Probate is the process by which a Will is submitted to the Surrogate’s Court and an Executor is appointed with the authority to act on behalf of the estate. It is also generally used to describe the process of estate administration, when a person dies without a will. However, only certain types of assets must go through the probate process, these assets are called often called probate assets.
Probate assets are those that pass through the terms of the decedent’s will or (through intestacy if there is no will) because they do not have a joint owner or a beneficiary designation and are not in a trust. Examples of common probate assets include: checking accounts, money market accounts (without beneficiary designations), ownership interests in a Corporation or LLC (without an operating agreement discussing succession), stock certificates, cars, boats, furniture, jewelry, cash, real estate without a joint owner.
It is possible, but not desirable, to turn a non-probate asset into a probate asset by removing or not listing a beneficiary designation so that the asset passes under the terms of the owner’s Last Will and Testament or intestacy. It is much more desirable to turn probate assets into non probate assets to avoid the hassle and cost of court.
A non probate asset will not pass through the terms of the owner’s will and will immediately pass to the named beneficiary or joint owner of the account. Non-probate assets also include those that have a “payable on death” or “transfer on death” provision. Retirement accounts almost always have beneficiary designations, making them the typical non-probate asset.
Examples of Non-Probate assets include: Retirement accounts such as IRAs, 401ks and annuities that have beneficiary designations, life insurance, U.S. Savings bonds with a co-owner, pension plan distributions with beneficiary designations, trust funds, assets with a life estate, real property with a joint owner with right of survivorship or tenants by the entirety (which is generally the default ownership status for spouses).
It is advisable to list beneficiaries on accounts and/or leave assets in a living trust in order to avoid probate. One main goal of estate planning is to convert probate assets into non probate assets to save your family the time and money (and aggravation) of having to go through the probate process.
The attorneys at the Law Offices of Roman Aminov, P.C. can help the nominated executor or surviving family members to review the decedent’s assets and determine which assets are probate assets and which are not. Please contact us today at 347-766-2685.
