Executive Summary
- Probate assets, like real property, require court supervision before distribution, while non-probate assets, like life insurance benefits, may bypass the probate process and be transferred directly to beneficiaries.
- The probate process involves the court validating the will, appointing an administrator to inventory assets, ensure debts and taxes are paid, and distribute leftover assets to beneficiaries per the will or intestate laws.
- Separately held assets or tenancy in common assets may be subject to probate, while assets held in a trust, assets with a named beneficiary, and jointly owned assets may be exempt.
- A probate administration attorney can help you navigate probate, resolve disputes, handle complex assets, and ensure proper distribution after the individual dies.
Learning About Probate & Non-Probate Assets in California
Even when times are difficult, managing estate assets efficiently is essential to avoid legal complications, family disputes, and delays in asset distribution per the decedent’s wishes. Knowing how to distinguish examples of probate assets and non-probate assets can help streamline estate administration and tailor each party’s expectations.
Assets that have to go through the probate process like most bank accounts and vehicles may take longer to get to the beneficiaries since a California probate court may first have to validate the will if one exists or appoint an estate administrator, appraise each item on the probate assets list, and ensure debts and taxes are paid. However, any assets that do not require probate, such as assets with named beneficiaries like most life insurance policies, may get distributed more quickly after death.
This guide will list non-probate and probate assets examples and help you better understand how and when assets will be distributed upon a California resident’s death.
Understanding Probate and Estate Assets
Probate is a term used to describe the legal process of administering a deceased person’s estate according to a will or the state’s intestate succession laws if no valid will is available. An executor named in the will or an estate administrator that the court appoints if no will exists plays a crucial role in the probate process, considering they are responsible for managing estate assets, ensuring debts are paid, and distributing property to beneficiaries according to legal requirements.
The Difference Between Probate and Non-Probate Assets
In California, the distribution of probate assets requires court supervision, while non-probate assets can go directly to beneficiaries, bypassing the court process.
Therefore, before probate assets can be distributed per the will’s request or California’s intestate succession laws, the court may have to validate the will, identify and inventory the assets, and ensure debts and taxes are paid before the remaining assets are allocated to the beneficiaries. In many cases, this process can be time-consuming and expensive, potentially adding to the emotional turmoil a beneficiary may already be feeling due to the loss of a loved one.
On the other hand, non-probate assets are usually governed by contracts or beneficiary designations, such as life insurance policies or a retirement account. Since these assets can bypass the probate court, they are typically distributed more quickly and efficiently.
Identifying Probate Assets
As a general rule, any asset solely owned by the deceased that does not have a designated beneficiary may be subject to probate. Since probate assets are not structured to be automatically transferred upon death, the probate court oversees the asset distribution process to ensure legal compliance and avoid some disputes among heirs.
California’s probate court determines asset distribution based on the decedent’s will when available. However, the court will turn to California’s intestacy laws to determine who inherits property if there is no will. For example, California Probate Code § 6401 states the surviving spouse should inherit the decedent’s half of the community property if a will does not declare otherwise, which usually results in full ownership.
Common Examples of Probate Assets
Probate assets can include anything from personal property such as jewelry, vehicles, and household items to real estate solely owned by the decedent. Most probate assets fall under one of the three following categories.
Separately Held Assets
These types of assets are solely owned by an individual and not jointly held or designated to a specific beneficiary. Accordingly, they require probate to be legally transferred. Some noteworthy examples of separately held assets include:
- A bank account
- Investment accounts
- Stocks
- Bonds
- Cars
- Boats
- Aircraft
- Business interests
- Real estate solely owned by the deceased
Tenancy in Common Assets
In most cases, when an individual co-owns property as tenants in common, their share does not automatically transfer to their co-owners upon death. Instead, their share of the assets must go through probate. Some common scenarios that may apply to this situation are:
- If the decedent jointly held investment accounts
- If the decedent had real estate held as tenants in common
- If the decedent owned a portion of a business
Beneficiary Assets Subject to Probate
Although most assets with beneficiary designations qualify as non-probate assets, they may still be subject to the probate process if the named beneficiary predeceases the account holder or no valid beneficiary is listed. Some examples of assets that may be forced to go through probate if there is not a listed or living beneficiary include:
- Life insurance policies
- Medical savings accounts
- Retirement accounts
Since wills are the best way to ensure assets are distributed according to the wishes of the creator, or testator, working with an estate planning attorney as soon as possible is essential. However, if someone has already passed away and there are concerns about their probate assets, you should choose a probate lawyer near you for help.
Understanding Non-Probate Assets
As mentioned earlier, non-probate assets are resources that bypass the probate process and transfer directly to beneficiaries since they are a part of a unique legal structure, such as joint ownership or valid beneficiary designations. Since these legal mechanisms ensure automatic transfer upon death and avoid probate intervention, there are usually fewer delays and expenses associated with their distribution.
Common Non-Probate Assets Examples
The following three types of non-probate assets are usually exempt from California’s traditional probate court process, potentially expediting their distribution following the resident’s death.
