Probate versus Non-Probate Assets
PROBATE VERSUS NON-PROBATE ASSETS
The decedent (deceased) will most likely have held assets that may or may not be subject to probate.
Assets that may be Probated.
Probate assets are those which the decedent individually owned including but not limited to personal property and business interests. More detailed examples of probate property include the following:
Accounts:
Bank accounts and securities in decedent’s name alone with no pay-on-death (POD) designation.
Undeposited checks payable to decedent generally consisting of a final paycheck or a tax refund.
Real Estate:
Real estate titled solely in decedent’s name or as tenants in common with no transfer-on-death (TOD) designation.
Real estate titled as tenants in common, with no TOD designation.
Decedent’s share of real estate that was held with another person however the deed failed to specify the how title was held. These situations often occur when property is held:
by individuals that are not married, it is assumed they are tenants in common and therefore the decedent’s share will be subject to probate.
by married individuals, it is assumed to be held as tenants by the entireties and will not be subject to probate, unless the deed provides otherwise which is a rarity
Personal Property:
The decedent’s tangible personal property if not held jointly or assigned to a trust.
Assets Not Probated.
Non-probate assets are, as you can guess, not probated and therefore pass directly to the subsequent owner or beneficiary. Examples of non-probate assets include:
Accounts:
Pay-on-death or transfer-on-death accounts.
Life insurance proceeds and annuities with named beneficiaries.
Retirement accounts with named beneficiaries.
Property:
owned jointly with a right of survivorship or as tenants by the entirety.
with a transfer-on-death (”lady bird”) or property in which decedent held only a life interest.
Property held in trust, unless the trust agreement provides for payment to the decedent’s estate at the time of decedent’s death.
When Assets Are Determined Whether they are Probatable:
It is vital for counsel to identify all property as either probate or non-probate at the inception of the probate administration. Obviously, only probate property contained in the probate estate is subject to the estate administration process, though further property could be incorporated into the estate for federal estate tax purposes but that is for another blog post.
....and one last thing!
In the event that all of decedent’s assets transfer by title or otherwise outside of probate, in most cases, the estate will not need to go through probate; however, there are a few huge exceptions to this that might find the survivors and beneficiaries still ending up in probate court. This may occur when:
There is an error in the property’s form of title. (Common)
The property transfers to minor, incompetent or disabled beneficiaries. (May need to be put into a trust)
Disputes arise between a trustee and beneficiaries.
A major life change, such as birth of a child, death of a spouse, marriage or divorce, occurs and the decedent dies before making related changes to an existing estate plan. In this case, Florida law may write out an x-wife or make other alterations to the will or estate depending on the circumstances.
In any case, Probate is a very serious process and as such, Florida requires an attorney to assist in all Probate filings. Whatever your situation is, please contact our office for a free consultation. A few minutes on the phone with one of our attorneys might save you a fortune.
