Probate vs. Non-probate: What Is the Difference?
When planning your estate it is important to understand the difference between probate and non-probate assets. Probate is the process through which a court oversees the executor in the management of your estate. Some assets are probate assets and some assets bypass the court process and go directly to your beneficiaries (non-probate assets).
The probate process includes filing a will and a few forms in order to appoint an executor. The executor’s job is, among other things, to collect assets, pay bills, file taxes, distribute property to heirs, and file accounts. This can be a costly and time-consuming process, which is why some people try to avoid probate by creating a Revocable Living Trust instead of a will. To learn more about a Revocable Living Trust, click here.
Probate assets are assets owned solely in the name of the decedent. These can include:
- Personal property, such as jewelry, furniture, and automobiles;
- Bank accounts;
- An interest in a partnership, corporation, or limited liability company;
- Brokerage accounts
Non-probate assets are assets owned jointly with another person or assets that have a named beneficiary or transferred on death. These can include:
- Property that is held in joint tenancy or as tenants by the entirety
- Bank or brokerage accounts held in joint tenancy or with payable on death (POD) or transfer on death (TOD) beneficiaries
- Property held in a trust
- Life insurance or brokerage accounts that list someone as the beneficiary
- Retirement accounts
When planning your estate, you need to take into account whether property is probate property or non-probate property. Your will does not control the distribution of non-probate property and your will cannot override a beneficiary designation on any asset. Check the ownership of your property and your accounts to make sure jointly owned property will be distributed the way you want it to. It is also important to review your beneficiary designations.
If you would like to create a plan that will ensure your property is being distributed in a way that reflects your needs, wishes, and goals or you would like to learn more on how a Revocable Living Trust can keep your family from spending money on attorney’s fees and keep your estate out of court, please call Sabrina Winters, Attorney at Law, PLLC at (704) 843-1446 or email us at email@example.com. We help clients plan today for their family’s tomorrow.