After a love one has passed away, one item that most people do not want to think about is probate, but undoubtedly it may be one of the first things on his or her mind.
One important question regarding probate is: what is a probate asset? Or, What assets are included in the probate estate?
Assets belonging to an individual when he or she dies can be titled in a variety of ways. The characterization of the assets will determine if the assets will need to be included in probate or if it will be excluded from probate administration.
Decedent’s Name in Probate
All assets that are titled in the name of the decedent only will be included as a probate asset. For example, if the decedent, Joe Smith, dies leaving a bank account that is titled as “Joe Smith” this account is an estate asset. In order for the bank to release the contents of the account to the heirs or beneficiaries of the estate, the bank will require an order signed by the court that specifically designates who has the authority to collect the funds.
The same rules apply for real property that is titled in the name of the decedent at the time of his passing. By way of example, if Joe Smith dies owning real property and the property is titled as “Joe Smith,” then the real property would be an asset of the estate and county recorder and assessor would need an order signed by the court that designates who is to receive the property or an order that authorizes the sale of the property.
Most financial accounts allow for the owner of the account to list or designate a pay on death beneficiary (POD) or a transfer upon death beneficiary (TOD). If the designation is completed prior to the decedent’s death and while the decedent has his mental capacity1)among other conditions, then the asset will pass to the beneficiaries listed and will not be subject to the probate estate or the court’s jurisdiction.
Jointly owed accounts will become the sole property of the surviving joint owner. Many financial accounts and real property are owned as joint tenants with the decedent’s significant other or a business partner. By operation of law, the survivor of the joint owners will have complete control and ownership of the asset at the time of the decedent’s death. The asset will pass to the survivor and would do so outside of the probate estate.
For example, if Joe Smith owned his home with his wife Jane Smith and the title of the home was Joe Smith and Jane Smith as joint tenants, then at the time of Joe Smith’s passing, Jane Smith would be the sole owner of the property. Joe Smith’s interest in the property would not be subject to the probate estate.
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|1.||↑||among other conditions|