Probate is the court-administered process for distributing your property to your heirs when you pass away. But, did you know that not all property has to go through the probate process? Generally, property that is titled solely in your name at the time of your death – and that no one else has any contractual right to receive – has to go through probate. Property that’s not in your name, or that’s in your name and someone else’s, does not have to go through probate.
Knowing what property does and does not have to be probated is key to planning your estate. By making sure that all of your assets are held in a form that’s not subject to probate, you can save your estate considerable time and expense.
Here are some examples of non-probate property:
- Assets held jointly with another person as Joint Tenants With Rights of Survivorship (JTWROS). This property passes directly to the surviving owner at the time of your death, with no need for probate.
- Assets for which you’ve designated a beneficiary. Your retirement plan, your life insurance policy, and your pay-on-death bank account are all non-probate assets. Assuming two things: first, that your beneficiary outlives you, and second, that you don’t designate your estate as your beneficiary.
- Assets you’ve transferred into a trust, such as a Revocable Living Trust. When you establish a trust and transfer your property’s title to the trustee, you’re no longer the owner of the property – even though you often keep full use of the property. Any property that’s held by your trust at the time of your death is distributed to your beneficiaries according to your trust agreement, and does not go through probate.
Keep in mind that even if property doesn’t have to be probated, it may still be included in your “gross estate” for purposes of calculating your estate tax bill.
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