Minnesota Small Estate AffidavitMinnesota Small Estate Affidavit or Affidavit of Collection of Personal Property

Minnesota small estate affidavit is a legal form used in estates valued and under $75,000.   Minnesota statute 524.3-1201 tells us that this dollar amount is the threshold level by which an estate in Minnesota does or does not need to be probated.

If the estate does not need to be probated, there may still be outstanding estate issues that the heirs need to deal with.  This article will discuss when estates do not need to be probated and an Affidavit of Collection of Personal Property may be utilized.

Affidavit of Collection of Personal Property and the $75,000 threshold

As discussed previously, the law in Minnesota sets the threshold limit of smaller states at under under $75,000.

Interestingly, there may be some estates that have more than $75,000 in non-probate assets. However there may be probate assets that are still valued at less than $75,000 – in the same estate.

Common small estate assets include vehicles, boats, cars or other items of personal property.  Personal property can include the household furnishings in the deceased person’s home. Another common small estate are small bank accounts in the deceased’s name but valued under $75,000.  Please keep in mind that the total of assets in a small estate is cumulative. This means that you must total all of the estate assets together and if they are valued at over $75,000, a formal probate could be required.

It is also important to understand the difference between probate and non-probate assets to be able to make this determination about whether a probate is necessary.

Minnesota Probate Assets

When lawyers use the term “probate assets” they mean:   assets that belonged to the deceased person and were only in their name at the time of death. This issue relates to the legal idea of titling. 

Lawyers often refer to titling when describing who owned what asset at death.  For example, the deceased person may have owned a car in only their name. That would be a probate asset. It is titled in the deceased person’s name. Or, the deceased person may have owned a bank account in only his or her name. That bank account would be titled as a probate assets.

Again, understanding the idea of titling will enable you to determine which assets might be defined as probate assets or non-probate assets.  If the deceased person held the asset exclusively in their name, that asset is probate asset as described above. Common probate assets include bank accounts, vehicles, personal property, and a home or real property.

Minnesota Non-probate Assets

What assets might be defined as non-probate assets? A non-probate asset is the asset which was held by the decedent, in their name, at the time of death.   Non-probate asset include:  pay-on-death, beneficiary, or rights-of-survivorship accounts.

An example of a Pay-on-Death account would be a life insurance policy.  The life insurance policy may name the children or grandchildren as beneficiaries. Please keep in mind that it does not matter if the beneficiaries are children or grandchildren or nieces and nephews or any other person.  The issue is whether the life insurance has a titled beneficiary.  As long as there is a title beneficiary of a life insurance policy, that asset is a non-probate asset.

Another example of a common non-probate asset are bank accounts with rights-of-survivorship .  These kinds of accounts are often referred to as joint tenants with rights of survivorship or J.T.R.O.S. accounts. Sometimes, a person may have a child on a bank account as a right of survivorship.  At the time of death, the child would receive that bank account if they held it with rights-of-survivorship. The asset would be titled in the name of the survivor.  Of course, this can create conflict among heirs.  Some heirs may have had a different understanding of mom or dad’s assets and why the money was titled that way. This article will not discuss disputes regarding these issues.  However, it is possible to dispute such a transaction.

Finally, the last common example of a non-probate asset would be a home or other real property that goes to heirs.  The most common way to transfer title of property for deceased persons is a Transfer on Death Deed (TODD).  A quitclaim deed is sometimes used as well.  Any deed must be properly executed and recorded during the deceased person’s lifetime.  The titling of the real property this way is very similar to right-to-survivorship or a beneficiary designation.  With a proper transfer on death deed, the real property now belongs to the heir.  The heir(s) then only need to file an Affidavit with the county recorders office to transfer title.  This titling of the real property makes it a non-probate asset.

I hope that this section has made clear that titling to assets is key to figuring out whether a deceased person’s assets are probate or non probate.

Affidavit of Collection of Personal Property

Once the executor or personal representative figures out which assets are probate and which are non-probate, they can then figure out whether there more or less than $75,000 in total assets.

Let’s assume that in a particular estate, there are under $75,000 in probate assets.  In this case, the executor of the will can use a small estate affidavit to transfer ownership of probate assets.  Again, the requirements are codified under Minnesota statute 524.3-1201.  This statute describes legal requirements when a small estate affidavit may be used.

If a person is using a small estate affidavit, the person must provide their own personal information on the form such as their name and address.  The person must specifically identifying the deceased person and the assets they’re wishing to transfer.  The Affidavit may only be used 30 days after death and must include a certified copy of the deceased person’s death certificate.

When using the affidavit, our office often sends an explanatory letter to financial institutions who hold the deceased’s assets.  In the letter, we explain that the probate estate is valued under $75,000 and pursuant to Minnesota law, the financial institution or bank may use the affidavit to transfer assets from the deceased person to the party using the affidavit.

It is important to keep in mind that just because a person can use a smallest dude advocate doesn’t mean they should use the affidavit to commit fraud or otherwise take money from a deceased person’s estate and put it into their own accounts.  It is also important to remember that, although $75,000 is the smallest estate threshold in Minnesota, the transfer of the asset is likely taxable – either to the estate or to the individual receiving the money.  Just because you can use the small estate affidavit, does not mean that you should use it blindly.  A lawyer should be consulted for all use of the affidavit.

Once the affidavit if finalized, the executor will send the required documentation to the financial institution and the financial institution should transfer the asset to the requesting party.  Keep in mind that some financial institutions will tell you that they must have Letters Testamentary or a court order allowing the person to transfer the assets. This is where a Minnesota probate lawyer comes into play.  It is common that the bank or other financial institution will be wrong.  A person requesting the transfer does not need to provide Letters Testamentary in every case.  In a small estates case, you can use the Affidavit of Collection of Personal Property.

Our office has negotiated this issue on behalf of many clients.  The lawyer and client must understand the difference between probate and non-probate assets.  We know that a small estate is one under $75,000.  Finally, we now know that the small estate affidavit applies to probate assets only.  Finally, keep in mind that there could be taxes owed for the estate or the individual decedent.

Minnesota Small Estate Affidavit Lawyers

If you have any questions about using a small estate affidavit or the Minnesota affidavit of collection of personal property, please contact our office.  The law firm offers years of experience counseling clients on Minnesota small estate affidavits and all issues related to probate.  Joseph M. Flanders, an Eagan, Minnesota probate lawyer, offers free legal consultations in every case.

If you have any question about the proper transfer of probate and or non-probate assets, contact the firm at 612-424-0398.