Probate Assets: What are They?
When someone dies, it is not always clear to whom they intended to pass certain assets or property. That leaves the courts to decide through the probate process who inherits what after all the decedent’s valuables and property are accounted for. Most of the deliberation concerns probate assets. But what exactly are probate assets?
This article and accompanying video will clear that up.
Need Probate Guidance? Talk with an Attorney.
If your loved one has passed away without a will, the last thing you want is to worry about what will become of their assets or property or how family members united in remembrance might be in conflict over who gets what. An experienced probate attorney can provide a steady hand through this difficult time and help you obtain a fair and satisfying resolution. Call 303-688-0944 to begin your free case assessment.
What is Probate Exactly?
Probate law determines how an individual’s estate is processed after their death. An estate is the total value of all the property and possessions your loved one leaves behind.
Even if the decedent left a detailed will and trust, it is up to the courts to decide how their remaining debts are paid off and how their remaining assets and possessions will be passed on.
Most often, these matters are handled in a routine fashion, but there are times when the decedent’s intent was unclear and legal conflicts arise resulting in probate litigation.
The Two Asset Classes
When someone draws up a living will without the aid of a competent attorney, they often fail to account for the two distinct classes that assets are divided into. This can lead to inconsistent and incomplete directions when it’s time to distribute assets, property, and other valuables. The two classes are probate assets and non-probate assets. Let’s explore these classes a little further.
In general, probate assets are any possessions or property left over after the rest of the estate has been distributed to pre-determined beneficiaries. These assets tend to be items or property solely owned by your loved one or assets listed only in their name. These can include:
- motor vehicles and boats
- stocks and investments
- bank accounts
- real estate property that wasn’t jointly owned
- other personal valuables, such as antiques, jewelry, etc.
Probate assets also include property whose designated beneficiary died before the estate could be distributed. For example, when one elderly spouse precedes the other in death but the second spouse died before listing an alternate beneficiary.
In many cases, non-probate assets can bypass the probate process before they are distributed. These tend to be jointly-owned property or at least property with a clearly designated beneficiary associated with it. Common non-probate assets include:
- life insurance payouts
- jointly-owned real estate
- retirement plans
- joint bank accounts
- pensions or annuities
- assets in trust
- other accounts or assets with a designated “payable on death” beneficiary
Because trust assets are those bequeathed to designated beneficiaries in a will, they can go around the probate process and directly to the intended person.
Sometimes, proceedings from a life insurance policy are “willed” to a different beneficiary than the one listed on the policy. Whenever this occurs, the law defers to the beneficiary listed on the life insurance policy. The same priority applies in every situation where a decedent’s will lists a different beneficiary than the one on the pertinent document.
What Happens if My Loved One Did Not Have a Will?
When a person passes away without a will, they leave behind an intestate estate. Most of the time, this is because the individual had not accumulated a large estate, and, in that case, it can probably get sorted in a small estate or informal probate process.
Small Estate and Informal Probate
Small estate probate applies when a decedent does not leave a will and the sum total of their valuables is less than $70,000 (as of 2020). This requires is filling out a small estate affidavit and having it approved by the court. Then the deceased individual’s heirs may collect the assets.
Informal Probate can be applied to estates worth more than $70,000 as long as there is no expectation that the distribution of any assets will be disputed. This usually applies to smaller families where there is a clear, linear path of succession. For example, if the decedent married only once and only had children inside that marriage.
How Can the Probate Process be Avoided?
In nearly all situations where the distribution of an estate is unclear or becomes contested, it is the result of poor or non-existent estate planning.
A well-considered estate plan can go a long way toward avoiding the probate process. With the help of a seasoned estate planning attorney, you can bring clarity to the processing of your estate through:
- a living will or trust
- life insurance policies
- payable-on-death bank and savings accounts
- transfer-on-death real estate deeds and securities
Avoid Probate by Working With an Estate Planning Attorney
The very nature of estate planning makes it a personal process, but you still should get the help of a legal professional to make sure you do it right. If you or someone you love needs to create a will, consider talking with an estate planning attorney. Robinson & Henry’s Estate Planning Team can help ensure your true intentions are expressed when the time comes so your heirs and loved ones won’t be left in the dark. Call 303-688-0944 to begin your free case assessment.