After twenty-some years as an estate planning and 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 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 advantages for clients that their loved one did not otherwise possess.
When a person is alive, they enter into agreements, contracts, and 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. If they fail to do so, 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 statute to submit their claim. Failure to submit a timely claim generally results in the claim being barred.
Specifically, as most of you have probably seen from the legal notice in the newspapers, the time for bringing a claim is normally limited to 60 days. 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 60 days. Likewise, for the person who entered into a written agreement, the time is reduced from five years to 60 days.
For further illustration purposes, we have often encountered a situation where the 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 discover, much to their dismay, such claims existed.
My profession is often considered to be filled with negative people always predicting the worst scenario. So bear in mind that not every estate, or probably not even the majority of 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 not let the fear of the word “probate” scare you from using it to your advantage.