A key concept in estate planning and estate administration is the distinction between PROBATE and NON-PROBATE assets. This is a concept that is very often confusing to clients—but it’s not such a difficult concept once explained.
PROBATE ASSETS
Probate Assets are those assets that were solely owned by the person who passed away (the “Decedent”) at the time of their death. Examples of typical PROBATE assets are:
- Personal property of the Decedent (clothing, jewelry)
- Vehicles titled in the name of the Decedent only
- Real property titled in the name of the Decedent only.
NON-PROBATE ASSETS
Non-Probate Assets are typically those assets that the Decedent owned jointly with others or assets that were titled to a revocable living trust established by the Decedent prior to death. Examples of NON-PROBATE assets are:
- Real property held by the Decedent and his/her spouse as tenants by the entireties;
- Joint bank accounts owned by the Decedent and another person;
- Assets owned by or titled to a Revocable Living Trust established by the Decedent;
- Insurance policy proceeds payable to a beneficiary or beneficiaries;
- Retirement accounts payable to a beneficiary or beneficiaries.
The difference between PROBATE and NON-PROBATE assets is important because the distribution of those assets following the death of the Decedent will be determined based on their status as PROBATE or NON-PROBATE assets. PROBATE assets will be administered and distributed in accordance with the term of the Decedent’s Last Will and Testament.
NON-PROBATE assets will NOT be distributed according to the terms of the Decedent’s Last Will and Testament. Instead, those assets will be distributed or transferred to the joint owner, designated beneficiary or in accordance with the terms of the applicable revocable living trust document. In other words, the Decedent’s Will has no bearing on the distribution of NON-PROBATE assets.
Here’s a simple example of how this could play out:
Mr. Jones, a widower, has three children and one bank account. He decides to add his son Junior (who lives nearby) as a joint owner on his bank account for convenience purposes. Mr. Jones executes his Last Will and Testament, leaving all of his property to his children in equal shares. Mr. Jones passes away intending that his children share in his property. However, upon his death, the bank account immediately becomes the sole property of Junior. Because Junior was a joint owner of the account, the bank account is a non-probate asset, which is not governed by the terms of Mr. Jones’ Will. Junior is under no obligation to share the funds with his siblings.
The difference between PROBATE and NON-PROBATE assets can have a significant impact on the distribution of your estate following your passing.
The attorneys of Souza LLC are prepared to assist you with these and many other estate planning and estate administration matters.
The information you obtain at this site should not be taken as formal legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.