Difference Between Probate and Non-Probate Assets

Summary: A probate asset is any property owned solely by a deceased person in their name with no named beneficiary and which is not held in trust. Non-probate assets can pass to someone else without going through probate, often because they have a named beneficiary or joint owner or are held in a trust.

• Differences: While a probate asset usually requires court approval before it can be transferred to a beneficiary, non-probate assets can often pass outside the court process.
• Transfer timeline: It can take several weeks to receive non-probate assets. Conversely, probate assets may not be distributed until probate is complete, which can take nine months or more.

Whether you’re preparing your estate for your future beneficiaries or are an heir yourself, it’s useful to learn which assets go through probate. Check out this guide so you know what to plan for and expect throughout the probate process.

What Are Probate Assets?

A probate asset is property owned solely by the decedent. Since the asset is in the decedent’s name, there must be a court proceeding to transfer the title to its rightful heir.

There are a few types of assets subject to probate, including individual and beneficiary assets, tenants-in-common property and more.

Individual Assets

Any property titled in the decedent’s name alone will need to go through probate. This property includes:

• Bank accounts.
• Stocks and bonds.
• Vehicles including cars, boats and airplanes.
• Business interests.
• Real estate.

Individual assets also include those with no individual title, such as household items. This property may be electronics, furniture, clothing, artwork, jewelry and memorabilia. Personal items in probate will most likely be returned to the beneficiaries because they’re typically of negligible monetary value but immense sentimental value. Sometimes these items will be placed in a living trust, avoiding probate altogether.

Certain Beneficiary Assets

If an asset’s beneficiary passes away before the decedent, the asset must go through probate. These assets include health savings accounts, retirement accounts like IRAs and life insurance policies. Property also must go through probate if no beneficiary was designated.

Tenants-In-Common Property

Probate assets include property in the decedent’s name as a tenant-in-common with one or more individuals. Each individual owns a percentage interest in the property. These assets can include bank accounts and real estate.

Tenants-in-common property differs from property with rights of survivorship or joint tenants because the asset will not automatically pass on when one owner dies.

Assets Left out of a Trust

An individual may choose to move their property into a living trust where it won’t have to go through probate. Any assets not passed into the trust will be subject to probate, as will any items placed in a testamentary trust.

What Are Non-Probate Assets

A non-probate property is anything that will pass directly to heirs and beneficiaries because the title has already been transferred within a decedent’s lifetime. There are three types of non-probate assets:

• Jointly owned: Also known as joint tenancy or property with rights of survivorship, these assets include anything the decedent owned with a spouse or another person, like bank accounts or property.
• Beneficiary designations: These assets name a beneficiary, including health or medical savings accounts, life insurance policies, annuities, and some retirement accounts like IRAs and 401(k)s. Beneficiary accounts can go through probate if the beneficiary passes before the decedent.
• Trust assets: All property named in a living will is protected from probate.

Frequently Asked Questions

Have more questions about probate and non-probate assets? Here are the answers to some common questions:

What’s the difference between probate and non-probate assets?

The main difference between probate and non-probate assets is that probate assets usually require court approval before they transfer to beneficiaries. In contrast, non-probate assets can pass directly to beneficiaries outside probate.

How do you know if an asset is probate or non-probate?

You can determine whether an asset is probate or non-probate by assessing whether it is solely or jointly owned, whether there is a named beneficiary or whether it was held in trust. If the asset was solely owned, has no named beneficiary and wasn’t in a trust, it’s a probate asset.

However, if it has any established mechanism for transfer, such as joint ownership with survivorship, a named beneficiary or a trust, it’s a non-probate asset.

Does a will control non-probate assets?

No, a will doesn’t control non-probate assets because they usually pass through a separate arrangement, such as a beneficiary designation, joint ownership or trust.

Can non-probate assets be used to pay the deceased person’s debts?

In many cases, non-probate assets are not used to pay the deceased person’s debts. However, there can be exceptions depending on the state, the type of asset and the estate’s situation.

Can a beneficiary receive non-probate assets before probate is complete?

A beneficiary may be able to receive non-probate assets before probate is complete because these assets usually transfer outside the probate court process.

How long does it take to receive probate vs. non-probate assets?

Some non-probate assets may be transferred within a few weeks, but the timeline depends on the type of asset and the steps required. The timeline for receiving probate assets depends on how long the probate process takes. Typically, probate can take nine months or longer to complete.

Use Your Inheritance Now With IFC

If you’re an heir to assets that must go through probate, you may wait several months — and in some cases years — before you can access what’s rightfully yours. Get access to your inheritance now with an advance from IFC. Request a quote today to get your inheritance fast.