What’s the Difference Between Probate and Nonprobate Assets?


Often, estates are settled through probate, a process in which a county or city court ensures that the deceased person’s creditors are paid and that any remaining assets or property are distributed properly to their heirs and beneficiaries. However, depending on the planning a person did prior to their death, some of their assets may be dubbed nonprobate. Here’s what you need to know about the difference between probate and nonprobate assets.

Probate assets

Probate assets, not surprisingly, require probate court to order to be distributed to your heirs. Typically, those assets are held in the decedent’s name only and passed according to a will, if one exists, or a state statute if no will exists. (The decedent is the person who has died.)

Probate assets can include:

  • Personal property, like furniture, art, or jewelry, owned by the decedent
  • Bank accounts or stock titled in the decedent’s name alone
  • Boats or automobiles with titles solely in the person’s name  
  • Other real property, like real estate, held in the decedent’s name or held as a tenant in common (meaning their share of the property does not automatically pass to any co-owners, but can be left to someone else)
  • Any interest in a corporation, partnership, or limited liability company held in the person’s name
  • Any life insurance policy or brokerage account that names the decedent or their estate as the beneficiary.

Nonprobate assets

Nonprobate assets bypass court proceedings and are passed on directly to beneficiaries based upon the title or the beneficiary designation of the asset. Not even a will controls nonprobate assets. These assets will also be generally available to heirs within a short period of time following the decedent’s death.

Nonprobate assets include:

  • Jointly owned assets: If the asset is structured so that the share of each party passes onto the other or others at the time of their death, the asset is nonprobate. With property, for instance, two people may own a home together through joint tenancy with rights of survivorship.
  • Transferable on death assets: A decedent may have bank or brokerage accounts held in their name, but that may have payable on death (POD) or transfer on death (TOD) beneficiaries. Examples include Health Savings Accounts and Transfer on Death or Beneficiary Deeds.
  • Certain assets owned with your spouse: In some states, assets you own with your spouse could be held in a distinctive type of joint ownership called tenants by the entirety, whereby one spouse inherits the entirety of the other spouse’s share of the assets upon the death of their spouse.
  • Revocable living trusts: This is a legal entity that is created to hold ownership over an individual’s assets. Assuming a person hasn’t taken back possession of their assets before their death, the assets in the trust will pass on to their designated beneficiaries without having to go through probate court.
  • Contract rights assets: Life insurance policies, 401(k) retirement accounts, and IRAs fall into this bucket. These are assets that are technically owned by a decedent through various contract rights, allowing them to pass to the beneficiary upon death without probate.

Is nonprobate always better?

Probate can be a lengthy and sometimes costly process, so it might seem that avoiding it is always a win. It’s worth noting, though, that structuring assets to be nonprobate can sometimes mean you’ll spend more effort keeping your final wishes up to date. Revising your will can update all your probate assets at once, but changing the beneficiaries or eventual recipients of nonprobate assets could mean restructuring deeds or updating multiple legal forms. For maximum flexibility while you’re alive, sometimes probate has its benefits.

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