Not all property owned by a decedent will pass through his or her probate estate. Some property will pass directly to the intended person outside of the probate process. Understanding the difference between probate assets and non-probate assets is the first step in the estate planning process.
What is a probate asset?
A probate asset is an asset that must pass through the probate court to legally title the asset in the name of the heir. In most cases, probate assets are those assets that are titled solely in the name of the decedent upon his or her death.
Examples of probate assets include:
- Motor vehicles, boats, and other property that has a legal title issued by a state agency
- Real property or a partial interest in real property held without a right of survivorship
- Stocks and bonds
- Business interests
- Personal property
- Bank accounts or some other financial accounts
What is a non-probate asset?
A will only transfers assets that go through the probate estate. All other assets pass outside of the estate according to the laws and designations regulating that specific asset. In other words, some written instruments control the disposition of an asset. Typically, this is accomplished through the naming of a beneficiary.
These types of assets are considered non-probate assets because the asset passes directly to the beneficiary outside of the probate estate. For some individuals, owning non-probate assets is a way of avoiding the expense and time involved in the probate process.
Examples of assets that are not subject to probate are:
- Payable on Death accounts (POD)
- Transfer on Death accounts (TOD)
- Annuities
- Pension plans
- Individual Retirement Accounts
- Other retirement accounts, such as a 401k or a TSA
- Some jointly titled property
- Survivorship property
- Living Trusts
- Property held in trust
Life Insurance Death Benefits
However, there are some exceptions to the rules for non-probate assets. In some cases, the owner of the asset may designate the “probate estate” as his or her beneficiary for that asset. In this case, the asset would pass to the probate estate and would therefore pass through the estate according to the terms and conditions of the will. For example, if the decedent names his estate as the beneficiary on a life insurance policy, the proceeds of the policy would be payable to the estate and the cash would be distributed to the heirs according to the terms of the will.
Contact an Experienced Ohio Probate Attorney for Help
If you have questions regarding a probate estate or if you need legal advice regarding estate planning, the attorneys of Lovett & House Co., LPA are here to help you. Understanding the laws relating to non-probate and probate assets is very important in the planning process. Our attorneys will assist you in developing an estate plan that covers all assets and accomplishes your goals, ensuring that your final wishes are honored. Contact our office to schedule your consultation and get started today.
