The Law Offices of Kristyne L. Seidenberg, Esq.
Focused on Estate Planning, Fiduciary Law, and Education Law
What assets are governed by the Probate Process (your Will)?
Probate assets are those assets belonging to a deceased person which pass to the named beneficiaries under the terms of the Will. Not all assets pass via a Will (see the information below regarding non-probate assets). Assets that pass via a Will must not have a survivorship designation or beneficiary designation to legally control who receives the property when the decedent dies. Examples of Probate assets include, but are not limited to:
Individually owned personal property;
Proceeds from a life insurance policy owned by the decedent, only if the decedent’s “Probate Estate” is the contractually named primary beneficiary on that policy;
Accounts in financial institutions that have no beneficiary designation or joint ownership; and
Real estate owned individually by the decedent...
What assets are not governed by the Probate process?
Any asset that has a survivorship designation or a beneficiary designation will not be governed by the probate of a Will. These are non-probate assets. By the operation of those designations and the operation of law (not the probate of a Will) upon the passing of a decedent, those assets will pass to the joint owner or named beneficiary. If for any reason a beneficiary designation fails, or if the “estate” of an individual is the named beneficiary, that asset may become a probate asset. Examples of non-Probate assets include, but are not limited to:
Financial accounts with payable on death or transfer on death beneficiary designations;
Retirement benefits with beneficiary designations;
Property owned by the decedent in joint tenancy with a right of survivorship with one or more other individuals;
Life insurance policy proceeds; and
Property owned solely by a revocable living trust.
The belief that all of ones assets can be governed by a Will is a common misconception. When planning for the distribution of your estate and assessing your estate planning options, the careful consideration of which assets are subject to probate and which ones are not is crucial. Be aware that most life insurance companies will not and cannot give you guidance when indicating your beneficiary designations.
*Note: The proceeds of life insurance policies are non-probate assets that are not governed by your Will. Life insurance policies have beneficiary designations. Those beneficiary designations are contractual, and those contractual designations “trump” the probate process. No matter what your Will says, those assets will pass contractually to the named beneficiaries on the policy.
The only way to channel proceeds from a life insurance policy through your Will is to contractually designate your “Probate Estate” as the beneficiary on the policy directly. If you do make that designation, said assets will be distributed to your Executor upon your death to be managed per the terms of your Will.
This same framework governs pensions, IRA benefits, annuity benefits, etc. in which there exists a contractual beneficiary designation.
Minors: Can they inherit directly?
Another common misconception is that a minor will be able to inherit directly under either a Will or under a non-probate asset beneficiary designation. Naming a minor as a direct primary beneficiary under a life insurance policy is a mistake which could impact the minor’s ability to access those funds when needed. Not only do different states have different laws governing the preservation of and distribution of assets meant for minors, each life insurance company has different policies and procedures in this regard as well. Usually, a named conservator or custodian must be in place within the beneficiary designation in order for a minor to have access to those non-probate funds.
Assess and Re-Assess: Considering the difference between “Probate Assets” and “Non-Probate Assets” and how those assets are titled is critical and can have a definitive impact on how your property is distributed upon your death. Revisit your beneficiary designations. Most importantly, consider your goals and whether the planning you have in place will legally accomplish those goals.