Lawyers on Call: Probate vs. Non-probate assets

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Beth Westfall, Partner at Coughlin and Gerhart explains the difference between probate and non-probate assets.

1. What is probate?

Probate is the approval of a Will by the Surrogate Court. That means the Court has found that the Will meets all of the procedural requirements, and that all of the necessary people have been notified of the probate. So even though you may be named as an Executor (manager) of an estate, you are not officially the Executor until the Court grants the probate.

2. What are “probate” assets?

“Probate” assets are the assets that we own in our individual names, with no other names on them. So if I own my house and my deed is in my name alone, that’s a “probate” asset. Once my will is probated, the will dictates what happens to that “probate” asset.

3. What are “non-probate” assets?

“Non-probate” assets have another person’s name on them and when the owner dies, “non-probate” assets automatically pass to the other person, no matter what your Will says. Some examples of “non-probate” assets are joint bank accounts, life insurance policies with named beneficiaries, and retirement accounts with designated beneficiaries. So if I have an IRA and my husband is the designated beneficiary on my IRA, he will inherit that IRA when I die, no matter what my Will says.

4. Why is it important to know the difference?

When we help a client write a Will, it’s important to know exactly what goes through the Will (meaning the “probate” assets). Remember that the “non-probate” assets will pass to the other people on those accounts and the Will doesn’t change that. So if I have all of my investments in one account and I put my sister’s name on that account as a joint owner, that account will go directly to my sister; it won’t go through my Will. A complete estate plan looks at both types of assets. In an upcoming segment, my partner, Kristen Luce, will explain how to plan for your “non-probate” assets by designating beneficiaries.

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