Non Probate Property

Non probate property includes assets that do not go through the probate process.

It is the legal process of validating and executing a will. Understanding the significance of non probate property is essential for effective estate planning. 

This article will explore the importance of non probate property in will and estate planning.

What Is Non Probate Property?

Non probate property refers to assets that can be transferred to designated beneficiaries or heirs without going through the probate process. 

These assets typically pass outside the will, ensuring a smoother and more efficient estate distribution. 

Some common examples of non probate property include:

Joint Tenancy Assets: 

When multiple individuals own an asset, the property passes to the surviving owner(s).

This will be upon the death of one owner.

Beneficiary Designations:

Assets like life insurance policies, retirement accounts (e.g., 401(k)s and IRAs), and payable-on-death (POD) or transfer-on-death (TOD) bank accounts.

It allows the account holder to specify beneficiaries who will receive the assets upon their death.

Living Trust Assets: 

Assets held in a living trust are managed by a trustee.

They can be distributed to beneficiaries named in the trust without going through probate.

Gifts

Assets that were gifted before the decedent’s passing, or gifts with specific conditions, may not be subject to probate.

Community Property With Right Of Survivorship: 

In some states, married couples can hold property as community property.

This will be with the right of survivorship, allowing the surviving spouse to inherit the entire property without probate.

Non-probate property refers to assets and property that pass to beneficiaries outside of the probate process upon the owner’s death. 

This means that they are not subject to the time-consuming and costly court-supervised probate proceedings. 

The Significance of Nonprobate Property:

One of the primary advantages of non probate property is the avoidance of probate costs and delays. 

The probate process can be time-consuming and also costly.

It involves legal fees, court expenses, and potential disputes. Non probate assets bypass these issues, ensuring a more efficient transfer of assets to beneficiaries.

Example 1: Joint Tenancy With Right Of Survivorship

Persons: Sarah and John

Background Scenario: 

Sarah and John are a married couple who own a house as joint tenants with the right of survivorship. This means that they both have equal ownership rights to the property and if one of them passes away, the ownership automatically transfers to the surviving spouse.

Example: Unfortunately, John passes away. Since they held the property as joint tenants with the right of survivorship, Sarah now becomes the sole owner of the house.

This will be without the need for probate. This is a common way for spouses to ensure the seamless transfer of real estate to the surviving spouse.

Example 2: Payable-On-Death (POD) Bank Account

Persons: Robert and his daughter, Emily

Background Scenario: Robert has a close relationship with his daughter, Emily, and wants to ensure she can access his savings in the event of his death without going through probate. He sets up a savings account with a payable-on-death (POD) designation.

Example

Robert passes away, and Emily is the designated POD beneficiary of the savings account. She only needs to provide a copy of Robert’s death certificate and her identification to the bank to claim the funds. The money in the account transfers directly to her without the need for probate, simplifying the process of accessing her inheritance.

In both of these examples, the property passes directly to the intended beneficiaries (the surviving spouse or the designated POD beneficiary) upon the owner’s death, bypassing the probate process. This is a way to make the transfer of assets quicker and more efficient while also ensuring the deceased person’s wishes are carried out.