Many types of assets are subject to going through the probate process when a person dies. However, not all are. Certain types of assets skip probate when a person dies. These assets are called non-probate assets.
There are a variety of different types of non-probate assets. One type of asset that generally falls into the non-probate category are assets that have a formal beneficiary on death designation attached to them. Assets that can have such a designation include retirement accounts, life insurance benefits, investment accounts, annuity benefits and bank accounts.
It is worth noting though that there are things that can turn an asset with an attached beneficiary on death designation that would normally be a non-probate asset into a probate asset. One such thing is a person not exercising appropriate care when it comes to naming beneficiaries for such assets. For one, if they fail to name a beneficiary in the beneficiary designation, the asset will generally revert to their estate upon their death and become a probate asset. The same thing will occur if they did name a beneficiary, but that beneficiary died before they did and no living back-up beneficiary was listed in the beneficiary designation.
Thus, lack of care when it comes to beneficiary designations could lead to a person thinking that a given asset will not have to go through probate when they die when the asset would in fact be subject to the probate process. This is among the many reasons why it is extremely important for individuals to exercise care when it comes to beneficiary designations on assets like the ones mentioned above and to take care to keep their beneficiary designations properly updated.
Understanding which assets one has would be probate assets and which would be non-probate assets upon one's death can be very important for a person when they are making estate planning decisions. Our firm can provide individuals with guidance on estate planning issues and information on what things impact whether a given asset would be a probate asset or a non-probate one.