Defining Non Probate Assets in Estate Planning

When it comes to estate planning, it’s essential to understand all the details, including non probate assets.

Read on to learn more.

Introduction

If you have ever had to deal with a probate case, whether due to the loss of a loved one or being chosen as a personal representative for an estate, then you know just how trying the process can be. There are so many rules that apply that it can leave you begging for clarity.

Taking the time to understand how probate works and to, hopefully, work on some estate planning of your own can make the future seem a tad bit more manageable. In doing so, you will learn about probate assets and non probate assets – and by knowing the differences and that planning accordingly for non probate assets is important – you can set yourself, and your family, up for success.

Why is Estate Planning So Important?

It doesn’t matter how old you are or what your level of wealth is, estate planning is important for everyone. When we die, everything we own – all our assets – will have to be dealt with. After all, you cannot take it with you. So, what will happen to it? This is what estate planning helps determine.

Estate plans are like a will, but better. They will give instructions about what is to be done with your assets after you die, but they also can provide:

• Medical directives
• Power of attorney appointing someone to make medical/financial decisions if you are unable to.
• A listing of beneficiaries for things like insurance policies, bank accounts, financial.
• Trusts that will benefit you regarding taxes the transferring of property.

There is going to come a time when you die and you are going to leave behind everything you own to your loved ones. You can plan ahead and have it entirely taken care of – or you can let it be subjected to probate. And, well, let’s just say that the latter is the most unwelcome outcome.

Probate: What Is It?

Probate is the legal or court process of working through your assets and determining those who should inherit them. This process is necessary for those who do and do not have a will. Be prepared for this process to potentially take several months before the case is closed. Based on California Inheritance Laws, it will be determined who is the next in line to receive your assets or how they should be split after you die. If you have a will in place, the probate process will review and authenticate it before proceeding.

Someone is appointed to administer the probate process if no will is available. This person is responsible for documenting all assets of the decedent so that any liabilities can be paid. Once everything is settled, the remainder will be distributed accordingly.

But are all assets included? You can probably guess by now that they are not.

Probate Assets in Estate Planning

Probate assets are known assets – they are left behind and have to be dealt with to settle an estate. The heir can be determined with a will or by using intestate succession. This makes an assumption of what you probably would have wanted if you have the chance to make the decision. (Just another reason to estate plan – so your real wishes are recorded).

Probate assets include things, such as:

• Household furnishings and other such personal property, including jewelry, cars, etc. owned by the decedent alone.
• Savings accounts, stocks, cryptocurrency, and other intangible assets.
• Real estate or property owned solely by the decedent.
• Money owed to the decedent.

So, What Are Non Probate Assets in Estate Planning?

According to the laws of California, any property that isn’t solely owned by the decedent can be considered non probate property. In other words, if two or more people, including the decedent, are listed as joint owners of:

• A piece of real estate.
• A car.
• Personal belongings.
• Life insurance policy.
• Financial accounts.
• Living trusts.

These are just a few of the most common examples.

These non probate assets get their name because they don’t have to go through probate at all. Instead, they are transferred to the new rightful owner as soon as possible. 

How to Handle Non Probate Assets in Estate Planning

When doing your estate planning, it is important to have an understanding of probate assets and non probate assets – and how they will be handled upon your death. Any joint owners, beneficiaries to policies, or trust beneficiaries will all avoid probate. If you have a will, it will still go through probate, but your assets will be distributed according to the will.

As you plan, you want to consider these situations and what would happen with each asset when you die. Then, take steps to ensure that they are handled as you would like them to be. This may involve creating a specific trust – or even more than one trust. Or, it may mean adding a joint owner onto a piece of property, for instance. You want to make sure all your t’s are crossed and your i’s are dotted so that there are no issues or questions. And always – always – make sure your beneficiaries are up to date.

Why An Attorney is Necessary

The process of estate planning can be overwhelming. Everything needs to be approached in a way that has your family’s best interest in mind after you are gone. Because you won’t be here to make sure it happens or to give your own wishes, hiring an attorney to make sure everything is set in place is a great idea.

Attorneys who handle estate planning have a deep understanding of non probate assets and how to ensure that they can be transferred over as smoothly as possible. Hiring someone to handle your end-of-life plans is a great step in the right direction of looking out for those you love.

Grief can be heavy and difficult to deal with. This is even amplified when all your recently deceased loved one’s assets are tied up in a probate case. Don’t put your family through this. Estate planning – and planning for when you are no longer here – is tough, but necessary. Hire an attorney and start today.