The goal of any good estate plan is to protect as much of your property as possible and ensure that, once you die, that property is inherited or transferred in a manner that you choose. While some people know that probate is the set of legal requirements that have to be met before inheritors can become the legal owners of a deceased person’s property, it isn’t always clear what property has to go through probate.
In short, your property will be divided into two general categories after you die: your probate and non-probate estates.
State law determines what is counted as probate property and what isn’t. Typically this includes real property, such as your home or real estate investments, as well as personal property such as cars, valuable objects, or heirlooms. Probate property also includes any debt or obligations you have, as well as cash accounts and investments.
Avoiding probate is one of the primary goals of establishing an estate plan because probate is often expensive and time-consuming. Some property naturally avoids probate because state law allows it to pass without first having to go before probate court. Any property that names a beneficiary, such as life insurance policies or transfer on death accounts as well as retirement accounts and joint property where the other co-owner remains alive, will typically pass outside of the probate process. Further, any property that you properly transfer to a living trust before you die will also avoid probate. This is primarily why people create revocable living trusts.
In today’s complex society, it is often difficult to decide which is the best strategy or strategies for addressing the myriad of asset types that most of us own. The best place to begin is to consult with an experienced and qualified estate planning attorney.