Assets Held in a Trust
Unlike a will, which takes effect after the testator dies, a trust becomes effective immediately after it is written and signed. Therefore, placing assets in a trust typically allows them to avoid the probate process. Instead, the individual in charge of managing and administering the trust, known as the trustee, should be distributing the assets according to the trust’s terms to ensure beneficiaries receive their rightful inheritance.
Assets with a Named Beneficiary
Depending on their structure, some financial accounts allow for direct beneficiary designations, which can allow for distribution without probate involvement. Some examples of account types that typically allow you to name a beneficiary include:
- Life insurance policies
- IRAs
- 401(k)s
- Pensions
- Transfer-on-death (TOD) accounts
Jointly Owned Assets with Survivorship Rights
When assets are held in joint tenancy with rights of survivorship (JTWROS), they usually transfer directly to the surviving owner. Some potential examples of JTWROS assets are:
- Homes owned by married couples
- Parent-child partnerships
- Joint bank accounts
- Vehicles that are titled in both spouses’ names
- Investment accounts that two or more people hold
Although situations with joint tenants usually circumvent the probate process, consulting an estate planning attorney and a financial advisor is the best way to verify that one’s estate plan ensures their wishes are carried out.
What is the Role of a Probate Attorney?
A probate administration lawyer can help people with estate administration by ensuring assets are distributed correctly and resolving legal complexities. These legal professionals can further assist in the probate process by distinguishing probate and non-probate assets, preparing and filing essential court documents, and representing clients in probate court.
Some common scenarios that may warrant consulting an experienced probate attorney include:
- If there is a dispute between heirs
- If the estate holds complicated assets or debts
- If the executor needs legal guidance
- If the decedent did not leave a will
- If there are challenges to the validity of the will
- If the estate includes out-of-state or international assets
- If there are tax implications or concerns regarding the estate
- If the estate involves a business or significant investment assets
- If there are concerns with creditors or claims against the estate
The skilled probate administration attorneys at RMO Lawyers can help you navigate complex probate scenarios like the ones mentioned above, ultimately making achieving the best possible outcome easier.
Take the Next Steps with Help from RMO Lawyers
In any case, probate can be complex, especially when an estate involves a significant number of valuable assets to distribute, so it’s essential to understand which assets are subject to probate and what steps you should expect.
Our experienced probate administration attorneys at RMO Lawyers can offer tailored guidance to simplify the process and offer you peace of mind. We’ll build a winning strategy to ensure your loved one’s wishes are carried out and that beneficiaries receive access to their rightful inheritance.
Schedule a free consultation with an experienced probate litigation attorney from RMO Lawyers if you have concerns about probate assets.
Glossary
Appraisal – The assessment of the value of probate assets for tax and distribution purposes.
Beneficiary – An individual or entity identified in a trust as being entitled to receive benefits from the estate.
Community property – Jointly owned property that is acquired during marriage and often passes directly to the surviving spouse per California law.
Estate administrator – An individual appointed by a probate court to manage and administer an estate when there is no will naming an executor, the named executor is deceased or otherwise cannot serve, including because they are disqualified or were suspended or removed.
Estate planning attorney – A legal professional who helps create a broad strategy that usually includes documents like a will to outline how an individual’s assets should be managed and distributed after their death.
Executor – Someone who is appointed to carry out a decedent’s requests, such as managing the estate and distributing assets to beneficiaries.
Intestate succession – The legal process for guiding the distribution of assets based on state law when someone passes away without leaving a will.
Joint tenancy with rights of survivorship (JTWROS) – A type of property ownership where assets are automatically transferred to the surviving owner without going through the probate process.
Non-probate assets – Assets that may bypass probate and transfer directly to beneficiaries, such as assets held in a trust, assets with a named beneficiary like life insurance policies, or jointly owned assets like a married couple’s house.
Probate assets – Assets that require court supervision before distribution, such as separately held assets like bank accounts and vehicles or tenancy in common assets like jointly held investment accounts.
Probate attorney – A lawyer who helps navigate the probate process after a person has already died. They may be able to address contested wills or disagreements among heirs and ensure assets are distributed lawfully.
Probate process – The legal procedure for estate administration, which may include validating a will, appointing an estate administrator, and ensuring debts and taxes are paid before distributing assets.
Tenancy in common – A type of property ownership where a deceased person’s share will not automatically transfer to co-owners; instead, it must go through probate.
Testator – An individual who creates a will to be followed upon their death, explaining their wishes for the distribution of their assets to relevant beneficiaries.
Transfer-on-death (TOD) accounts – Financial accounts that automatically transfer to a designated beneficiary upon death, avoiding probate.
Trust – A legal agreement that grants a third party, or fiduciary, the authority to hold and manage assets for the beneficiaries of an estate.
Trustee – A person who coordinates the administration of the trust, manages the trust’s assets and is responsible for distributing the assets to the trust’s beneficiaries.Will – A legal document specifying how someone’s assets and affairs should be handled and distributed after their death.