If you've been named the administrator or executor of an estate, you'll need to take an inventory of property and possessions and determine what's subject to probate and what isn't. Only the assets considered "probate property" should be listed on forms filed with the probate court.
Probate assets versus nonprobate assets
Probate is the legal process for paying a deceased person's debts and distributing money and property to heirs. It begins with a petition filed in probate court and proceeds through a series of steps, including inventorying the estate, notifying creditors, paying bills, filing taxes, and getting court approval to distribute property to heirs.
If you've been appointed as a personal representative (also known as executor or administrator) of a probate estate, one of your first tasks is to figure out what the deceased person owned. Some of those assets are considered probate property—or assets that will be distributed to heirs based on the terms of a will or according to state law if there isn't a will.
Other assets are non-probate property. These assets bypass the probate process and go directly to beneficiaries or co-owners, no matter what the will says. A non-probate/probate property list can help you keep track of what's subject to probate and show whether probate is even necessary.
What is nonprobate property?
Because non-probate assets aren't part of the probate process, they aren't listed with the probate court. Non-probate property includes:
- Assets titled in the name of a trust or designating a trust as beneficiary. Many people set up living trusts specifically to avoid probate. The trustee named in the trust is authorized to carry out the trust's instructions, including distributing trust assets to beneficiaries.
- Property with a named beneficiary. Common examples include life insurance policies, IRAs, 401(k)s, and pensions.
- Bank accounts with beneficiaries. These do not go through probate if they have a payable on death (POD) designation. Other property such as real estate or vehicles is non-probate property if there's a transfer on death (TOD) designation.
- Property owned jointly, with survivorship rights. This means that, if one owner dies, the other owner automatically gets the deceased owner's interest in the property. Married couples often own their home this way. Look for the words "joint tenancy with right of survivorship" or "tenancy by the entirety" in the title documents. If you live in a community property state, your state laws may also provide a right of survivorship.
Once you've identified the assets that pass outside of probate, the rest of the decedent's assets are probably part of the probate estate.
What are probate assets?
In most states, the personal representative must list all probate assets with their values and file the list with the probate court. You can also think of this as a list of assets for the will. Some assets, like bank accounts, are easy to put a value on. Others, like antiques, jewelry, and collectibles, may require an appraisal.
Probate assets include:
- Real estate, vehicles, and other titled assets owned solely by the deceased person or as a tenant in common with someone else. Tenants in common don't have survivorship rights. The owners can bequeath their share of the property to someone else.
- Personal possessions. Household items go through probate, along with clothing, jewelry, and collections. The inventory should include the decedent's personal belongings that remain after death.
In some states, probate isn't required if the estate's value is below a certain dollar amount. Some states also have a simplified probate procedure for small estates or when all property is transferred to a surviving spouse. But even when probate isn't required, going through the process can have advantages.
Sorting through property and accounts can be tedious, and it's not always easy to tell what's subject to probate and what isn't. It's best to get legal advice if you have questions or aren't sure what property to list with the probate court.