What Assets Must Go Through Probate?

Lots of assets, including real estate and retirement accounts, may not need to go through probate.

Almost every person leaves behind some assets that don’t need to go through probate. So even if you do conduct a probate court proceeding for the estate, not everything will have to be included. That’s good news, because property that doesn’t have to go through probate can be transferred to the people who inherit it much more quickly.

Common Assets That Go Through Probate

Basically, probate is necessary only for property that was:

  • owned solely in the name of the deceased person—for example, real estate or a car titled in that person’s name alone, or
  • a share of property owned as “tenants in common”—for example, the deceased person’s interest in a warehouse owned with his brother as an investment.

This property is commonly called the probate estate. If there are assets that require probate court proceedings, it’s the responsibility of the executor named in the will to open a case in probate court and shepherd it to its conclusion. If there’s no will, or the will doesn’t name an executor, the probate court will appoint someone to serve. Either way, the person in charge can hire a lawyer to help with the court proceeding, and pay the lawyer’s fee from money in the estate.

Assets That Don’t Need to Go Through Probate

Typically, many of the assets in an estate don’t need to go through probate. If the deceased person was married and owned most everything jointly, or did some planning to avoid probate, a probate court proceeding may not be necessary.

Here are kinds of assets that don’t need to go through probate:

  • Retirement accounts—IRAs or 401(k)s, for example—for which a beneficiary was named
  • Life insurance proceeds (unless the estate is named as beneficiary, which is rare)
  • Property held in a living trust
  • Funds in a payable-on-death (POD) bank account
  • Securities registered in transfer-on-death (TOD) form
  • U.S. savings bonds registered in payable-on-death form
  • Co-owned U.S. savings bonds
  • Real estate subject to a valid transfer-on-death deed (allowed only in some states)
  • Pension plan distributions
  • Wages, salary, or commissions (up to a certain amount) due the deceased person
  • Property held in joint tenancy with right of survivorship
  • Property owned as tenants by the entirety with a spouse (not all states have this form of ownership)
  • Property held in community property with right of survivorship (allowed only in some community property states)
  • Cars or boats registered in transfer-on-death form (allowed only in some states)
  • Vehicles that go to immediate family members under state law
  • Household goods and other items that go to immediate family members under state law

In addition, most states offer simplified probate proceedings for estates of small value. The simpler process is commonly called “summary probate.” The executor can use the simpler process if the total property that is subject to probate is under a certain amount, which varies greatly from state to state. In some states, the limit is just a few thousand dollars; in others, it’s $200,000.

Because you count only the property that must go through probate—and exclude property that was jointly owned or held in trust, for example—some very large estates can take advantage of the “small estate” procedures. For example, say an estate consists of a $400,000 house that’s jointly owned, a $200,000 bank account for which a payable-on-death beneficiary has been named, a $100,000 IRA, and a solely owned car worth $10,000. The estate has a value of more than $700,000, but the only probate asset is the car—and its value qualifies it for the small estate procedure in almost every state.

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