What Assets Must Go Through Probate?
Many assets, including retirement accounts and real estate might not be required to go through probate.
Just about every person is going to leave behind some assets that are not required to go through probate. So even when you do carry out probate court proceedings for the estate, not everything is going to have to be included. That is positive news, since property that does not have to go through probate is able to be transferred to the individuals that are going to inherit it much faster.
General Assets That Go Through Probate
Overall, probate is necessary only for property that was:
- owned in the name of the decedent —for instance, real estate or a vehicle titled solely in that individual’s name, or
- a percentage of property owned as “tenants in common”—for instance, the decedent’s interest in a workshop owned with his sister as an investment.
This property is typically known as the probate estate. When there are assets that necessitate probate court proceedings, it’s the obligation of the executor appointed in the will to open a case through probate court and guide it to its conclusion. When there is not a will, or the will doesn’t appoint an executor, the probate court is going to appoint someone for serving. Nonetheless, the individual responsible can hire a lawyer to assist with the court proceedings and pay the lawyer’s fee from funds in the estate.
Assets That Aren’t Required to Go Through Probate
Usually, a lot of the assets in an estate aren’t required to go through probate. If the departed was married and jointly owned almost everything, or had a plan to bypass probate, probate court proceedings might not be required.
Below are the kinds of assets that aren’t required to go through probate:
- Retirement accounts—401(k)s or IRAs, for instance—for which a beneficiary was designated
- Life insurance proceeds (unless the estate is designated as beneficiary, which is uncommon
- Property retained in a living trust
- Capital in a POD financial institution account
- Stocks and bonds registered in TOD form
- US savings bonds registered in POD form
- Jointly-owned US savings bonds
- Property owned as tenants by the entirety with a partner (not all states have this type of ownership)
- Real estate subject to a genuine TOD deed (only allowed in some states)
- Pension plan dispersals
- Earnings, salary, or commissions (up to a specific amount) owed to the deceased
- Property retained in joint tenancy with right to survivorship
- Property held in community property with right to survivorship (only allowed in some states that are community property ones)
- Vehicles or boats registered in TOD form (only allowed in some states)
- Vehicles that go to immediate relatives under state law
- Household effects and other belongings that go to immediate relatives under state law
Smaller Estates
Additionally, a lot of states offer streamlined probate proceedings for estates of lesser value. The streamlined process is referred to as “summary probate.” The executor can utilize the streamlined process when the total property that is subject to probate is under a specific amount, which differs significantly by state. In many states, the ceiling is only a couple thousand dollars; in others, it’s a couple hundred thousand.
Since you only count the property that is required to go through probate—and leave property that was jointly-owned or retained in trust, for instance—some considerably large estates can take advantage of the “small estate” proceedings. For instance, say an estate consists of a $400,000 house that’s jointly owned, a $250,000 financial institution account for which a POD beneficiary has been designated, a $150,000 IRA, and a solely owned vehicle valued at $12,000. The estate has a value of more than $700,000, however, the only probate asset is the vehicle —and its value qualifies it for the small estate procedure in just about every state.
Source:
- Mary Randolph, J. D. (2022, November 22). What assets must go through probate? Alllaw.com Retrieved April 10, 2023, from https://www.alllaw.com/articles/nolo/wills-trusts/what-assets-go-through-probate.html
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