Probate is the process where a court oversees the property management of a deceased person to ensure that all their debts are paid and that their remaining properties are transferred to the appropriate parties. In some cases, probate is required regardless of whether the deceased has left a will. That said, not all of a decedent’s assets are subject to probate. Brook Legal explains how you can differentiate the two and why it’s important to know the difference:
Probate and Non-Probate Assets
While probate lawyers in Perth would enlighten you on which assets are subject to probate and which are not, knowing these beforehand will allow you to plan your assets properly. Probate assets are those that you own in your own right, and that is subject to the probate process. This often includes liquid assets such as savings, checking or other bank accounts that are in your name as well as vehicles, furnishings for your home, jewellery, or other personal items. Any land or real estate property that you own or share ownership with through a tenancy in common is also under probate properties. There are also personal items that do not have title documents like clothing, appliances and household goods. These are subject to probate too and would need to be listed on the inventory that you file with the probate court. In case your assets require probate court proceedings, it will be the executor’s responsibility to open the case in court and shepherd it to its conclusion. If you did not name an executor, the probate court could appoint someone to serve instead.
Non-probate assets, on the other hand, do not need to pass the probate process before being distributed. These assets can be immediately distributed to named beneficiaries. There are usually three types of non-probate assets. The first is a property that’s held jointly with survivorship rights, wherein if one owner dies, the title is automatically passed on to the remaining owner. Another is a property with a designated beneficiary, such as life insurance. Lastly, trust properties or those owned by a living trust, regardless of whether they are revocable or irrevocable, do not need to be probated.
Why the Distinction is Important
The question of probate and non-probate assets becomes important during estate planning. Knowing which properties you have control over, and which you do not, allows you to ensure that any property you own or jointly own with your spouse will be distributed to your exact specifications. Since the dispersal of non-probate properties isn’t dictated by your will, it’s important to review your assets and discuss them in detail with your estate planning attorney. While categorising your assets into probate and non-probate may seem simple, doing so without consulting your estate planning attorney can result in serious problems. The incorrect titling of your assets, for instance, can lead to huge losses in tax benefits. When seeking a grant of probate application in WA, be sure to work with a professional.
It’s a common misconception that all of the assets in the Estate will require a Grant of Probate in order to be sold or transferred. However, this is not always the case. Whether or not an Estate asset requires a Grant of Probate will often be determined by the type of asset it is, and how that asset was owned by the deceased during their lifetime.
Non Probate Assets
There are certain assets that do not require a Grant of Probate in order for them to be dealt with legally. These consist of the following:
1. Jointly Held Assets
These are assets that are held jointly by the deceased with one or more individuals. This is not limited to married couples. One example is a joint bank account. If a bank account is held in joint names then once one of the account holders dies, the bank or building society will transfer the account into the survivor’s sole name. They will usually request an original copy of the death certificate in order to do this.
Another common example is jointly held property. If the property is held as ‘Joint Tenants’ by two or more people, then upon the death of one of the owners, the property can be transferred into the name of the survivor/s without a Grant of Probate. This is not always the case with properties held jointly as ‘Tenants in Common’.
2. Low Value Assets
If an asset has a low monetary value, it may be that a Grant of Probate is not required in order to deal with that asset. In addition, many banks or building societies have set thresholds, which vary from bank to bank. A Grant of Probate may not be required for the bank to be willing to release the money held in an account if it falls below this threshold. In this instance, the bank may release the money to the person or people dealing with the Estate without asking for a Grant of Probate. Even if there is only a relatively small amount of money in one account, it may be the Estate as a whole requires a Grant of Probate (because of other assets in the Estate). When this is the case the bank or building society may still ask to see the Grant of Probate before they will release the funds.
3. Policies Where There is a Nomination
There are certain policy or pension pay-outs that do not technically form part of the deceased’s Estate. This is because that particular asset may be written into the Will under a Discretionary Trust and as such the Trustees can choose to whom to pay the money out to. For example an individual may specifically request that their child benefits from a specific Life Assurance policy. Therefore once the individual passes away the Trustees of that Life Assurance policy can choose to pay the lump sum to the deceased’s child directly, instead of paying it into the deceased’s Estate. This is not a guarantee for all policies and pension plans and your Probate Solicitor will be able to advise you accordingly.
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FAQs
What are considered assets after death?
Personal property, such as jewelry, furniture, and automobiles. Bank accounts that are solely in the decedent’s name. An interest in a partnership, corporation, or limited liability company.
How do you protect your assets from Probate ?
It is done mostly by giving away your assets before you die (directly to others, or by putting your assets into trusts)
What assets are not considered part of an estate
Non-probate assets can include the following: Property that is held in joint tenancy or as tenants by the entirety.
