Not all of your assets automatically go through probate. Assets are generally probated if the title or account is under your own name. Such assets include investments, bank accounts, vehicles, your home, other real estates, etc. In case you pass away, and your assets are under your individual name, only a probate court can transfer those assets to your beneficiaries or heirs.
Normally, most of the assets in an estate don’t have to go through probate. In cases where the deceased was married, and most of the assets were jointly owned or had done some estate planning to avoid probate, then a probate court proceeding might not be necessary. Some of the assets that do not need to go through probate include assets with a valid designation of beneficiaries, jointly-owned assets that can be transferred to the surviving owner, and assets in a living trust. Nonetheless, these assets don’t always avoid probate.
1. Jointly Owned Assets
For jointly owned assets, they don’t go through probate because they ideally transfer to the surviving owner. This kind of “joint tenants” or “joint ownerships” applies with the right of survivorship. However, if the surviving owner passes on before adding another owner, or when both the owners die at the same time, the asset must go through probate before being dispersed to the heirs or beneficiaries.
The transfer of this ownership needs to happen immediately after the first owner dies. In this case, if you die first and your will states that someone else will receive a particular share, like children from a previous marriage, for instance, the assets will pass on to the surviving owner, who has the right to do whatever they want to do with it. It means that your children can be disinherited.
Tenants-in-common is another form of joint ownership where if you happen to die first, there will be a distribution of your share as you stated in your will. If there’s no will, the share goes to your heirs, and it can’t go to another owner unless stated in the will. Tenants-in-common lets you choose who will receive your share, though the assets need to go through probate.
2. Designations for Beneficiaries
Assets like insurance policies, retirement plans, IRAs, and some bank accounts allow you to name a beneficiary. In the event of your death, the designated beneficiaries will receive these assets without probate. But it doesn’t happen this way.
- If you and your beneficiary happen to pass on at the same time, the proceeds need to go through probate to be distributed with the rest of your assets
- In case your beneficiary is incapacitated, the probate court can take control of the funds via a conservatorship or guardianship
- If you name a minor as a beneficiary, the probate court needs to determine a guardianship for the child
- If you list “my estate” as the beneficiary, the probate court will have to establish who “my estate” is, and the funds will undergo probate and ideally be distributed with the rest of your assets
3. Assets in a Trust
Just like with a revocable living trust, assets in a trust can avoid probate. But, if you have a testamentary trust (a trust in your will) then your assets may not avoid probate. Both your will and your assets have to go through probate so that the trust can go into effect. Assets that you leave out in your living trust may also need to go through a probate.
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Misha is an estate planning attorney for his firm, Speedwell Law, PLLC. If you would like assistance in setting up your own estate plan, Misha can be reached at (703) 553-2577 or firstname.lastname@example.org.
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