Non-Probate Assets and Why They Matter

Coral Gables probate attorneys

Although the primary focus of your estate plan may be to ensure that your estate assets are distributed according to your wishes after you are gone, there are other goals that you may wish to consider when creating your estate plan as well. For example, you may wish to consider the impact probate will have on your estate and on the loved ones you leave behind. Understanding which assets are part of the probate process, and which are not, is a good place to start. Toward that end, the Coral Gables probate attorneys at Stivers Law explain non-probate assets and why they matter.

The Probate Process

When a person dies, he or she leaves behind an estate that consists of all the assets the individual owned or had an ownership interest in at the time of death. This includes both real and personal property as well as both tangible and intangible assets. Probate is the legal process that many of those assets must go through before eventually being transferred to the intended beneficiaries or legal heirs of the estate. In addition, probate serves to identify, locate, and value those assets as well as notify creditors of the estate and provide them with the opportunity to file claims against the estate. Finally, probate ensures that any state and/or federal gift and estate taxes owed by the estate are paid.

Probate vs. Non-Probate Assets

One of the first tasks an Executor has when overseeing the probate of an estate is to categorize estate assets as probate or non-probate assets. This plays an important part in the probate process because it often determines the need for formal probate and/or the amount of time an estate spends in probate. Some common non-probate assets include:

  • Assets held in a trust. Your Will must be submitted for probate; however, a trust is not. Assets held by the trust are also not subject to probate and can, therefore, be distributed to beneficiaries right away if the terms of the trust dictate that they be.
  • Certain types of jointly held property. Real property, for example, can be held jointly with rights of survivorship, allowing your interest in the property to pass directly to the co-owner upon your death without first going through probate.
  • Accounts designated as POD or TOD. Certain accounts can also be designated as “Payable on Death (POD)” or “Transfer on Death (TOD)” accounts which allows you to designate a beneficiary who will automatically become the owner of the assets held in the account upon your death. Unlike jointly held assets, however, a beneficiary of a POD or TOD account has no ownership interest in the asset while you are alive. Most financial accounts can be designated as POD as can securities and even vehicles in some states.
  • Proceeds of a life insurance policy. Proceeds of an insurance policy can be paid out directly to the named beneficiaries without going through probate.
  • Retirement accounts. Funds held in many types of retirement accounts, such as an IRA or 401(k) are also often non-probate assets.

Why Does It Matter If Assets Are Non-Probate Assets?

Even a relatively simple estate with uncomplicated assets often takes several months to make it through the probate process. Larger estates that include complex assets can take years to probate. The assets that are part of this process remain tied up in probate until the end of the process. Add to that the cost of probate and it becomes clear why it is advantageous to leave behind as many non-probate assets as possible in your estate.

Contact Coral Gables Probate Attorneys

For more information, please join us for an upcoming FREE webinar. If you have additional questions or concerns about probate and non-probate assets, contact the experienced Coral Gables probate attorneys at Stivers Law by calling (305) 456-3255 to schedule an appointment.

Author Bio

Justin Stivers is the founder and managing attorney of Stivers Law, an estate planning firm specializing in wills, probate, trust administration, and financial risk management services. Justin’s approach goes beyond just creating legal documents. From aligning investments with estate plans to ensuring comprehensive insurance coverage, he safeguards a client’s legacy from unforeseen circumstances. His commitment extends beyond individual transactions, fostering lifelong partnerships to provide ongoing support and guidance.

With an impressive track record, Justin is licensed by the Florida and the Tennessee State Bars. His professional portfolio boasts Series 65 registration as a Registered Investment Advisor, the Wealth Management Specialist™ designation, and a 2-15 License for Health, Life, and Annuities. His dedication to excellence has earned him positions like Board Member of the Estate Planning Council of Greater Miami, Business Eagle Member of the Florida Justice Association, and active membership in esteemed organizations like the American Academy of Estate Planning Attorneys.

LinkedIn | State Bar Association | Avvo | Google