When planning your estate it’s important to understand the difference between probate and non-probate assets. Probate is the process through which a court determines how to distribute your property after you die. Some assets are distributed to heirs by the court (probate assets) and some assets bypass the court process and go directly to your beneficiaries (non-probate assets).
The probate process includes filing a will and appointing an executor or administrator, collecting assets, paying bills, filing taxes, distributing property to heirs, and filing a final account. This can be a costly and time-consuming process, which is why some people try to avoid probate by having only non-probate assets.
Probate assets are any assets that are owned solely by the decedent. This can include the following:
Real property that is titled solely in the decedent’s name or held as a tenant in common
Personal property, such as jewelry, furniture, and automobiles
Bank accounts that are solely in the decedent’s name
An interest in a partnership, corporation, or limited liability company
Any life insurance policy or brokerage account that lists either the decedent or the estate as the beneficiary
Non-probate assets can include the following:
Property that is held in joint tenancy or as tenants by the entirety;
Bank or brokerage accounts held in joint tenancy or with payable on death (POD) or transfer on death (TOD) beneficiaries
Property held in a trust
Life insurance or brokerage accounts that list someone other than the decedent as the beneficiary
When planning your estate, you need to take into account whether property is probate property or non-probate property. Remember that your will does not control the distribution of non-probate property. In fact, a will does not avoid probate court, but rather is an invitation to probate court. Check the ownership of your property and your accounts to make sure jointly owned property will be distributed the way you want it to be distributed.
*RANDALL A. DENHA, J.D,, LL.M., principal and founder of the law firm of Denha & Associates, PLLC with offices in Birmingham, MI and West Bloomfield, MI. Mr. Denha continues to be recognized as a “Super Lawyer” by Michigan Super Lawyers in the areas of Trusts and Estates; a “Top Lawyer” by D Business Magazine in the areas of Estate Planning and Tax Law; a Five Star Wealth Planning Professional and a New York Times Top Attorney in Michigan. Mr. Denha can be reached at 248-265-4100 or by email at email@example.com