Avoiding Ancillary ProbateSeptember 8, 2015
Assets: What Assets Do NOT Go Through Probate? (Part 2)October 6, 2015
It is important to understand that not all assets go through probate. Generally, jointly owned assets, assets that have a beneficiary designation, and assets placed in a trust do not go through probate. In the next three blogs, I will give a basic overview on each of the three assets that do not generally go through probate.
Jointly Owned Assets:
Assets titled solely in the decedents name will go through probate; those assets include, but are not limited to, bank accounts, real estate, vehicles, etc. Part of the probate process is taking the decedent’s name off the title and putting someone else’s name on it.
If assets are jointly titled by tenancy in the entirety or joint tenancy with the right of survivorship, then those assets will automatically transfer to the surviving owner, for example: a piece of real property owned by husband and wife as tenancy in the entirety will automatically pass to the wife when the husband dies. However, if the wife fails to add another owner or if both the husband and wife die at the same time, then the asset, the real estate in this case, will have to go through probate before it can be distributed to the heirs.
It is important to remember that if you own property as a joint tenant or tenancy by the entirety, the transfer of ownership occurs automatically upon death. A Will that devises a property held in joint tenant or tenancy by the entirety to someone else is not enforceable, for example: a brother and sister own a piece of property as joint tenants. The brother puts in his Will that his share of the property shall go to his two sons when he passes. The brother passes, but since his property is owned by him and his sister as joint tenants, the property automatically goes to his sister at the brother’s death. His sons do not the brother’s share of the property. Please Note that the brother could have transferred his portion to his sons before his death making the sons and sister tenants in common, and our office can assist you in this process.
Property held by tenants in common is another type of joint ownership, but the individual’s share is distributed according to their Will or intestacy (via state law when there is no Will). The individual’s share of a property held by tenants in common will have to go through probate.
People often wonder if they should place all the assets in a tenancy that has automatic survivorship, joint tenancy or tenancy by the entirety. The answer, as with all things, is that it depends. The needs for a husband and wife who have been married to each other their whole lives and have kids together are different from a second marriage husband and wife who have children from their previous relationships. If the second marriage husband and wife place assets in a tenancy with survivorship, a Will transferring those assets to their children will not be enforced by the court absent fraud, duress, or other legal challenges. For more information about avoiding probate and protecting your unique family situation, please call and schedule a meeting with us. Stay tuned for next week’s overview on beneficiary designations.