Many estate planning tools are set up to allow property to avoid probate. Why? Probate Court can not only tie up property for months, even years, but it can rack up fees and costs as well. Property that avoids probate is called non-probate property, and it generally falls into three different categories:
- Transfers by Title: Assets transferred by title include property owned in joint tenancy with the right of survivorship, such as a house that is jointly owned by a married couple. It is important to know the form of ownership for property, particularly when it comes to estate planning, as property jointly owned as a tenancy-in-common has no rights of survivorship and is considered probate property.
- Transfers by Contract: Assets transferred by contract include life insurance policies, 401K and retirement plans, and any other asset that has the owner declare a beneficiary to receive it upon the owner’s death.
- Transfers by Trust: If the deceased has created a trust, the trust will generally contain provisions regarding transfer of the property at the time of death.
Title to these non-probate assets passes automatically at death without any Probate Court proceeding. While ownership transfers automatically, certain steps may be required to have the property released or retitled to the new owner. A certified copy of the death certificate is usually required and additional documentation may be necessary.
If a person has arranged for a non-probate transfer of ownership through title, contract, or trust, this certainly does not mean that a will is not needed. Not only will it still be needed to distribute probate assets, but a will is necessary to name a guardian for minor children, as well as an executor to administer the estate.
An estate planning attorney can best advise you on the estate planning strategies that allow property to avoid probate, while creating an estate plan to meet your family’s needs and goals.