The Perils of Not Completing The Probate Process
Most people have heard of probate, but many don’t know exactly what it is and why it is important. Probate is the court process of settling and distributing the assets and liabilities of a deceased person’s estate. Some assets are able to pass to heirs or beneficiaries without having to go through the process- those assets are called “non-probate assets.” This post is not focused on an explanation of what assets do or don’t pass through probate, but rather on the importance of going through the process when there are assets which cannot bypass probate.
When a probate case is opened, one of the first things that happens is a representative of the estate gets appointed. Generally speaking, that representative (generally referred to as a “personal representative” or an “administrator”) has authority to bring and defend lawsuits on behalf of the estate. This may include pursuing claims or raising defenses which the decedent had prior to their death. After the estate’s representative has dealt with claims against or on behalf of the estate, assets remaining in the estate get distributed in accordance with a will or through the laws of intestacy.
Not opening a probate leaves the estate and its heirs without a representative to act on behalf of the estate’s assets. It also leaves the heirs without clear title to the property they stand to inherit. In a recent unpublished case from Division II of the Washington State Court of Appeals, Erickson v. Stenman, the failure to pursue probate proceedings had some very negative consequences. There, the borrower under a mortgage passed away during foreclosure proceedings. The borrower’s heirs apparently opened a probate but then failed to continue on with the probate process, resulting in the probate proceedings getting dismissed for “lack of prosecution.” Shortly before the mortgaged property was sold at a foreclosure auction, the deceased borrower’s daughter filed an action to stop the foreclosure, based upon numerous claims, including fraud and the lender’s alleged breach of a payment plan. However, the court refused to entertain the daughter’s claims because it found that she lacked standing. The mortgaged property belonged to the estate, not to the daughter. Said the court: “[Plaintiff] fails to establish standing to challenge the foreclosure of the property. It is undisputed that she is the daughter and heir of [borrower], but that fact provided only a future, contingent interest in the property. Absent a showing that the property was distributed to [her] during probate, she cannot show a real present interest in the property. An heir apparent right to a decedent’s property ‘depends upon the outcome of probated proceedings,’ including the resolution of creditor’s claims. And although an heir has an immediate interest in a decedent’s property upon death, that interest is subject to the administration of probate.”
The lesson of Erickson is that extreme prejudice can result from not promptly opening and pursuing a probate proceeding. Courts do not treat heirs’ contingent interests as the equivalent of present legal title. This does not mean that the probate process must be complete before assets can be protected. Heirs can protect the estate’s assets by opening a probate and petitioning the court for the appointment of a personal representative or administrator, who then will have the authority and standing to protect the assets in court proceedings.
The lawyers at Beresford Booth have a wealth of experience with probate administration. We would be happy to assist you in protecting estate assets and facilitating their distribution.