Probate is an essential part of estate planning, especially when it comes to distributing assets to heirs. However, there are some assets that are considered probate assets and others that are not. You'll definitely need to know more about these two as you move forward with the probate process.
What Are Probate Assets?
A probate asset is anything that will be subject to going through probate after someone passes away. This will include assets that are owned solely by the deceased person and do not have any joint owners or beneficiaries. This often includes real estate, investment accounts, bank accounts, and all of the personal property that they own.
What Are Non-Probate Assets?
A non-probate asset will bypass the probate process because there is a direct beneficiary assigned to that person or some sort of joint ownership. When someone is assigned as the beneficiary of an account there is a transfer mechanism already in place for how ownership changes. This is often the case with bank accounts that have a beneficiary, which allows the funds to be used immediately upon submitting a death certificate.
Other examples include a life insurance policy that ways out upon death, and any retirement accounts that contain stocks and bonds. Those investments do not have to be liquidated and divided, since they pass onto the person identified to receive it without disrupting the investments.
Why Do Assets Go Through Probate?
The probate process is necessary to determine who an asset is supposed to go to, and there is not a process already in place to make that decision. While a last will and testament will often be the legal document that helps guide the decisions, there can be disputes about if the will is valid or what to do if no will exists at all. This means that discussions need to take place to figure out how to handle assets that belong to the deceased, and then put someone in place to carry out that plan.
Why Should Certain Items Bypass Probate?
The main reason to bypass probate is speed since the probate process can take quite a while to complete. Any asset that can bypass probate will be transferred immediately and can be used by the heirs. Assets that do not pass through probate will avoid any court costs, probate fees, and administrative costs to help divide the item among heirs. This can potentially cut into an inheritance if the estate does not have the cash on hand to pay for these fees.
Contact a local probate attorney to learn more.