A last will and testament or a revocable living trust can help ensure that your assets are distributed the way you want them to be after you pass on. It can also help you to identify a guardian for your child and choose someone to oversee the distribution of your estate after you're gone.
Yet you may be wondering what probate is, as well as the difference between probate and non-probate assets.
Let's take a look.
What is Probate?
Probate is the process by which a last will and testament is legally verified in court. It involves identifying and distributing the deceased person's property, getting the property appraised, and paying off debts and taxes. Probate also means distributing your property as your will directs. But your will be subject to the judges interpretation of it.
Probate usually involves court appearances by estate lawyers. They will get paid from the estate of the deceased.
After you pass on, the person you named as your will executor will file papers with a local court. They will supply proof of the validity of your will and list your property, debts, and beneficiaries. Next, anyone who is a relative or creditor will be notified of your death.
Not all of the property in your will is subject to probate. Anything that is passed on through a living trust or joint tenancy deed, for example, will not go through probate.
Many prefer having a living trust in addition to or in place of a will in order to avoid probate. This is because the probate process takes a bit longer and makes your records public.
The probate process in Arizona usually takes between 6 months and 1 year, but in extreme cases we have seen if last for up to 3 years. Doing you best to avoid probate is always a good strategy.
What Are Probate Assets?
Probate assets are any that are owned solely by you. They are distributed to your beneficiaries by the court.
Probate assets can include personal property, including cars, jewelry, or furniture. It can also include any bank accounts that are in your name only.
Your probate assets can also be a life insurance policy or brokerage account in which either you or your estate are the beneficiary. In addition, it could be any interest you have in a corporation or partnership.
What Are Non-Probate Assets?
Non-probate assets, by contrast, are those that can bypass the court and get passed on directly to your beneficiaries. These include any property that is held by you in its entirety or as a joint tenant. It could also be anything in joint bank accounts or property held in trust.
In addition, non-probate assets include life insurance or brokerage accounts that list someone other than you as the beneficiary. It could also be your retirement account.
Some people try to avoid putting their loved ones through probate by having only non-probate assets when they pass. That is a strategy when assets are scarce and may not meet the threshold for probate.
Probate Vs Non-Probate
If you're drawing up your estate plans, it's important to know the difference between probate vs non-probate. Avoiding probate can help your relatives avoid a costly and time-consuming enterprise after you pass. It can also help keep your family together.
Don't stop getting smart about your estate plans. For help with creating the best estate planning that you can have call Citadel Law Firm. Contact us today at (480)565-8020 or click here to schedule your free estate planning consultation.