Types of Estate Assets and When They Require Probate

As a person lives their life they will accumulate assets throughout their life. This will be in the form of money, investments, property, and long-term money ensuring contracts like insurance policies. When a person dies, you may think that all of these assets may be distributed easily and in the same fashion, and you would be wrong. Given that many assets carry with them very different rules for distribution it is good to have a general understanding of what assets require probate and which don’t.

The first category to tackle are assets that take the form of policies for retirement such as a 401k or a Roth IRA or a promise for later benefits in the event of a tragedy such as with life insurance. More often than not, these policies are opened up with major companies that will have you establish who the beneficiaries of these policies are. Since these companies have already established rules for distributions in the policies, insurance and retirement benefit policies rarely have to be probated, the only thing that typically needs to be done is contacting the company that provides the polices to determine the steps for payout.

The next category of assets is personal property, this comes in the form of personal items such as jewellery, paintings, furniture, and other physical personal items. Personal property also includes money held as cash or in bank accounts. Personal property CAN potentially be distributed without probate but only in regards to the personal items in the possession of the family and any bank accounts that the deceased shared with a living person. If authority is needed to obtain control or ownership of a certain asset, such as a bank account not shared by the deceased with a living person. This authority can only be obtained through probate, or in certain circumstances, through a small estate affidavit.

Finally, there is real estate property, real estate property can be transferred via a transfer on death instrument without probate, however if something like that is not in place, probate will need to be opened as a person requires authority to transfer the deed of a home they do not have any ownership in to another person.

The final category of property is property held within a trust. Often when deciding whether how to handle their estates, people will choose to open what’s known as a trust. A trust is a document that creates a current legal entity to hold all of your assets. A trust typically allows all assets to avoid probate by virtue of the trust providing the necessary authority to the distributor, also known as the trustee. If all assets are put into the trust prior to the decedent’s death, then normally all the assets owned by the trust are then distributable without the need to open and go through probate.

With all these different kinds of property and assets, it can be difficult to know what the correct path to take for your estate. If you have any property or assets that you don’t believe have a designated person they are to go to and wish to change that, please consider contacting the law office of Andrew Szocka P.C. by phone at 815-455-8430 or by emailing us at info@szocka.com we have extensive trust and probate experience and will see to it that all of your wishes are properly formalized.