What Exactly Does “Probate Avoidance” Mean in New Hampshire?
- In New Hampshire, most but not all the probate process can be avoided if a person has a Revocable Living Trust, and all their assets are in their Trust when they pass away.
- This super simplified probate process begins the same way as the usual process: by filing the deceased person’s Last Will and a Petition for Estate Administration with the probate court.
- Just as in the usual process, the estate must stay “open” for 6 months to allow creditors time to file claims.
- However, instead of needing to file an Inventory, multiple Accountings, and Receipts for distribution, only a one-page Waiver of Full Administration Statement to Close Estate must be filed at the end of the 6-month period.
What’s Being Avoided: Probate in a Nutshell
The term “probate,” as it’s typically used, means the legal process that occurs after a person passes away. The person who’s in charge of following the probate process is called an Executor (or sometimes an Administrator). A person who’s deceased cannot own property, so when a person passes away their property becomes owned by a legal entity called an estate. For instance, if John Smith passes away then many things he owned become part of the Estate of John Smith.
If a person has a Last Will when they pass away, then the Last Will must be filed with the probate court along with a Petition for Estate Administration, and the court will automatically send a copy of the Last Will to certain next of kin. The Last Will becomes a public document that anyone can get a copy of by requesting it from the probate court.
Only the estate’s Executor (or Administrator) has authority to do things with the estate, such as open a special bank account for it, collect income like interest or dividends, pay expenses, and distribute assets to beneficiaries. The purpose of the probate process is to make sure the Executor follows New Hampshire law and if the deceased person made a Last Will, to ensure the terms of their Last Will are followed.
Even if a person picked who they wanted to be Executor in their Last Will, this Executor must still be officially appointed by the probate court. An Executor has no authority to do anything until officially appointed and currently it can take up to 2 months for an Executor to receive a Certificate of Appointment.
After an Executor is appointed, they must file multiple documents in the probate court, so a probate judge knows what’s happening and can make sure the Executor is doing everything correctly. The Executor must first file an Inventory, which lists all the assets in the estate and their value at the beginning of the probate process, as well as multiple Accountings, which lists all the estate’s expenses and income during different time periods.
By law an estate must stay “open” for at least 6 months to give any creditors time to notify the Executor that the person who passed away was indebted to them. Once this period is over and a Final Accounting is filed, which shows the probate court that all debts have been fully paid, then the remaining assets in the estate can finally be distributed to beneficiaries. When each beneficiary receives the assets given to them, they must sign a Receipt that must be filed with the probate court. Once this is all done then the estate can be “closed”, and the probate process is over.
What Can Be Avoided in New Hampshire
“Probate avoidance” means finding a legal way to skip the burdensome court process summarized above. Creating a Revocable Living Trust is a common method for trying to avoid probate because any assets that’re in a person’s Trust aren’t part of that person’s estate when they pass away, so these assets don’t go through probate.
However, in New Hampshire if all a deceased person’s assets are in their Revocable Trust (so there’s no assets in their estate), then an extremely simplified probate process is still required. This process still begins by filing the deceased person’s Last Will and a Petition for Estate Administration (which is called a Pour Over Will when a person also has a Trust) with the probate court, an Executor must still be appointed, and the estate must still stay “open” for at least 6 months.
However, there are a few key differences when it comes to what must be filed with the court and who has authority to move the process along. If a person has a Revocable Living Trust, then all the instructions on what should happen to their assets when they pass away are in their Trust document, and a Trustee is in charge of making sure these instructions are followed.
Unlike with an Executor (or Administrator) a Trustee does not need to be appointed by the probate court. Rather, as soon as the person picked to be the Trustee in the Trust document accepts this role, they have authority to do whatever they need to do with the Trust assets. The Trustee will then do everything that the Executor would have done, including opening a bank account, collecting any income, paying expenses, and distributing assets to beneficiaries.
Additionally, since there’s no assets in the estate (all assets are in the Trust instead) there’s no need to file an Inventory, any Accountings, or any receipts once distributions are made to beneficiaries. Instead, at the end of the 6-month period the estate must stay open for, a one-page form called a Waiver of Full Administration Statement to Close Estate must be filed. That’s it!
The content of this blog post is for informational purposes only and may not reflect current developments in the law. Do not make decisions based on the content of this blog post without consulting a lawyer first. Nothing in this blog post should be interpreted as guaranteeing any future result. Viewing this blog post does not create a lawyer-client relationship.