The dangers of delaying probate

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We like to kick the can down the road. We do tomorrow what we should do today. We avoid the difficult in favor of the easy. In so doing, we allow tiny problems to develop into snarling dragons that threaten to rain fire on our lives.

But while watching dragons devastate King’s Landing in an inferno of flame and fury may make for compelling television, there’s no law that says we need to let problems snowball into an avalanche. There’s no rule that prevents us from nipping a problem in the bud. And there’s no edict that prohibits us from addressing a situation while it’s easy to solve.

And yet it happens all the time. For instance, I frequently see people kick the can down the road when it comes to probate (the court-supervised process for distributing a person’s property after they die). And by the time they get to it, a relatively simple process has grown from elementary-school arithmetic into college-level calculus.

There are reasons for the delay, of course. Maybe the family did not realize that probate was necessary. Or they did not want to think about it while they were grieving and then never got around to it. Perhaps they were intimidated by the process, and thus never started. Or they didn’t want to spend the money needed to complete probate.

But here’s the thing: Except in rare cases, you will have to do the probate eventually. And the longer you delay, the harder, slower, and more expensive it will get. So, putting it off will generally backfire.

Consider an example. Let’s say Grandpa Juan passed away 20 years ago, leaving several pieces of property to Grandma Gertrude and their five kids. A few years later Grandma Gertrude passes away. And then a few years later, two of the kids die, each with several kids of their own. And now the family wants to sell some of the land originally owned by Grandpa Juan. Can they?

No. Because they don’t own the land. The Estate of Grandpa Juan does. Thus, to transfer the property, Grandpa Juan’s estate will need to go through probate. And the same for the estates of Grandma Gertrude and the two kids that died. In short, the family cannot lawfully sell or lease the land until four probates have been completed.

Now let’s make it more complicated. The previous example assumed that the whole family was in agreement about the sale/lease. But what if that wasn’t the case. What if one of the heirs did not agree? Or they wanted an unreasonable amount of money? Or they insisted on silly contract terms that a lessee or buyer could not agree to? One family member could derail an otherwise promising transaction.

How about if the family had informally split up the property without going through probate, and then you wanted to sell or lease your piece of the property? As before, you technically do not own the property. The Estate of Grandpa Juan does. So, you would have to probate the Estate of Grandpa Juan and potentially several of the other estates. And if the rest of the family did not want to pitch in, you would wind up footing the whole bill yourself.

Clear ownership of real estate is not the only reason to begin probate shortly after a person dies. Convenience is another. Never will it be easier to do the probate than right after the person passes away. At that point, the paper trail is relatively simple to follow. But if you wait a year (or 10), financial statements disappear, memories fade, and information gets lost.

And the same for valuable assets. If probate is delayed, valuable assets tend to disappear into the pockets and homes of the most opportunistic (or brazen) relative. Promptly beginning probate, by contrast, increases the chances of the property being fairly distributed to the family.

Another advantage of filing for probate quickly is that it shortens the time for creditors to stake a claim to the estate. In other words, once an estate posts notice that probate began, unknown creditors have 60 days to notify the court that they have a claim against the estate. If this notice is not supplied, however, then creditors have three years from when the person died. Just a little difference.

In special cases, delaying could also raise civil (and perhaps criminal) liability. How so? Let’s say that Grandpa Juan had a will and told Grandma Gertrude to file it with the court after he died. But she didn’t file the will or start a probate because doing so meant she would receive less than she would get from inaction. Any heir who received less because Grandma Gertrude hid the will would have a lawsuit against her.

Bottom line: The CNMI has an endemic of people putting off probates for years and decades. These delays muddy the property records and complicate real-estate transactions every day. If you want to have clear ownership of your property and position yourself to profit from the next real-estate boom, start probating your property today.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.

Jordan Sundell | Author
Jordan Sundell is a lawyer primarily practicing business, real-estate, estate-planning, and asset-protection law. He formerly worked for the CNMI Supreme Court and Bridge Capital and is now general counsel for several real-estate companies, including JZ Group. His columns—focused mainly on real estate, small business, and estate planning—are published every other Tuesday. Be sure to like the Fine Print on Facebook! Contact Sundell via this newspaper at editor@saipantribune.com or 235-6397/235-2440.
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