Probate v. Non-Probate Assets: What Is the Difference?
You may have heard a wide variety of advice about probate in Nevada and how to use your estate planning to avoid being subject to the probate process. Generally, a good way to avoid the probate process is by using a Trust. It is not the only way, however. Thus, when planning your estate, we think it is important that you understand the difference between probate and non-probate assets. Probate is the process through which a court determines how to distribute your property after you die and the court will direct the distribution of probate assets to your heirs. Non-probate assets, on the other hand, will pass directly to your beneficiaries without court involvement.
The probate process includes filing a Will and appointing an executor or administrator, collecting assets, paying legally enforceable debts and expenses (including filing taxes), distributing property to heirs, and filing a final account. This can be a costly and time-consuming process, which is why many people try to avoid probate by having only non-probate assets.
Probate assets include those owned solely by the decedent, and can include the following:
Real property that is titled solely in the decedent’s name or held as a tenant in common
Personal property, such as jewelry, furniture, and automobiles
Bank accounts that are solely in the decedent’s name
An interest in a partnership, corporation, or limited liability company
Any life insurance policy or brokerage account that lists either the decedent or the estate as the beneficiary or neglects to name a living beneficiary
Non-probate assets can include the following:
Property held in joint tenancy or as tenants by the entirety
Bank or brokerage accounts held in joint tenancy or having payable on death (POD) or transfer on death (TOD) beneficiaries
Life insurance or brokerage accounts that list someone other than the decedent or estate as the beneficiary
Property held in a trust
When planning your estate, you need to consider what probate vs. non-probate property you own, and how you want that property to be distributed. For instance, your Will does not control the distribution of non-probate property. For non-probate property, the nature of your ownership interest or beneficiary designations may be controlling. For all of your property, your goal should be making an informed decision and knowing that your estate will be distributed according to your wishes…whatever those may be.