Benefits of Non-Probate PropertyPosted May 31, 2016
“Probate” is the court process by which someone’s property gets passed to their heirs after his or her demise. Usually, that property passes through the hands of an estate representative, called an “executor” or an “administrator.” However, not all of someone’s property passes through the probate process. Only the property that is solely owned by someone at the time of their death is considered a probate asset. Property that is owned jointly with someone else is considered a non-probate asset, and will not go through the probate process. Be careful, as many non-probate assets are subject to tax when transferred on death.
Examples of Non-Probate Property
People sometimes do not realize that they are dealing with property that is held jointly with someone else. The notion of property with multiple owners is something unfamiliar to many people without a legal background. Because of this potential for confusion, it can be helpful to see some of the common forms that jointly-owned property can take. Some of these are:
- Assets transferred in trust (or to a trust)
- Jointly held bank accounts
- Real estate that is owned as joint-tenants
- Accounts like life insurance accounts or retirement accounts that have designated beneficiaries
- Pensions or annuities
- Property transferred during life subject to a life estate
The thing that all of these types of property have in common is that there is clearly someone who will have ownership of the property once the original or part owner passes away. Because it is evident who the property passes to, there is no need for the probate process to determine who the new owner will be.
Benefits of Non-Probate Property
Through estate planning, non-probate property is an excellent way to control where your property will go after you pass away. If you want to make sure that a particular person receives a sum of money, putting it into a trust account and then designating that person as the account’s beneficiary will make it happen.
By making sure that your assets are non-probate, your heirs will also be able to receive the property without having to go through the probate system. With proper planning, this can avoid potential taxes, and can give access to the property much quicker, and without the time, effort, and legal fees that often come with probate situations. However, making too many assets “non-probate” can have unintended and unfavorable results. Sometimes the estate representative can be left with insufficient money to effectively manage the estate’s remaining assets; such as paying real estate mortgage payments and taxes.
New Jersey Estate Planning Attorneys
Carefully planning your estate is the best way to ensure that the people who mean the most to you benefit from the assets that you want to give them. Contact the estate planning attorneys at the law office of Foss, San Filippo & Milne, LLC online or by calling (732) 741-2525.