The assets listed in your estate pass on to the designated beneficiaries after your estate settles at the end of the probate process in court, but this is only part of the story. The assets that count as part of your estate are only the ones that you have not found a way to transfer to the beneficiaries while you are alive or through some legal provision that enables the assets to pass to the beneficiaries immediately upon your death without going through probate. Transferring property in the form of non-probate assets is an important part of estate planning. When you meet with a Northern Kentucky estate planning lawyer, you might find out that you already have more non-probate assets than you realized you had.
What Is Probate?
Probate is when the court accounts for the property of a recently deceased person (called the decedent) and distributes the property to the decedent's heirs. If the decedent wrote a will, then the heirs are the people listed as beneficiaries in the will, who may or may not be family members of the decedent. If the decedent did not write a will, then the heirs are the decedent's closest surviving relatives. During probate, the court must appoint someone as the personal representative of the estate; most wills list the names of people whom the decedent wishes to serve as their personal representative. Probate serves the following purposes:
- Determining whether the decedent left a will and whether it is valid
- Filing a tax return for the estate
- Notifying people who might be entitled to an inheritance (called “interested persons” in probate law) that the estate is open
- Giving creditors to whom the decedent owed money an opportunity to settle the debts with the estate
Examples of Non-Probate Assets
Certain types of assets can pass directly to the beneficiaries without going through probate; these are called non-probate assets. In some cases, multimillionaires have died, leaving only a few hundred thousand dollars in their estate. It is not because they donated all their money to charity before they died (even though estate planning lawyers encourage charitable donations if you can afford to make them), but because they found ways to keep their money out of probate. The following are examples of non-probate assets:
- Any asset that you own jointly with someone else
- Revocable trusts
- 401(K) retirement accounts
- Payable on death bank accounts
- Transfer on death brokerage accounts
- Life insurance payouts
- Any other asset that specifically lists that it has survivor benefits
- Frequent flier miles (for some airlines
Keeping as much of your property as possible in non-probate assets can help your heirs save money and get their inheritance more quickly.
Contact Darpel Elder Law About Spreading Prosperity to the Next Generation
Trust funds are not just for rich people. An estate planning attorney can help you choose the best strategies for passing assets to your heirs as inexpensively as possible. Contact Darpel Elder Law in Crestview Heights, New Jersey, or call (859)341-4100.