Upon the passing of a person, his assets and property are left behind and have to go through the process of a Probate so that these are properly accounted for and can be distributed to the beneficiaries of the deceased also known as the decedent. The thing is people are trying to avoid going through a probate due to the time, money, and effort one needs. It is also for that reason why people are looking to get a living trust. But if you may not know, there are actually assets that do not need to go through a probate and are called non probate assets.
There is something that you first have to take note of. Although people are looking for ways to be able to avoid a Probate, chances are the assets that don’t go through one may end up with people that you did not intend it to be. You see, a probate is a process that is overseen by the court which is a legal entity and follows laws and makes sure to consider the documents and paperwork of the assets. This can actually become a big security issue and people could get their hands on your assets through your children and other relatives.
With that word of caution about non probate property set aside, it is time to take a look at the types of assets that do not need to go through a probate process.
1.) The first type are assets that are under only one name which is the name of the decedent but have a designation of transfer on death or TOD, payable on death, or POD, or in trust for or ITF. Assets which have one of those three designations can go through without a Probate process. Included assets are Health Savings and Beneficiary Deeds that you can find in a few states. But in the case where the beneficiaries of these accounts pass away before the owner, then these will have to go through probate upon the owner’s death.
2.) Assets that are owned with a spouse or other family and are under a right of survivorship. Upon your passing, these assets may be transferred to whoever joint owns the asset with you. The right of survivorship means that if the joint owner is still surviving then it is to them that the asset is passed without it having to go through the process of a probate.
3.) Another way that your spouse can receive the assets is through a special joint ownership. This type of ownership is called “tenants by the entirety” or TBE for short. However, this type of joint ownership is only accepted in a few states. If that joint ownership is accepted in the state, then you do not need to worry about it going through a probate process.
4.) Assets that are owned by the person bound by the rights in a contract which have to be paid to a beneficiary upon the owner’s death. Assets under this are life insurance policies, IRAs, annuities, etc. which are passed without the need for a Probate.