When someone dies and leaves behind owned items without provision for distribution in a Will or by the title of the property with a joint owner or beneficiary listed, they must undergo the probate process. The probate court will remove the decedent’s name as owner of these estate assets and transfer them to those who have a rightful claim or to designated beneficiaries. Before making any major decisions about how to go through probate it’s always a good idea to educate yourself about the process. One of the fastest ways to educate yourself is by attending an online estate planning event. We work with the Planning Community to offer these educational events at no cost.
Vehicles
Household items
Real estate
Bank or investment accounts
Stocks and bonds
Some personal property
Probate rules also affect assets considered tenants in common. If property is titled Tenants in Common, the decedent’s share of the property does not automatically go to the co-owners. Instead, it would go to a beneficiary named in a Will or Trust or it would go to the decedent’s heirs per the state’s probate laws.
Are Household Items Affected by Probate Law?
A loved one who has household items without any form of title will have to go through the probate process.
Typical items considered as household goods include:
Clothing
Furniture
Artwork and antiques
Curated collections
Jewelry
While these items often have more sentimental value than monetary value, they do still have to be handled when a loved one passes. It can save your family a lot of stress to name specific items that you have promised to someone or items that hold high value in your estate planning documents. The executor of the estate can distribute those assets according to your wishes and avoid any family conflicts that may hold up the probate process.
Which Assets Do Not Fall Under Probate?
Several types of assets are not subject to the probate process and do not fall under the earlier category listed. The common theme with most of the assets below is that a beneficiary has been designated through the proper channels, such as a transfer on death (TOD) form, payable on death (POD) form, or even the Department of Motor Vehicle beneficiary designation form.
Specifically, the following assets would likely avoid probate:
Life insurance or 401(k) accounts with a named beneficiary
Living Trust assets
Registered transfer on death (TOD) or payable on death (POD) securities, US bonds, and other funds
Pension plan funds
Remaining salary, commissions, or wages still owed to the deceased
Vehicles and watercraft with a transfer on death beneficiary named
Household and vehicle assets already distributed to the surviving family
If you do not check on your beneficiary designations at least every 3 to 5 years, these assets may not go to the person you intend. After family changes like divorce, death, the birth of a child, adoption of a child, marriage, etc. you will need to update your beneficiaries to ensure these assets avoid probate and go to the right people.
Additional Asset Types That May Avoid Probate
Below are three additional asset types with examples that typically avoid the probate process after an individual dies.
Jointly Owned Assets
Jointly owned assets involve assets that have shared ownership with another person. These assets could include:
Motor vehicles and watercraft
Real estate property
Bank and related financial accounts.
Property with titling documentation
Basically, any asset that has a co-owner named on the title or on the account and is not titled “tenants in common” as mentioned earlier. These types of property usually transfer ownership upon death. This transference of ownership supersedes a Will designating different beneficiaries for the jointly owned asset.
Designated Beneficiaries
While many assets allow the owner to designate a beneficiary in case of death, which can help to avoid the probate process, there are a few situations that can require the probate process anyway.
Incapacitation of the beneficiary
The beneficiary precedes the owner in death
At the time of death, the designated beneficiary is a minor
Your estate is the beneficiary
Assets in a Trust
Normally, a Living Trust can avoid probate by naming assets within it. This approach doesn’t work if the Trust is a named beneficiary of your Will. People do this to ensure that their property and/or assets are processed through their Trust; however, in order for the transfer from the name of the decedent to the Trust, those assets will have to go through probate first. Only after that is complete could a Trust go into effect. Keeping one’s Living Trust up-to-date regarding assets and new property acquisitions helps to avoid this situation.
Prepare and Plan Ahead in Distributing Your Household Assets
Whether you’re new to estate planning or you want to update your current plan to avoid probate, call (480) 924-4424 today to schedule a free family legal session to make a custom estate plan for you! Since the probate process is complex and there is a lot of room for errors and unnecessary expenses we recommend continuing to educate yourself before making any major decisions. A good resource is the Planning Community. We work with them to provide educational events at no cost. At their online estate planning event you will get a good understanding of the probate process and be able to submit any questions you might have.
