At some point during your life, you may find yourself in charge of overseeing the probate of an estate. If you do find yourself in that position, at least a basic understanding of the probate process will be necessary. That same level of understanding is necessary when you sit down to create your own estate plan. A good starting point is learning what assets are part of the probate process. A Tucson probate lawyer at Morris Hall PLLC explains which assets are subject to probate and why it matters.
What Is the Purpose of Probate?
Just about everyone leaves behind an estate when they die that is made up of all the assets the individual owned, or had an ownership interest in, at the time of death. This includes both tangible and intangible assets as well as real and personal property. 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. Probate also provides a method by which the Executor can 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. If the decedent left behind a Last Will and Testament, that Will is also authenticated during probate or challenged if someone questions the validity of the Will. Last, but certainly not least, any state and/or federal gift and estate taxes owed by the estate must be calculated and paid before the probate process can reach its conclusion.
Common Non-Probate Assets
If you find yourself in charge of probating an estate, one of your first tasks will be to identify all estate assets and categorize each one as a probate or non-probate asset. Conversely, if you are working on your own estate plan, you may wish to convert as many assets as possible into on-probate assets to make the probate of your estate easier for all involved. Either way, you need to know what assets are not subject to probate. With that in mind, the following represents common examples of non-probate assets:
- Assets held in a trust. Whereas your Will must be submitted for probate, a trust does 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 allow 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 help in many types of retirement accounts, such as an IRA or 401(k) are also often non-probate assets.
Contact a Tucson Probate Lawyer
For more information, please join us for an upcoming FREE seminar. If you have additional questions about probate, contact an experienced Tucson probate lawyer at Morris Hall PLLCby calling 888-222-1328 to schedule your free consultation today.