PROBATE vs. NON-PROBATE ASSETS
Probate Assets - Probate assets are those owned solely by the deceased individual and do not have a designated beneficiary or co-owner. These assets must go through the probate process, which involves court supervision to validate the will and distribute the assets. Examples include:
- Real estate owned individually
- Personal property (i.e. furniture, jewelry)
- Bank accounts or investments held solely in the deceased's name
- Business interests without automatic transfer clauses
Non-Probate Assets - Non-probate assets bypass the probate process and transfer directly to beneficiaries or co-owners upon death. These assets have mechanisms in place for automatic transfer. Examples include:
- Jointly owned property with rights of survivorship
- Life insurance policies with named beneficiaries
- Retirement accounts with designated beneficiaries
- Assets held in a trust
- Bank accounts with payable-on-death (POD) designations
The key difference is that probate assets are distributed according to the will or state law, while non-probate assets transfer based on beneficiary designations or ownership structure. Understanding this distinction is crucial for effective estate planning and ensuring assets are distributed as intended.