When a person dies, whether they do or do not have a will, there’s a chance that their heirs and beneficiaries may need to undergo a court process to settle their estate. This legal process serves to determine the real and personal property, and to determine the overall market value of the assets for tax purposes, as well as establish the proper and appropriate distribution to those who have a claim to the property. The process is called probate.
Probate in Montana can take quite a long time and can be stressful and expensive for those involved. Still, if the proper steps for asset protection and estate planning have not been taken, it is a necessity to make sure everything is covered and legal. Let’s look at the probate process in Montana, what it involves, how long it takes and the steps that can be taken to avoid probate and protect your assets.
What Is the Probate Process?
The probate process is a detailed and complex legal process by which the district courts of the county where a deceased person resided determine the value of said property as well as its appropriate distribution to parties and entities with a claim upon that property. It applies regardless of whether the decedent passed away with a will.
The first step in the property is to appoint a personal representative of the estate. This can be someone designated by the decedent before they died (as in a will), or it can be appointed by the courts or estate. It can be an attorney, a family member, a corporate entity, or some other entity or combination of entities. If no representative has been appointed, the courts generally look to the spouse named in a will, custodial parent of minor descendants, surviving spouse if none is named, and other heirs, in that order.
Following the naming of the representative, the courts will:
- Determine the validity of the will (if any) and interpret it.
- Manage, protect and collect assets until they are distributed.
- Settle claims by creditors.
- Settle state and federal obligations, if any.
- Distribute property to heirs and devisees.
- Provide for legal transfer of property ownership for things like real estate, cars, stocks, etc.
If all property is designated nonprobate in nature, the courts won’t need to get involved. Nonprobate property includes property that is held in joint tenancy with right of sole survivorship, property that is held in irrevocable trust, life insurance, payable-on-death financial deposits, pension plan assets, and transfer-on-death registrations related to securities accounts. These kinds of properties, however, do have financial reporting requirements and may be subject to federal income and estate taxes.
The easiest and quickest form of probate is an informal probate administration. Applications for this kind of process have to be filed within 120 hours of the decedent’s passing. When the clerk determines all legal requirements have been met, they can file the will and appoint the personal representative to settle the case.
To settle the case, the personal representative may need to send formal notice to any beneficiaries, publish a notice in the local newspaper to alert creditors and provide proof that these notices have been sent and published. Following this, an inventory and appraisal of assets must be prepared, the property must be kept safe until closing and then must be properly distributed. Finally, when everything has been distributed, the representative files a final accounting and closing statement with the courts declaring that the property has been properly accounted.
Formal probate becomes necessary if there are any disputes regarding the distribution of assets. There are two types of formal probate: unsupervised and supervised. Even unsupervised formal probate requires court proceedings. In this process, a judge has to approve certain actions that the personal representative undertakes, such as distributing assets, paying attorney fees, or selling property. This helps to avoid and settle disputes between beneficiaries, to interpret the will, and to establish the amounts due to creditors.
In supervised formal probate, the courts adjudicate and supervise the entire process, every step of the way. The closing and distribution of the estate and even the discharge of the personal representative’s services, require an order to end the proceedings. This is the most restrictive and, generally speaking, the most expensive and time-consuming form of probate.
How Long Does the Probate Process Take in Montana?
The time frame for probate in Montana can widely vary from one case to the next. The best bet going in is to ask your estate planning and probate attorney to estimate the time frame for completion. Still, understand that if there are challenges to the distribution of assets or other disputes, the process can be drawn out. The process can take as little as six months or can extend to a year or more.
Complications that can lengthen the process include difficult-to-value assets, federal estate taxation requiring an IRS audit and disputes regarding asset distribution. In any case, if an estate isn’t closed within two years from the date of appointing a personal representative, the state Supreme Court will notify district court judges who will require the personal representative and their attorney to appear to explain why probate has become drawn out. This can result in the court-ordered closing of the estate within 30 days, and a declaration that the attorney and representative won’t be compensated. For this reason, it’s in the best interests of the attorney and representative to close the estate efficiently.
Small estates in Montana benefit from a simplified and faster probate process. To take advantage of this process, the entire value of the estate must be a maximum of the state’s homestead allowance, exempt property, costs of administration, family allowance, reasonable funeral expenses and any medical expenses before death.
To use this process, the executor must file a written request to the local probate courts. This allows distribution of assets in a manner similar to informal probate and without the hoops of regular courts. Following distribution of property, a closing statement must be filed which discloses that the value of the estate meets requirements, that the executor has given full written notice and accounting of assets to beneficiaries and that the assets have been distributed. A copy of this statement has to be given to all inheritors and any known creditors of the decedent.
If the right steps are taken, it’s possible in Montana to avoid probate entirely. Two methods generally allow this. The first involves either maintaining all property as non-probate in nature, such as having joint ownership of property with right of survivorship, payable-on-death bank account designations, or transfer-on-death securities registrations, real estate deeds, or vehicle registrations.
The second method for avoiding probate involves having assets placed in trust before death. The two main kinds of trust are irrevocable trusts, wherein the trust itself becomes the owner of all property placed into it, and revocable living trusts, wherein the trust primary beneficiary continues to own and control the property placed in trust. The former (irrevocable) trust protects assets from creditors when done properly but removes control by the decedent before they die. The latter (revocable living) trust allows the trust holder complete control, and even the ability to simply cancel the trust, but opens property up to legal claims.
Make the Right Choices for Your Estate
Thinking about final plans is never a comfortable thing, but the best time to protect your assets and take the steps to avoid probate is now, before you pass away. If you’re thinking about estate planning and you need help making the right choices for your estate, turn to the experienced estate planning and probate attorneys at Tanko Law.
Our office can help to protect your assets and help to ensure that your sentimental property goes where you want it to go, rather than to a faceless creditor or distributed by courts that don’t know your family. For over 16 years, the attorneys at Tanko Law have stood up for families in Montana and Nevada, and we’re ready to stand up for you. Call our offices today for a free consultation.