barred because the statute of limitations has expired.
Likewise, if the person entered into a written agreement to sell anything or perform some act, then any claim of them failing to live up to their obligations has a five year statute of limitations.
As stated above, a significant purpose for probating an estate is to settle and resolve claims. This is implemented by providing notice to a claimant or a potential claimant that they have a certain time period as set by the respected state statue to submit their claim. Failure to submit a timely claim generally results in the claim being barred. In essence, it is very similar to the expiration the statute of limitations.
Specifically, as most of you have probably seen from the legal notice in the newspapers, the time for bringing a claim is limited to sixty days normally. So, in the example where the person causes an accident, probate and the notice to creditor aspect, shortens the time for the purportedly aggrieved person to bring suit from two years to sixty days. Likewise, for the person who entered into a written agreement, the time is reduced from five years to sixty days.
For further illustration purposes, we have often encountered a situation where there client was not aware of the deceased’s affairs, and even in thoroughly reviewing the deceased’s files and affairs, the client could not ascertain potential claims, later only to, and much to their dismay, discover such claims existed.
My profession is often looked upon as negative people always predicting the worst scenario. So bear in mind that not every estate, or probably not even the majority estates can benefit from this aspect of the probate process; however, there are a lot of estates that can derive such benefits. Accordingly, it is important to ascertain the facts and do not let the fear of the word “probate” scare you from using it to your advantage.