In this week’s blog post in our ongoing series on basic questions about estate planning, we are going to turn our attention to non-probate assets. When your lawyer talks to you about probate and non-probate assets, it’s important to understand how these two categories are different, and how they can impact your estate plan. Understanding the difference between probate non-probate assets will allow you a greater insight into the general estate planning process as well, because probate issues are so vitally important. So, here are some basic questions people have about non-probate assets, and non-probate estate transfers.
What is a non-probate asset?
If you’ve been reading along with our series, you already know that the probate process surrounds the transfer of property from a deceased person to inheritors. Florida laws dictate how such transfers must take place, and they provide specific requirements and processes that must be followed in order to transfer probate property.
However, not all of the property a person leaves behind is considered probate property that has to pass through the probate process. Non-probate assets are those that are specifically excluded from the probate process under Florida law.
What kinds of non-probate assets are there?
In general, there are several different categories of non-probate assets. One of the most commonly encountered is the transfer-on-death asset. An example of this type of asset is a life insurance policy that names a policy beneficiary. When the policy-holder dies, the beneficiary named in the policy will automatically receive the insurance payout. The policy, and the benefit, will not have to go through the probate process, but will instead transfer directly from the insurance company to the named beneficiary.
Another example of a non-probate asset is jointly owned property. In situations where two or more people are equal owners of the property, the transfer of that property from one joint owner to another takes place outside of probate. So, for example, if you and your sibling own the property as joint owners with the right of survivorship and your sibling dies, you will become the sole owner automatically. The property will not have to pass through probate in order for you to inherit your sibling’s share.
Can I turn probate assets into non-probate assets?
Usually. When you create an estate plan you will have the opportunity to create one or more types of trust. When you transfer your property to the trust’s name, the trust becomes the new owner. So, when you die, you can use the trust to distribute property that would otherwise have to be distributed through the probate process.