Do You Know the Difference Between Probate and Non-Probate Assets?
I was working with a family earlier this year regarding the probate court process. This family lost their mother suddenly. Further, they told me that their father passed away about seven years ago. Their mother died with a will and the family had a lot of questions. Their mother owned a home, a modest amount of personal property, two bank accounts with a total of $125,000, an IRA with $200,000, an annuity, and several CDs.
The family’s main concern was how long it would take to settle their mother’s estate through the probate court process.
I explained that not all their mother’s assets would go through probate because there are probate assets and non-probate assets. Non-probate assets typically have a beneficiary named such as IRAs, annuities, and life insurance. I discussed with them that their mother’s IRA and annuity would be transferred immediately. All they needed to do was present the financial institution with a certified copy of the death. Those assets would not have to go through the probate court process.
The probate court process
However, the remainder of their mother’s assets would have to go through the probate court process. Since their mother did not complete transfer-on-death (TOD) designations at the bank, the bank accounts would be frozen and would need to go through probate. Also, their mother’s home and all her personal property would need to be inventoried and have a value assessed to it. Furthermore, these assets would need to pass through the probate court first before being transferred. Finally, due to the CDs not being titled appropriately, the CDs at the bank would need to go through the probate court process.
We would get to work on this probate court process. It would be as expeditious as possible, but it was likely to take several months, possibly over a year, before their mother’s probate estate was going to be settled.
As you can imagine, they were not thrilled to endure this process before gaining access to the property in their late mother’s estate. For this reason, most families prefer to put a plan in place so that the entire probate court process is avoided including all the costs and delays.
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