What Assets Need to Be Listed for Probate?

What Assets Need to Be Listed for Probate?

by Edward A. Haman, Esq., December 2015

Whether it is necessary to probate property can depend upon how title to the property is held, or whether there is a designated beneficiary. An estate probate can be time-consuming and expensive, so arranging proper titling and beneficiary designations can be important.

What Is Probate?

Probate is a legal process, whereby a court oversees the management of a deceased person’s property (or assets) to assure that all debts are paid, and transfers property to the appropriate parties. The probate process may be required regardless of whether the deceased person (the decedent) left a last will and testament. Probate law varies from state-to-state, but there are some general concepts common to most jurisdictions.

When a person dies leaving probate property, a person will be designated by the court to handle the estate. If the decedent did not have a will (or the will is declared invalid by the court), this person is typically called the estate administrator. If there is a will, this person is typically called the estate executor. (The term personal representative may also be used in either situation.) The executor of a will is usually a person named in the will to serve in that capacity. To probate a will, the process is generally the same as without a will, except that the will (rather than state law) determines who gets the property.

What Does an Executor Do?

The duties of the administrator or executor are to identify all of the decedent’s probate property and list it on an inventory, take control of the property, use it to pay off any debts of the decedent and distribute any remaining assets to the beneficiaries as required by either the will or state law (if there is no will).

Do All Assets Go Through Probate?

Some, or all, of a decedent’s assets may not be probate assets. Such non-probate assets will be transferred directly to the party designated to receive them without involving the probate court. Therefore, before opening a probate estate with the court, it is necessary to determine the nature of the decedent’s property to see whether probate is required.

Non-Probate Assets

There are three types of property that do not have to go through probate. This property transfers without probate, regardless of what a will might say. Non-probate assets are:

Property held jointly, with survivorship rights. Real estate, motor vehicles, financial accounts, and any other property with a title document, may be held jointly, with survivorship rights. If one owner dies, title passes automatically to the remaining owner. The three types of joint ownership with survivorship rights are:

  • Joint tenancy with rights of survivorship. It must be clear from the title document that survivorship is intended, such as stating that the property is held “as joint tenants with rights of survivorship.” With bank accounts, this may be abbreviated “JTWROS.”
  • Tenancy by the entireties. Used in some states only by married couples, this is the same as joint tenancy with rights of survivorship.
  • Community property. This form of joint ownership, only for married couples, is only available if you live, or own property, in Alaska, Arizona, California, Idaho, Nevada, Texas, or Wisconsin.

Tenancy in common. A form of joint ownership that does not avoid probate is tenancy in common. In this case, the interest of a joint owner passes to their beneficiaries, and must be probated. If it is not clear that survivorship rights were intended, a tenancy in common will be assumed.

If, prior to death, a person determines that property he or she owns is not properly titled so as to avoid probate, it is possible to change the title document. To avoid having to probate real estate, this can be accomplished with a quitclaim deed.

Property with a designated beneficiary. Life insurance policies have designated beneficiaries. Banks and similar financial accounts (including IRAs) may also have someone designated as a beneficiary in the event of death. This is called Pay-On-Death (or POD). Upon death the funds are paid to the beneficiary. For other types of property (especially stocks, bonds, and other securities), a beneficiary designation is called Transfer-On-Death (or TOD).

However, if the beneficiary is listed as “my estate,” or the beneficiary has already died, the asset will become part of the probate estate. The probate court may also get involved if the designated beneficiary is mentally incapacitated or is a minor.

Trust property. Property owned by a living trust, revocable or irrevocable, does not need to be probated. Upon death, the trustee transfers the trust property to those designated as trust beneficiaries. However, wills that create a trust, or that give assets to an existing trust, must be probated in order for the property to be transferred into the trust.

Probate Assets

All assets that are only titled in the name of the decedent, are held jointly as tenants in common, or don’t qualify as one of the non-probate assets discussed above, must be probated. There will also be items of personal property that do not have title documents, such as furniture and appliances, clothing, household goods, and other personal items. All of these are subject to probate and must be included on the inventory filed with the probate court.

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