Which Assets Must Go Through Probate?

When it comes to estate planning, one of the most common concerns is how assets will be distributed after someone passes away. Probate can seem like an overwhelming task, but understanding which assets are subject to probate can help ease the process for both the deceased’s family and the beneficiaries.

As an experienced probate attorney in California, I often field questions about probate and which assets must go through this legal process. My firm, Law Offices of Lawrence H. Nemirow, is located in Los Alamitos, California.

Here, I’ll break down which assets must go through probate and which may be excluded. I’ll also cover some of the potential ways to avoid probate and provide knowledge about how I can assist in managing the probate process.

What Is Probate?

Before getting into which assets are subject to probate, it’s important to first define what probate is. Probate is the legal process through which a court validates a will and distributes the decedent’s assets according to their wishes. 

If there’s no will, the court follows California’s laws of intestate succession to determine how assets will be distributed. The probate process can be time-consuming, often taking several months, and can involve court fees, attorney’s fees, and other costs.

Some assets, however, aren’t subject to probate. These assets typically pass outside of the probate process, either because they’re automatically transferred to a beneficiary or because they’re held in a way that avoids probate altogether.

Assets That Must Go Through Probate

There are several categories of assets that will generally need to go through probate. These assets are typically those that are solely owned by the decedent and don’t have a designated beneficiary or an automatic transfer mechanism in place. Let’s take a closer look at some of these assets.

Solely Owned Real Estate

Real estate that’s solely owned by the decedent will usually need to go through probate. This includes any property that isn’t jointly owned or doesn’t have a designated beneficiary listed. For example, if someone owns a home in their name alone and hasn’t made arrangements for it to transfer to a specific person upon their death, it will likely need to go through probate.

If you’re a surviving family member or beneficiary, it’s essential to work with a probate attorney to make sure that the property is transferred according to the deceased person’s wishes. Depending on the value of the property and the specifics of the situation, the court may require that the property be sold to settle debts or to distribute the proceeds to beneficiaries.

Personal Property

Personal property is another category of assets that usually go through probate if not specifically addressed in a trust or will. This can include:

• Jewelry

• Clothing

• Collectibles

• Furniture

• And more

If the decedent owned valuable personal property and didn’t designate beneficiaries or take steps to transfer these items before their death, they would likely be included in the probate process.

Even if a will exists, it’s important that the decedent’s personal property is clearly outlined in that will. Without clear direction, a probate attorney will have to work with the court to determine how these assets are distributed.

Bank Accounts and Financial Accounts Without Beneficiaries

Bank accounts, investment accounts, and other financial accounts that don’t have designated beneficiaries or payable-on-death (POD) instructions will generally need to go through probate. For example, if a person holds a savings account or a certificate of deposit in their name alone, and hasn’t named a beneficiary, the account will go through the probate process.

However, if the account includes a beneficiary designation, such as a joint account with rights of survivorship or a payable-on-death account, that asset will likely avoid probate, as it will automatically transfer to the named beneficiary upon the decedent’s death.

Business Interests

For individuals who own a business, their business interests will often be subject to probate if they’re solely owned and not transferred to a trust or a designated beneficiary. This can include sole proprietorships or shares in a partnership or corporation that aren’t assigned to someone else in a will or trust.

The transfer of business interests is typically a more involved process, especially if the business has significant value. This is an area where it’s crucial to consult with a probate attorney to help determine how to handle the distribution of these assets in accordance with the decedent’s wishes and to avoid potential complications.

Tangible Property That Isn’t Included in a Trust or Will

Tangible property such as artwork, vehicles, and equipment will also likely need to go through probate if the decedent didn’t address it in their will or trust. For example, a car that’s solely owned by the decedent will need to be transferred through probate if the car wasn’t added to a living trust or assigned to a beneficiary.

When it comes to tangible property, it’s essential that the decedent’s intentions are clearly laid out in the will. If there’s any uncertainty about the ownership or distribution of tangible property, it may delay the probate process or result in disputes between beneficiaries.

Retirement Accounts Without Beneficiaries

Retirement accounts like IRAs and 401(k)s are often set up with designated beneficiaries, allowing the account to pass directly to the named individuals without going through probate. However, if a retirement account doesn’t have a beneficiary designation or if the named beneficiary is no longer alive, the account will need to go through probate.

Retirement accounts can be tricky when it comes to estate planning, so it’s always wise to consult with a probate attorney or estate planner to make sure the accounts are properly managed and that beneficiaries are updated regularly.

How to Avoid Probate

While probate is necessary for certain types of assets, there are several strategies that can be used to avoid the process altogether. Avoiding probate can save time and money and reduce the stress that often comes with the legal process. Here are some ways to bypass probate for certain assets.

Establish a Trust

One of the most effective ways to avoid probate is by setting up a revocable living trust. When assets are placed in a trust, they’re technically owned by the trust rather than the individual, meaning they don’t go through probate when the individual dies. 

Trusts can hold a wide range of assets, including real estate, bank accounts, and business interests, making them a comprehensive tool for estate planning. As a probate attorney, we often advise clients to create a living trust as part of their estate planning, especially if they want to avoid probate and maintain privacy.

Joint Ownership

Another way to avoid probate is by owning property jointly with another person, especially with the right of survivorship. In this case, when one owner passes away, the property automatically transfers to the surviving owner. This is common for married couples, who may own real estate or bank accounts jointly.

However, it’s important to note that joint ownership doesn’t work in all cases, and it may not be the best solution for everyone. As a probate attorney, we can help you determine whether joint ownership is appropriate for your specific situation.

Beneficiary Designations

Many assets, such as life insurance policies, retirement accounts, and certain bank accounts, allow the account holder to designate a beneficiary. It’s crucial to update beneficiary designations regularly to reflect changes in life circumstances, such as marriage, divorce, or the birth of children.

Small Estate Procedure

In California, estates that meet certain criteria can qualify for a simplified probate procedure, often referred to as the “small estate procedure.” If the estate is valued below a specific threshold, it may not need to go through full probate, and the heirs can claim assets through a more streamlined process.

A probate attorney can help determine whether the small estate procedure applies and assist with the necessary paperwork to expedite the process.

Get in Touch With an Attorney Today

As a probate attorney in California, I’m here to guide you through the process and make sure that your estate plan is set up to meet your goals. The Law Offices of Lawrence H. Nemirow PC serves Los Alamitos, California, as well as clients throughout Los Angeles County, Orange County, Huntington Beach, Newport Beach, Cerritos, Santa Ana, Anaheim, and Long Beach. Contact my firm today.