Probate Assets & Non-Probate Assets

When an individual passes away, most of their assets are transferred to the individuals named in their will through the probate process. These named individuals who receive the deceased person’s assets are called the beneficiaries. Assets which are transferred through probate are known as probate assets and the distribution of these assets can be controlled by the deceased based on the intentions specified in their will. Probate assets are typically assets that are solely in the deceased individual’s name and include real property, such as land or buildings, and personal property, such as cars, jewelry, furniture and clothing. Other probate assets include bank accounts solely in the decedent’s name, ownership shares in certain types of businesses and life insurance policies which name the decedent as the beneficiary. 

Assets which are not transferred through the probate process and do not require a probate court are known as non-probate assets. Non-probate assets are typically assets which are jointly owned and do not need to pass through the probate process because they automatically transfer to the surviving joint owner upon the decedent’s death. Jointly owned assets include property and bank accounts with rights of survivorship, bank accounts which have payable on death beneficiaries, life insurance policies with a named beneficiary other than the decedent, retirement accounts such as 401(k) and individual retirement accounts (IRA), and assets held in a trust. These types of assets are considered “will-substitutes” because they serve the same function as a will in that they transfer assets to the beneficiaries upon the decedent’s death, but do not need to pass through the probate court like a will would.

The advantages of having a decedent’s assets transfer through the probate process is that it allows the probate court to supervise the transfer of assets to ensure that the will is legitimate, any outstanding debts owed by the decedent to creditors are paid, and each beneficiary receives what is owed to them based on the intentions of the decedent’s will. However, for individuals with less complicated wills who would like their beneficiaries to receive their transferable assets immediately upon their death, non-probate assets can serve as an alternative. Individuals electing to transfer their assets at death through non-probate avenues should ensure to take careful and thorough care in the planning and execution of the transfer of non-probate assets, as they will not have the oversight of the probate court to ensure that their intentions are carried out as they wish. 

If you have any questions or wish to discuss your specific matter, please contact the Estate Planning Department at (860) 659-0700.