Difference Between Probate and Non-Probate Assets

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 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.

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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.