Which of the following items will pass through probate?
Probate Assets vs. Non-Probate Assets
Certain assets fall under the category of probate property, which refers to items that will be distributed to heirs according to the terms of a will or, if no will exists, according to state law. Examples of probate assets include personal belongings, real estate, vehicles, bank accounts, and tenants-in-common assets.
Not all property qualifies as probate assets; some are categorized as non-probate property. These assets circumvent the probate process and pass directly to beneficiaries or co-owners, regardless of the will's stipulations. Non-probate assets can include life insurance policies, retirement accounts, or any asset with a designated beneficiary. Additionally, any property held in a trust will also bypass probate.
Creating a non-probate/probate property list can help you monitor which assets are subject to probate and clarify whether the probate process is necessary.
What is Probate Property?
Probate property, or probate assets, includes any items owned by a deceased individual that need to go through the probate process. All probate assets must be evaluated and their future disposition determined, which may be dictated by a will or, in cases of intestacy (dying without a will), by the court.
Probate assets encompass properties where the decedent holds the title and are not jointly owned with others. If the asset is listed in a trust or has a named beneficiary, it can avoid probate. Once property is transferred to an heir, it ceases to be considered a probate asset.
In most states, the personal representative is required to compile a list of all probate assets along with their values and file it with the probate court. This list can also be viewed as a summary of the assets for the will.
Some assets, like bank accounts, are straightforward to value, while others, such as antiques, jewelry, and collectibles, may necessitate an appraisal.
Common Probate Assets Include:
Real estate and vehicles: Titled assets owned solely by the deceased will enter the probate process.
Personal property: Household items, clothing, jewelry, and collections are subject to probate. The inventory should capture the decedent's belongings remaining after death, which may have little monetary value yet significant sentimental worth to family and friends.
Bank accounts: Accounts solely owned by the decedent and not designated as payable on death will become part of probate.
Stocks and bonds: If investment accounts are solely in the name of the decedent without a beneficiary listed, they are subject to probate.
Business assets: Valuation of any business owned partially or wholly by the decedent must occur through probate.
Tenants-in-common assets: This type of asset, jointly owned by multiple individuals, is also subject to probate, as tenants in common do not possess survivorship rights. Owners can bequeath their share to others.
What is Non-Probate Property?
Non-probate assets do not undergo the probate process, meaning they are not listed with the probate court.
Common Non-Probate Assets Include:
Assets in a trust: Many individuals establish living trusts to avoid probate. The trustee named in the trust is responsible for executing the trust's instructions, including the distribution of assets to beneficiaries.
Property with a named beneficiary: This category commonly includes life insurance policies, IRAs, 401(k)s, pensions, and medical savings accounts.
Financial accounts with beneficiaries: These accounts do not enter probate if they carry a payable on death (POD) designation. Other properties, such as real estate or vehicles, are considered non-probate if they have a transfer on death (TOD) designation.
Property owned jointly with survivorship rights: When one owner passes away, the other owner automatically inherits the deceased's interest in the property. Married couples often hold their home in this manner. Look for terms like "joint tenancy with right of survivorship" or "tenancy by the entirety" in the title documents. If you reside in a community property state, local laws may also provide for a right of survivorship. Our office can effectively address any legal questions about probate. If you have any questions, please fill out the following form below and a probate lawyer from our office will get back to you.