Common Misconceptions about Wills

One of the biggest misconceptions about a Will is that it avoids the probate court system. So let’s answer the question directly: does a Will avoid probate? On its own, no. The other common misconception is that whatever you write in your Will decides how all of your assets pass when you die. Neither is true. To see why, you first need to understand probate and probate assets.

What Is Probate?

Simply put, probate is the legal process for changing ownership or title on any individually owned assets after you die. Say your home is owned in your own name when you die. To sell the house and decide who gets the proceeds, someone would first have to open a probate estate. This is a core reason estate planning matters.

Probate Assets Versus Non-Probate Assets

• Probate assets: These are assets owned only in your name, with no joint owner, that either list no beneficiary or list a minor child. The best example is a home owned only in your name, or an individual bank account with no named beneficiary.
• Non-probate assets: These assets avoid probate for one of two reasons. Either another owner is on the asset, or the asset names a beneficiary over the age of eighteen.

Joint ownership generally isn’t a recommended estate planning strategy, unless it involves a married couple in certain circumstances. Adding owners to certain assets can trigger adverse tax consequences and increased liability. Joint ownership also avoids probate for only so long. Eventually, when no owners are living, the asset needs probate anyway. You must also word the ownership interest properly to avoid probate if the other owner dies.

Beneficiary designations carry their own issues. For one, beneficiaries need to be adults. Otherwise, the probate court must step in to manage the asset for a minor until they turn eighteen. In addition, a beneficiary designation leaves no back-up plan if that beneficiary dies. It simply ignores that beneficiary’s children and your other wishes.

Now that we know the difference between probate and non-probate assets, we can turn to the Will itself. From there, it’s clear why a Will neither avoids probate nor controls all of your assets.

A Will Does Not Control All of Your Assets

Say you died yesterday. Your non-probate assets—jointly owned assets and beneficiary-designated items—would pass automatically to the other joint owner or to your named beneficiaries by operation of law. (The beneficiary issues above still apply.) A Will would not control those assets, and no one would probate them.

The Definition of a Will

For assets that do need probate, a Will is a document you create. It instructs the probate court on who gets those assets and how they pass. A Will also matters if you have minor children. It lets you name a guardian for them, should you die before they become adults.

Without a Will, the probate court distributes your probate assets under Michigan law—called the law of intestacy. The problem is simple. Michigan law may split your assets very differently than you would want. That’s exactly why people draft a Will. It lets them choose the who and the how for their probate assets and name a guardian for their children.

Guardianship also becomes a huge problem in a blended family without a Will. Say you die in Michigan with no Will, and you have children from a previous relationship. With some asset exceptions, Michigan law may then disinherit your own children unintentionally.

Why a Will Does Not Avoid Probate

Even with a Will, the probate court still must interpret and approve it before most assets can pass. Say you died yesterday. No one could simply walk into your bank, wave your Will, and say, “This says I get the money, so please empty the account.” The bank first needs letters of authority from the probate court validating the Will.

A Will is really just a letter of instruction to the court. On its own, it holds no power without the court’s interpretation and approval. Unfortunately, that approval comes with a full probate process, which can be costly and time-consuming.

Hopefully this clears up some basic misconceptions around probate and Wills. Do you want to control all your assets with one simple plan that avoids probate court? Our Firm would love to help. Our estate planning attorneys will assess your goals and concerns, then explain the best way to protect your legacy and avoid probate.