Most Americans have heard of probate, but they may not fully understand the process or what is subject to it. Probate is essentially the legal process for determining a deceased person's estate, paying its bills, and distributing its assets to heirs. Most estates, large and small, pass through some form of probate. However, some assets can skip this process. Which things do or don't fall into these categories? Here are a few answers.
Joint Tenancy Doesn't Go Through Probate. Assets held in joint tenancy with another individual generally are exempt from probate issues. The joint tenant takes full ownership, in accord with the terms of that particular tenancy agreement. There are different types of joints tenancy with specific provisions, such as 'tenancy by the entirety' used solely by married couples.
Wills Do Go Through Probate. Writing a will is an important step, but it doesn't negate the need for probate. Generally, the will and its provisions are confirmed through probate court. However, some assets within that document — such as a retirement account — can be handled outside probate if they fit other criteria.
'Payable on Death' Doesn't Go Through Probate. Accounts or deeds with specific provisions to make them 'payable on death' to an individual or organization can generally pass on to the beneficiary without the help of probate. This often includes retirement accounts, bank accounts, life insurance policies, and even a few real estate titles or vehicle deeds.
Assets Given to Minors Do Go Through Probate. Anything you left directly to a minor child may end up going through probate court. The reason isn't the asset itself, but the recipient being under the legal age. You may need to have a court-approved guardian appointed to receive the asset on behalf of the minor before the transaction will be completed by outside parties.
Trusts Don't Go Through Probate. Both revocable and irrevocable trusts can avoid probate if executed in the right way. One of the primary reasons for using such trusts is to circumvent probate, in fact. A trust separates the assets in its possession from your estate — either for legal purposes only or both legal and tax purposes — so it can make moves without involving you.
Clearly, the ownership and provisions of each individual asset can affect its journey through or around probate court. The best way to make a plan for your entire estate is to work with an experienced probate attorney in your state. Make an appointment today to learn more about probate law.