PROBATE PROPERTY vs. NONPROBATE PROPERTY

What is probate property?  A nutshell description follows.

Broadly speaking, probate property is any asset for which title or ownership does not automatically transfer by survivorship, beneficiary designation, contract, or by operation of law at a decedent’s death.  The type of property – tangible or intangible, personalty or realty – is not relevant. Instead, focus is on the form of ownership.

Ownership or title is usually evident from monthly statements (for bank or brokerage accounts) or commonly used documents, such as deeds for real property, certificates for stocks and bonds, and certificates of title for vehicles. Such documentation may be more unique for items such as patents, mineral and royalty interests, or interests in sole proprietorships and informal partnerships. Finally, most tangible personal property (e.g., personal effects, household furnishings, and currency) has no formal ownership documentation, which can be problematic in a second marriage or contentious family situation.

In general, nonprobate property is property that automatically transfers at death without a court probate proceeding.  There are several types of nonprobate property, including:

(1)       Property that transfers by form of ownership to the survivor at death (e.g., tenancy by the entirety real property, joint bank accounts, POD or TOD accounts);

(2)       Property that transfers by beneficiary designation at death (e.g., payable on death accounts, IRA accounts, 401(k) accounts, 403(b) accounts, PERS benefits, annuities, life insurance); and

(3)       Property having a statutory nonprobate status (e.g., Social Security and veterans benefits).

If an item is not probate property, it is ignored on all probate filings with the court.  For example, it is not included in the probate inventory of the decedent’s assets.

2 thoughts on “PROBATE PROPERTY vs. NONPROBATE PROPERTY

  1. My son died recently. He had no family, leaving me his heir. He owned his home
    and his truck. It is his truck I have a question about. Years ago, my father…gave
    my son $8,000 as a gift which he used toward the purchase of his truck. I am
    having a hard time finding a cancelled check to prove this investment to probate.
    I really don’t want to give away my son’s truck to probate just to be sold for cash to
    write us a check for funeral cost from his estate. Is there anything I can do?
    Thank you.

    • Sharon,

      Most states allow a vehicle to be transferred without probate if the heirs sign off on a one page affidavit. You should review the website of your state’s motor vehicles division for the form.

      Dave

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