What property is included in probate?

The probate process is the process of transferring legal title from a deceased’s own name to his or her beneficiaries or heirs as articulated in the will. Property that does not need to go through probate to transfer legal title includes property that passes automatically to someone else upon the death of the deceased, or that didn’t actually belong to the deceased at the time of death. Assets not transferring automatically are part of the probate estate, and will have title legally transferred by probate.

Property and Probate

The property that goes though probate or that is included in the probate estate, is any property the deceased owned at the time of his or her death or that is payable to the estate not subject to an exemption. For example, if a house, car, RV, and bank account are all in the name of the deceased at the time of death, those items of property will have to be included in the probate estate and go through the probate procedure before they can be legally transferred to the beneficiaries. Salary and benefits due to the deceased and money collected from debts owned to the deceased are part of the probate estate as well.

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Benefits Payable to Named Beneficiaries

Benefits payable to named beneficiaries, such as those from a life insurance policy or annuity bypass probate. Money from IRAs, Keoghs, and 401(k) accounts transfer automatically, outside probate, to the persons named as beneficiaries. Bank accounts that are set up as payable on death accounts (POD for short and also called an in trust for account or a Totten trust) with a named beneficiary also pass to that beneficiary without probate. If the estate of the deceased is named as the beneficiary of an insurance policy, the proceeds of the policy will be included in the probate estate.

Assets and Trusts

Assets that are put into a trust while the deceased is still alive belong to the trust, not to the deceased, at the time of death. Because of this, those assets are not included in the estate that has to go through probate. The most common form of trust used to remove property from probate is a revocable living trust. It’s revocable because it can be cancelled as long as the person setting it up is still alive and competent to make decisions. The trust is a legal entity that survives the person who created it. After the person setting up the trust (the settlor) dies, the trustee will distribute the assets of the trust to the beneficiaries named in the trust documents without going through probate or being supervised by a court. This is usually done without making the trust provisions public.

Other Exceptions to What Is Included in Probate

Other exceptions to what is included in a probate estate are set by state laws. Most states allow a limited amount of property to pass to certain beneficiaries free of probate or through a simplified probate procedure. Some states, for example, exclude property that is owned as community property by spouses or that one spouse or domestic partner leaves to the other spouse or partner in a will from probate.

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Getting Legal Help

You should always look to state law to learn about your state’s probate requirements. You should also consider consulting a probate attorney in your state if there is any doubt about what assets must be included in a probate estate.

Case Studies: Understanding Property in Probate

Case Study 1: Inclusion of Assets in Probate

John passes away, leaving behind a house, a car, an RV, and a bank account in his name. Since these assets were solely owned by John at the time of his death, they will be included in the probate estate. The legal transfer of these properties to John’s beneficiaries will require going through the probate process.

This case highlights the importance of individuals understanding which assets will be subject to probate and taking appropriate estate planning measures to minimize potential delays and complexities for their loved ones.

Case Study 2: Non-Probate Assets

Mary had a life insurance policy and an annuity that named her daughter as the beneficiary. Upon Mary’s death, the proceeds from these policies bypass probate and automatically transfer to her daughter. Similarly, Mary had set up a payable-on-death (POD) bank account, designating her son as the beneficiary.

This account will also pass directly to her son without going through probate. These examples illustrate the significance of properly designating beneficiaries and utilizing non-probate transfer mechanisms to streamline the distribution of assets after death.

Case Study 3: Trusts and Probate Avoidance

Robert established a revocable living trust during his lifetime and transferred his assets into the trust. Upon Robert’s death, the assets held within the trust do not need to go through probate.

Instead, the trustee will distribute the assets to the beneficiaries named in the trust documents according to Robert’s wishes. This case emphasizes the effectiveness of utilizing trusts as a means to avoid probate and maintain privacy in the distribution of assets.

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