Probate vs. Non-Probate Assets Estate Planning, Probate Everything you own at the time of your death will be transferred to your heirs. However, not all your property will pass through probate. Let’s provide an example. When Chase died, he left behind property that included two homes, three cars, several retirement accounts, a thriving business, and a saltwater fishing boat. The personal representative of his estate started gathering Chase’s property, only to learn that some assets were non-probate assets. When it comes to probate vs. non-probate assets, keep the following in mind: Property Titles Affect Probate The way property is titled may answer the probate assets vs. non-probate assets question. If you’re asking yourself what are examples of non-probate assets, you need to understand how property might be titled. This applies to property including but not limited to real estate. The following types of ownership may determine whether property will pass through probate. What is non probate property? Joint Ownership. People may own property with another person, titling the property as joint tenants with right of survivorship (JTWROS), as a tenancy in common, and as tenancy by the entirety. Property that is jointly owned may pass to the other owner or owners without the need for probate. However, in some cases, one owner’s interest may be passed through their estate and, as such, become a probate asset. This can include real estate, bank accounts, and investment accounts. Life Estate Deeds. With a life estate deed, the owner transfers property to beneficiaries called remaindermen. The owner has limited control over the property. The remaindermen take possession of the property after the owner’s death. Probate generally is not needed. Lady Bird Deeds. Also called an enhanced life estate deed, a Lady Bird Deed differs from a life estate deed because the owner continues to control the property during his or her lifetime. When the owner dies, the property is transferred to the beneficiaries named in the Lady Bird Deed. BENEFICIARY DESIGNATIONS MATTER, TOO Financial institutions and insurers offer account holders the chance to name who will receive funds remaining in their accounts after they pass away. Beneficiary designations should be considered during estate planning. Accounts with beneficiary designations pass directly to the beneficiaries without the need for probate. Examples of assets that may contain beneficiary designations include life insurance policies, IRA or 401k accounts, and non-qualified bank or investment accounts. TRUSTS – PART OF THE PROBATE VS. NON-PROBATE DEBATE Assets that are used to fund trusts generally do not become probate assets. Instead, the assets may pass directly to the beneficiaries or continue to be managed by the trustee. PROBATE VS. NON-PROBATE ASSETS MAKE A DIFFERENCE IN YOUR ESTATE Contact an Estate Planning Attorney to help avoid probate Attorney John Mangan is board certified in Wills, Trusts & Estates by the Florida Bar. Please call us at 772-218-0480 or use our Contact Form to set up an appointment. We help clients throughout Florida, including Stuart, Palm City, Hobe Sound, Jupiter, and Port St. Lucie.
