The ultimate goal of probate is settling a person’s estate. This process can seem difficult and confusing to the casual observer. What’s more, every state has unique rules that govern wills, estates, and probate. While some types of assets do go through the probate process, others can skip it altogether. Knowing the difference between the two can help with estate planning and execution.
Assets that require probate usually fall into two categories. First, there’s property that’s only owned by the deceased individual. This can include real estate, vehicles, personal effects, and memorabilia. But it also includes financial accounts that don’t have designated beneficiaries – bank accounts, CDs, and so forth. Then there’s tenants-in-common property, owned jointly with others. Each owner has a percentage interest in the property.
Probate estates typically include most types of assets – cars, houses, and the like. But some assets avoid the probate process entirely. These include financial accounts with beneficiary or pay-on-death designations. Pension plan distributions, wages owed to the deceased, and life insurance proceeds are also usually exempt. Joint tenancy with right of survivorship allows ownership to automatically transfer to a property’s remaining owners if one dies.
A living trust is a vehicle into which assets can be transferred and held. After creating a trust, you can transfer assets into it while you’re still alive. Trusts can contain real estate, financial accounts, and business ownership stakes. You can also include intellectual property and valuable items like artwork and antiques. You can also make adjustments to the trust such as changing or adding beneficiaries and assigning a person or attorney to manage the trust.
Whether you’re handling your own estate or managing someone else’s, a basic understanding of probate is helpful. That includes knowing what must go through probate, along with assets that can be excluded from the process. Each category of assets is governed by different rules. Depending on an estate’s complexity, professional assistance may be helpful. To find legal assistance in your local area, try searching for “probate attorney near me” which should lead you to professionals who understand trusts and probate.