What is probate property and non-probate property?
Probate property is any property that is controlled by your will. Non-probate property is property that is not controlled by your will. This sounds easier than it is. Jointly titled property is frequently (but not always) non-probate property. It is important to know the difference between your probate and non-probate property in order to make sure your property goes where you intend it to go when you die.
For example, you may want to leave your child a checking account with $10,000.00; you may even write this in your will. However, prior to your death, perhaps you add someone else to the account just to help you pay your bills. The problem is that joint bank accounts are usually “payable-on-death” (POD) accounts. This means, a joint bank account is not probate property and will not be governed by your will. Therefore, your child will not get the money even though you have written this in your will. Instead, your $10,000.00 checking account will go to the other account holder. This is a good reason not to put anyone’s name on your bank account unless you intend to give that person all the money in the account when you die.
Another type of asset or property that is usually “non-probate” is a life insurance policy with a beneficiary designation. At your death, the life insurance money will be paid directly to the beneficiary and will not be part of your probate estate. However, if your named beneficiary dies before you and you don’t update the policy, then this will become probate property. You can also designate a beneficiary for your IRAs, 401ks, and annuities. Keep in mind though that even though these assets are not probate assets, there are good reasons for listing a trust as a beneficiary of these accounts.
Understanding the different legal rules for the types of property you own is important when you draft a will. Your estate planning attorney at the Roberts Law Firm will review your probate and non-probate assets with you and answer any questions you may have about the rules governing each of your assets when you die. At Law Office of Nancy L Roberts PLLC, we advise and empower you so that together we create an effective estate plan.