It can save you time and money if you know which assets from an estate are not subject to probate. There are different types of assets that do not need to go through probate.
If you have been named the administrator or executor of an estate, you will need to make a list of all property and possessions and determine what is subject to probate and what is not. This means that you should only list the assets that are considered “probate property” on the forms filed with the probate court.
Does a Will Prevent the Need for Probate?
No. Even if there is a valid Last Will and Testament you must go through probate court. Arkansas Code Ann 28-40-104 states, “No will shall be effectual for the purpose of proving title to or the right to the possession of any real or personal property disposed of by the will until it has been admitted to probate.”
What is Probate Property?
In Arkansas, the person in charge of the will must make a list of all the things that are part of the will and how much each thing is worth. This is called an inventory. Some things, like bank accounts, are easy to figure out how much they are worth. But other things, like old jewelry and paintings, may need someone to tell us how much they are worth.
What Types of Assets are Subject To the Probate Process?
Probate assets are those assets that are only in the deceased person’s name. The assets are not titled as joint tenants with rights of survivorship or have beneficiary designations.
These assets are required to go through probate court. They will be given out according to your Will. If you do not have a Will, then it will go to your next of kin, which is decided by Arkansas law.
It is important to think about who you want to have your things when you die. Some things may go through a court process called “probate.” But other things might not have to go through probate. You need to update your records so the right people get what you want them to have.
Examples of Probate Assets
Probate assets include:
Real estate owned by one person or owned by two people as tenants-in-common.
For example, your mother owns a house in her name and her name alone. This could be because it just had her name on it or because she owned it jointly with her spouse and her spouse has already passed away.
Life Insurance policy with no named beneficiary, or the beneficiary is the decedent’s estate.
For example, your dad has a life insurance policy and your mother was the beneficiary. Your mother passed away 5 years ago and your father never updated the policy.
Bank Accounts not jointly owned or with no beneficiary designations.
For example, your parent has a bank account and it is in their name only. Moreover, they have not put any payable-on-death or transfer-on-death designations on the account.
Vehicles not under joint ownership will belong to the probate estate.
Looking through all the property and accounts can be tough, and it’s not always easy to tell what needs to go to the probate court. If you are unsure or have questions, it is best to get legal help.
Probate assets versus non-probate assets
You must go through each of the decedent’s assets individually to determine if it is a probate asset or not subject to the probate process. You may need the help of a probate attorney to determine what must go through probate.
What is non-probate property?
Non-probate property transfers from the deceased person according to their final wishes without the need to go through the legal process of probate. There are many ways to avoid probate from having a well-executed estate plan (like a funding living trust) to using appropriate beneficiary designations.
What types of property are Non-Probate Assets
Some assets do not have to go through probate. These are called non-probate assets. They include things that you own with someone else (joint tenants with rights of survivorship, JTWRS), things that have somebody’s name on them as a beneficiary, and things that are in a trust.
Any asset that is held by two people as joint tenants with rights of survivorship will go to the person who is still alive.
Assets that have beneficiary designations can include life insurance policies, 401(k)s, IRAs, annuities, and assets with a pay-on-death (POD) or transfer-on-death (TOD) designation.
Some of your things will go to the person you said they should go to on the form when you got them (like on a 401(k) application or beneficiary form, on a life insurance form, or on your car title). These things do not have to go through the probate court. Your Will does not control these assets.
Examples of Non-Probate Assets
Real Estate owned by husband and wife or owned as joint tenants with the right of survivorship (JTWRS). In these cases, it will transfer to the surviving spouse automatically under state law. For Example, your parents owned a house together as a married couple or as joint tenants with the right of survivorship. The deed would read Mom and Dad, husband and wife, or Mom and Dad, as tenants by the entirety, or Mom and Dad, and joint tenants with the right of survivorship.
Life Insurance with the appropriate beneficiary designation.
Bank Accounts that are titled as jointly owned assets. If you put one child on the account as a joint owner, they will inherit and none of your other children will receive that money. Click here for more on How to Avoid Probate (and Family Fights) Over a Bank Account.
Vehicles can either be jointly owned or have a transfer on death beneficiary.
How Much Does an Estate have to be Worth to Go Through Probate Court?
In Arkansas, you may be able to use the small estate process if the estate is worth less than $100,000 and meets the other criteria. You can click to read more about the Arkansas Small Estate Requirements and the Arkansas Small Estate Process.
If you have more questions about an Arkansas Probate, talk to an Experienced Probate Lawyer
If you are in charge of a probate or inheriting from an estate, it is important to consider your probate and non-probate assets. Even if there is a trust-based estate plan, there may be probate assets.
If the trust is not funded properly, or if the beneficiary designations have not been updated properly, there may be assets that need to go through probate. There may be some trust assets, which are non-probate assets; however, the remaining assets will be part of the decedent’s estate.
It is always the best option to consult with an experienced probate lawyer who will help you ensure that all of your assets go to your intended beneficiaries.
Feel free to schedule a free strategy session today.