Understanding Which Assets Must Go Through Probate

Most people work with an attorney to compose a last will and testament. The primary purpose of this legal document is to provide instructions for the disposition of a person’s property following their death. Probate is the court-supervised process of inventorying all a decedent’s assets and distributing them to creditors and inheritors. However, not all property is subject to disposition by a will or the probate process.

Why Try to Avoid Probate?

While most estates are small, uncontested, and generally uncomplicated, administering such an estate is not always quick and straightforward. Probate can be a lengthy process that ties up a decedent’s assets and can become quite costly due to attorney’s fees and court fees. For these reasons, many people take steps to minimize the property that must go through probate or work with an estate planning attorney or elder law attorney to ensure their estate avoids probate entirely.

Assets That Don’t Need to Go Through Probate

There are several ways in which assets can be handled to avoid probate and pass directly to chosen beneficiaries:

Life Insurance and Annuity Contracts

Most of these contracts name a non-estate beneficiary who is paid directly upon receipt of a death claim.

Brokerage Accounts and Retirement Accounts

Accounts like IRAs and 401(k)s often name beneficiaries who receive the funds without probate.

Bank Accounts

Accounts with payable on death (POD) or transfer on death (TOD) provisions pass directly to a named beneficiary.

Joint Accounts

These usually pass to the surviving owner(s) without going through probate.

Revocable Living Trusts

Assets titled in these trusts are managed and disposed of by successor trustees named in the trust documents.

Real Property

Certain types of ownership, such as joint tenancy with rights of survivorship (JTWROS), ensure that an owner's stake in an asset, like a home, passes directly to the surviving co-owner(s). Some states also allow the transfer of real estate with a TOD designation to a beneficiary.

Assets That Must Go Through Probate

Any property or assets that have only the decedent’s name on the title at the time of death must go through probate. Only the probate court can change these titles according to the specifications laid out in the decedent’s will. Examples include:

Solely Owned Property:

A home, car, or bank account owned solely by the decedent.

Co-Owned Assets Without Right of Survivorship:

Assets that are co-owned but do not include the right of survivorship.

In essence, anything that does not go directly to a beneficiary will be subject to disposal per the deceased’s will. All wills, as well as assets that do not pass by operation of law or contract, are subject to probate. Once the will has been probated and assets have been distributed to the rightful creditors and beneficiaries, you can do whatever you want with them.

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