Probate vs. Non-Probate Assets | Sorting out assets in your estate
Let’s talk about something most of us tend to push to the back of our minds: estate planning and probate v. non-probate assets. While it might not be a favorite topic at dinner parties, understanding how your assets will be handled after you pass is crucial. Today, we’re going to demystify two terms that often pop up in estate discussions: probate and non-probate assets. By the end of this post, you’ll be a pro in distinguishing the two!
Probate Assets: What Are They?
Probate assets are assets that will need to go through the probate process after your passing if not directed otherwise in a will or trust. What’s probate? It’s the legal procedure where a court oversees the distribution of your assets. If you have a will, the assets will be distributed according to your wishes. If not, Alabama state laws step in to decide. That is why getting a local will attorney to handle your estate planning needs is important.
Examples of Probate Assets:
Real Estate Owned Solely by You: If a property is only in your name, it’s a probate asset.
Personal Belongings: This includes your car, jewelry, furniture, and even your Beanie Baby collection!
Bank Accounts in Your Name Only: If you haven’t designated a payable-on-death beneficiary, it’s going through probate.
Non-Probate Assets: Skipping the Courtroom
Non-probate assets are, you guessed it, assets that bypass the probate process altogether. These assets already have a clear recipient designated.
Examples of Non-Probate Assets:
Jointly Owned Real Estate: If you and a partner own a house together with “right of survivorship,” the property automatically passes to the surviving owner when you pass away. Since both names are on the property deed, then the entire ownership naturally flows to the surviving person and no probate is necessary for that to happen.
Life Insurance Policies & Retirement Accounts: These usually have named beneficiaries. So, if you’ve designated your son as the beneficiary of your life insurance, he’ll receive the payout directly, no probate needed.
Payable-on-Death Bank Accounts: Some bank accounts let you name a beneficiary. Upon your passing, the funds go straight to this person.
Trust Assets: If you’ve put assets in a living trust, they bypass probate and go directly to the beneficiaries you’ve designated in the trust document.
Why Does It Matter?
You might wonder why the question or probate vs. non-probate assets is essential. Here’s why:
Speed: Probate can be a lengthy process. Non-probate assets can often be distributed more quickly.
Cost: Probate can come with court fees and other associated costs. Bypassing this process with non-probate assets can save money.
Privacy: Probate is a public process. If you value privacy, directing more assets to the non-probate category might be your move.
As you can see, knowing the difference between probate and non-probate assets is vital when planning your estate. By understanding where each asset falls, you can make informed decisions, ensuring your loved ones face fewer complications during an already challenging time. If this feels overwhelming, remember: you don’t have to navigate it alone. Seeking guidance from an estate planning or family law attorney in Alabama can give you clarity and peace of mind. So, get planning and take control of your legacy!
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!
Sharing is caring:
