When making a will, an individual should know the difference between a probate property and a non-probate property. The property will be distributed among heirs and beneficiaries after their death; therefore it is important to know such differences. Assets which the court distributes among the heirs are called as probate assets; whereas the assets which go straight to the beneficiaries and don’t have to go through the process determined by the court are known as non-probate assets.
As the probate process is lengthy and includes steps like; hiring an executor administrator, assets collection, bills payment, tax filing, property distribution among heirs and filing of final account; people attempt to steer clear of it and focus on non-probate properties.
If the decedent is the sole owner of the property, it is called as probate assets. Following are included in probate assets:
- Personal property comprising of jewelry, car, furniture, and any other expensive item.
- Bank account belonging completely to the decedent.
- Partnership, limited liability company or corporation interests.
- Life insurance policy or brokerage account in which the deceased or estate are listed as the beneficiary.
- Real property owned by decedent or seized as a common tenant.
Non probate assets incorporate:
- Properties that are hold joint contracts or contracts between multiple individuals.
- Property owned by trusts.
- Joint accounts which are either based on payable on death (POD) or transfer on death (TOD) contract.
- Retirement accounts
- Life insurance and brokerage accounts whose beneficiary is an individual other than the deceased.
The will does not support which property will be allocated as probate and non-probate, respectively; because of which these aspects must be considered while the will is still in the process. Reviewing of property and account’s ownership is vital to ensure that the shared properties are divided according to your way. Moreover, beneficiary titles should also be accessed.
Hurdles Faced in Probate
Depending on the complexity of the state, difficulties are faced in their implementation. Here are a few hurdles that you might face in the process of probate:
Probate and States
Probate law is present in all the states and is applicable to all kinds of properties that are a part of the estate; real or personal. When it comes to concrete and vague properties, they are probated in the state the individual lives, which include; stock collection and collectibles. However, real estate is only probated where the estate is located. This leads to more than one probate if you live somewhere else and have property elsewhere.
Probate and Types of Property
There is a widespread mistaken belief that probate is affective on all of the estates; however only managing of all the resources in the ‘probate estate’ is done by probate. The rest of them are non-probate properties.
Probate process can be avoided depending on the value of the property. If estate is not much valuable, the probate is not needed. Therefore, knowledge regarding all the assets is necessary when developing the will to evade difficulty.