The word “probate” is often associated with estates. But not every asset that passes to your estate is a probate asset. Only assets owned in your sole name at death — or assets co-owned with others where they do not automatically assume your share of ownership — are considered probate assets.
For instance, if you own 100% of your house alone, then your house is a probate asset. If, however, you co-own the house with your wife as joint tenants, then your wife automatically assumes 100% ownership upon your death; the house never passes through your probate estate. (However, when the second spouse dies, the house becomes a probate asset for his or her estate.) Similarly, if you have a joint bank account with survivorship provisions, the co-owner of the account will simply assume full ownership upon your death.
Life insurance policies commonly do not pass as probate assets because they are payable to a beneficiary, such as a spouse or child, rather than your estate. This is why it is often inadvisable to make insurance policies or other annuities — such as an IRA — payable to your estate.
In determining the best way to manage and title your assets, you should consult with an experienced estate planning attorney who can help maximize the financial and tax benefits of your estate planning.