Angela C. Artherton

Caring and Client-Focused Advocacy

Which assets go through probate and which do not?

On Behalf of | Sep 4, 2023 | Probate

When a loved one passes away, the legal process of distributing their assets may seem daunting. Not all assets go through the same channels, however.

Understanding the distinction between assets subject to probate and those that bypass this process can simplify matters during an already challenging time.

Probate assets: Assets that go through the formal process

Probate assets are those that must go through the court-supervised process of probate for proper distribution. These assets are solely in the deceased’s name. Probate pays debts and taxes and distributes the remaining assets according to the deceased’s will or, in its absence, state laws.

Real estate, such as houses or land, bank accounts exclusively under the deceased’s name and personal property including vehicles, jewelry and artwork held solely by the deceased, tend to follow the probate process. If the deceased was a sole proprietor or a partner in a partnership, their business interests typically go through probate.

Non-probate assets: Property that bypasses the formal process

Certain assets avoid probate and pass directly to beneficiaries. These assets have specific designations that dictate who receives them upon the owner’s passing, without the need for court involvement.

Joint tenancy property. Property held in joint tenancy with rights of survivorship automatically transfers to the surviving joint owner.

Beneficiary designations. Assets like life insurance policies, retirement accounts (e.g., IRAs, 401(k)s) and payable-on-death or transfer-on-death accounts have designated beneficiaries who receive them directly.

Living trust property. Assets placed in a living trust during the deceased’s lifetime pass to beneficiaries as outlined in the trust documents, avoiding probate.

Community property with right of survivorship. In Arkansas, married couples may hold property as community property with the right of survivorship. This ensures the surviving spouse inherits the property automatically.

Non-probate assets can expedite the transfer of ownership and potentially reduce the complexities of the probate process.

Understanding the categories of probate and non-probate assets helps you craft a well-structured estate plan. Strategically designating beneficiaries and considering legal mechanisms like trusts, ensures a smoother distribution of assets. This will also help you minimize potential delays and complications.