It's no secret the court system is clogged with cases. To help lighten the load, many states let small estates valued less than a certain dollar amount undergo a simplified version of probate, which can help them arrive at the distribution of assets faster. Many people with estates valued higher than the limit think they're automatically disqualified from using this shortcut, but that's not necessarily true. Here's how your large estate may still be able to do the simplified probate despite its size.
Some Assets Aren't Counted
As noted previously, an estate can only qualify for the simplified probate if they are under a certain dollar value. In Michigan, the estate can go through the simplified probate process if the gross value is under $15,000 or less than the various allowances (e.g. homestead, family), for example. However, not all property in the estate is counted towards this limit.
For instance, California excludes property held in other states and assets that are given directly to the spouse from the calculation. Thus, if the estate is valued at $300,000 but the decedent owned a home in Washington valued at $200,000, the calculated value of the estate would actually be $100,000, which would qualify it for the simplified probate since it's under California's $150,000 limit.
It would be worth looking up the exact simplified probate laws in your state to determine whether there are exceptions and exemptions you can use to reduce the value of the estate and qualify for the process.
Debt Sometimes Reduces Asset Value
In most states, you are required to use the market value of the assets to calculate how much the entire estate is worth. In others, though, you can deduct any remaining debt on the items from the asset's value. For example, a home is worth $400,000 but there is still $250,000 owed on the mortgage. You would deduct the amount owed to the bank from the home's market value and report the leftover amount ($150,000) as the assets true value.
As you can imagine, this can be immensely helpful in reducing the size of an estate enough to qualify for a simplified mortgage. Thus, it may be prudent to wait to pay off the estate's debts until after it has qualified to undergo the simplified probate process.
There may be other ways to shrink an estate's value so it meets the limit for simplified probate. Contact a probate lawyer for advice on and assistance with this issue.Share