Nashua Estate Planning Client Asks

One of the key questions to address during any discussion about estate planning and probate is to understand the difference between probate and non-probate assets. Probate is the process through which a court determines how to distribute someone’s property after they die. Assets that are distributed to heirs through the probate court process are considered to be probate estate asset.  However, some assets will bypass the probate court process and will be distributed directly to a person’s beneficiaries.  Accordingly, these assets are considered to be non-probate assets. 

By way of review, the probate process includes the filing of a will (if there is one), certified copies of a death certificate and a formal legal document known as a petition.  A petition is simply a request that the court take action to appoint an executor (the person to be appointed if there was a will) or administrator (the person to be appointed if there was no will).  In most cases, a bond will be ordered by the probate court and will be obtained by the fiduciary from a local insurance company (the executor or administrator is also referred to as the fiduciary).

Once the petition is granted by the court the fiduciary of the estate will begin the process of collecting assets, paying bills, filing taxes, distributing property to heirs, and filing a final account. This can be a costly and time-consuming process, which is why some people try to avoid probate by having only non-probate assets.

Probate assets are any assets that are owned solely by the decedent. This can include the following:

• Real property that is titled solely in the decedent’s name or held as a tenant in common
• Personal property, such as jewelry, furniture, and automobiles
• Bank accounts that are solely in the decedent’s name
• An interest in a partnership, corporation, or limited liability company
• Any life insurance policy or brokerage account that lists either the decedent or the estate as the beneficiary

Non-probate assets can include the following:

• Property that is held in joint tenancy or as tenants by the entirety
• Bank or brokerage accounts held in joint tenancy or with payable on death (POD) or transfer on death (TOD) beneficiaries
• Property held in a trust
• Life insurance or brokerage accounts that list someone other than the decedent as the beneficiary
• Retirement accounts with designated beneficiaries.

When planning an estate, having a general understanding of the probate process and the difference between which property is probate property or non-probate property is important. A will does not control the distribution of non-probate property. The form of ownership of property and whether it is owned jointly and whether appropriate beneficiary designations have been made (or need to be updated) is a key issue to consider.  Your estate planning attorney can help you with the process of deciding whether a will and a trust or a will with appropriate beneficiary designations and jointly titled property is the best solution for your particular situation.

Author: John Polgrean

This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.