People often misunderstand what the functions of the terms “Wills” and “Probate” are. You must know what assets make up a probate estate to understand how a Will works and when a probate is necessary.
Your estate is all the assets you own while living.
Assets that remain on your estate after death have to go through probate. Probate is where the court determines how to distribute your property after you die.
A Will controls and directs the distribution of these probate assets.
But, not all assets will be probate assets. Your Will does not control the distribution of non-probate assets.
Probate can be a complicated process that often includes:
- the filing of a Will
- appointment of an executor or administrator
- court hearings
- publication of notice
- settlement of claims
- filings of inventory
- accounting and distributing property to heirs
Some people opt to avoid the probate process altogether. Yet, to completely avoid probate, you must not die leaving behind any probate assets.
Probate assets are any assets owned only by the decedent. Probate assets have no beneficiary designation and joint tenants with rights of survivorship.
- Your home or any other real estate property
- Banking accounts that are only in the decedent’s name
- Life insurance policies that list the decedent or the estate as the beneficiary
- Stocks, bonds or brokerage accounts that fail to name a beneficiary
Non-probate assets are assets that bypass the probate process. Non-probate assets instead pass to the designated beneficiary or the surviving owner.
Almost all assets can become Non-probate assets.
- A spouse or others own joint property through rights of survivorship
- Bank accounts you own only in your name that have payable on death beneficiaries listed
- Life insurance policies, IRA’s, 401(k) and annuities payable to a designated beneficiary
- Assets held in the name of a Trust or with a Trust named as the beneficiary
Or, you may choose to end the need for a Will and avoid the probate process altogether. You would need to turn all your assets into non-probate assets. One of the best ways to do that is by establishing a Trust.
Avoiding probate sounds ideal. Sometimes non-probate assets can end up in the hands of someone you did not intend to have. Or affect the person who receives the assets.
Use non-probate distribution after understanding exactly who will inherit the asset. Know the legal consequences of converting assets to non-probate assets. For you during your lifetime and for the recipient of the asset at the time of your death.
It’s important to know if your assets will be probate assets or non-probate assets. Be sure to take the appropriate actions for distributing your property at the time of your death.
To determine if your property is being distributed the way you want, contact an Elder Law and Estate Planning attorney.
Original Article by Kline Pillow, “Wills Trust and Probate: Do I need any of this and if so, what do I need?” was first published in the Aging Insight Magazine, Tyler edition vol. 1 2017.