Non Probate Assets – Often Cause Family Distress


Often Cause Family Distress

By Liz Perry Attorney at Law

It is important for you to identify which of your assets are subject to probate and which are not part of your probate estate. Your will only governs who receives your “probate” assets. The definition of assets not subject to probate includes those assets with regard to which you have a contract with a financial institution, which contract provides who receives the assets on your death.

An example of an asset not subject to probate is your life insurance—assuming you have named a beneficiary. Other assets not subject to probate are IRAs and 401(k)s for which you have designated a beneficiary.

When you opened your bank account and signed the contract on your signature card, you may have agreed as to who receives the balance of your bank account if you die. The same is true when you opened your investment account with your stock brokerage company.

Common language that you see on bank accounts and/or brokerage accounts is “joint tenancy with right of survivorship” or “pay on death.” Both are ways to create assets not subject to probate.

Just because an asset is not subject to probate does not keep it from being part of your taxable estate. Its value, along with the value of your probate assets, will be included in the calculation made in determining if the value of your total assets exceeds the state and federal exemptions from inheritance tax.

Also, certain of your assets not subject to probate will still be liable for any debts that you owe on death.

The biggest problem that I see with nonprobate assets is that people often do not coordinate their will or trust with the beneficiaries they name on their nonprobate assets.

If you have a will that says, “I leave everything to my two children equally”, but you deposit all your savings in a certificate of deposit, for instance, which is in your name and in the name of one of your children as “joint tenants with right of survivorship”, then that child will be presumed to be entitled to everything in the account. You will have no assets to pass under the probate of your will. Your other child will receive nothing.

Your estate plan is only halfway complete when you sign your will. The next step is to make sure that all your nonprobate assets are set up so they pass on your death as you wish for them to do. If you fail to carefully attend to this detail, your failure can cause a lot of strife and hard feelings in your family after you are gone.

Elizabeth A. Perry, a member of the National Academy of Elder Law Attorneys, has been helping Clark County residents with their estate planning needs for over 20 years. Her practice emphasizes wills, trusts, probate and Medicaid planning. You are invited to call her to schedule an appointment or sign up for a class at (360) 816-2485. ©Liz Perry 2015


(The above should not be construed as specific legal advice and is intended for general information purposes only)

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