Probate v Non-Probate Assets

When someone passes away, their estate must be managed and distributed according to the terms of their will or state law. This process often involves opening the estate in probate court by filing a petition with basic information about the decedent and the property they owned. When preparing this petition, it’s important to know the difference between the decedent’s probate assets and non-probate assets.

Understanding the distinction between these two categories is crucial for probating an estate efficiently and ensuring a smooth transition of ownership to the heirs. In this blog, we'll explore the differences between probate and non-probate assets and how asset ownership can impact your estate administration bond in probate court. 

What are Probate Assets? 

Probate assets consist of any assets owned by a decedent that must go under the supervision of the probate court at the time of their passing. An asset is considered a probate asset if it was solely owned by the decedent with no beneficiary designations or any rights to survivorship. All probate assets must be distributed according to the terms of the decedent’s will, or according to state law if there is no will, and this property is subject to any estate taxes or creditor’s claims when passing through probate court. Additionally, all probate assets must be considered by the court and the fiduciary when calculating their probate bond amount.

Common examples of probate assets can be found below:

• Real Estate: Any real property that’s titled to the decedent’s name alone or held as a tenancy in common
• Investments and Bank Accounts: Accounts that are solely in your name without any payable-on-death (POD) or transfer-on-death (TOD) designations.
• Personal Property: Jewelry, furniture, and vehicles that do not have a title or designated beneficiaries.
• Life Insurance: Any insurance policy that lists the decedent or the estate as the beneficiary

What are Non-Probate Assets?

Non-probate assets consist of any property that can pass outside of probate court. The main difference with this property type is that non-probate assets have specific instructions on what will happen to the property after death, usually with a named beneficiary or multiple owners listed on the title. Ownership rights of non-probate assets can be transferred to the named beneficiary without court supervision because the original owner has clear wishes on what should happen to the asset at their passing. Unlike probate assets, this property is not controlled by your will or state law, which allows for the property to be distributed according to the decedent’s wishes alone and without any interference. Non-probate assets should not be included in your probate bond amount because they are not involved in the probate estate.

Common examples of non-probate assets can be found below:

• Property Held in Trust: Any property held in a living trust would not pass through probate court
• Beneficiary Designations: Investments, bank accounts, and life insurance policies can all have a beneficiary designated to receive the funds at death without court supervision. These are known as payable-on-death (POD) or transfer-on-death (TOD) designations.
• Joint Ownership: Real estate or vehicles with joint ownership and/or survivorship rights would not be included in the probate estate and will pass to the joint owner upon the other’s death. The decedent's ownership share in a tenancy in common will typically pass through probate.

How Would This Impact My Probate Bond?

When petitioning to open an estate in probate court, the administrator or executor may be required to obtain a probate bond before they have the authority to manage the estate. The bond is required to ensure that the fiduciary will act ethically when handling the estate assets or carrying out their duties. Additionally, the bond guarantees compensation to any heirs or creditors who suffer financial harm from the acts of the fiduciary. 

When setting the bond amount, the court requires the bond to cover the value of the probate assets that are under the court’s supervision. Non-probate assets are not included because the estate fiduciary has no control over any assets outside of court supervision. If the administrator can distinguish between what assets must go through probate court and what can avoid court supervision, they will likely have a lower bond requirement, which will come with lower expenses for the administrator and the estate.

How Do I Obtain a Probate Bond?

Going through the probate process? Don’t fret. We are experts in probate bonds and have expedited the bonding process to make obtaining probate bonds easy and efficient. Click below to get your bond today. Have any questions? Give us a call at (855) 470-0877 to speak to one of our probate bond experts.

The information provided on this blog is for general informational purposes only. It is not intended to be legal advice and should not be construed as such. Consult with a qualified legal professional if you are seeking assistance with a probate or estate matter.