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By: Steffani F. Terrell

When someone passes away some of the most common questions we get are, “Do I have to go through probate?” and “What exactly is probate?”

Generally, when someone passes away their Will needs to go through probate. Simply put, probate is the process where a Court declares a Will to be valid. Contrary to what most people think, a Will is not valid until the Court says it is. As part of the probate, the Executor must present testimony to the Court to prove the legality of the Will. Without a Court Order, a Will cannot be used to transfer property at death. Once a will has been “admitted to probate” and declared valid by the Court, the Executor can then begin the administration process. This includes paying debts of the Estate and distributing property according to the instructions in the Will.

Probate Assets

It is worth noting that not all assets are subject to probate. Probate assets are those assets that pass pursuant to your Will. This can include property such as real estate, mineral interests, business interests, vehicles, personal items, and financial accounts that do not have any beneficiaries.

Non-probate Assets

On the other hand, all other assets are known as “non-probate assets”. These assets all pass outside of the probate process and are not subject to the provisions of your Will. The most common non-probate assets are:

  • Any accounts with designated beneficiaries (e.g., 401(k)s and IRAs, life insurance policies, bank accounts designated as “Payable-on-Death” or “Transfer-on-Death”).
  • Jointly owned property “with rights of survivorship” (including bank accounts, real estate, investment accounts). “Rights of survivorship” means that upon the death of one of the joint owners the surviving joint owner receives 100% the property directly.
  • Assets titled in the name of a Trust

While it is often beneficial to own non-probate assets, you should maintain a level of caution. Qualified retirement accounts should be designated to beneficiaries in a way that will provide the greatest tax advantages to your beneficiaries. And minors should never be named as a beneficiary directly. More importantly, without the advice that an attorney can provide, jointly owned assets may pass entirely to individuals that you do not intend.

To illustrate, let’s assume you have two children and want your estate to pass to them equally upon your death. At your local bank, your banker recommends you name one of your children as a joint account holder so he or she can help pay your bills. The banker then recommends you check the box for “with rights of survivorship” so the account is not frozen at your death.  While the banker may have good intentions, his advice is contrary to your intent and will cause the entire account to be owned by the child that is a joint account holder, with no funds passing to your other child.

Our attorneys can help you examine these issues from both the estate planning and the probate administration perspectives to ensure your assets pass according to your wishes. Contact us today to schedule an appointment to discuss your estate plan.