When you sign your last will and testament, you are deciding how to dispose of your probate estate after your death. But in many cases, few or no probate assets may exist. Few or no probate assets is not the same as having few or no assets. Not all property that you own–or have an ownership interest in–is probate asset.
Broadly speaking, a probate asset is property you own solely in your own name and that will not be transferred by non-probate means after your death. For example, if you own a car and only your name is on the title, the car is a probate asset. But if you and your spouse own the car with survivorship, then the car is not a probate asset. However, if you and another person, perhaps a sibling, inherited real estate from a parent and co-own it as “tenants in common,” your interest in the property is a probate asset, since legally you are the sole owner of your share.
Probate vs. Non-Probate Assets
In practice, it is generally easier to understand what property is probate property by identifying excluded property.
Property that is not actually titled in your name is non-probate property. Assets in your revocable living trust are excluded from your probate estate because even though you can retain control of the trust during your lifetime, it is you as the “trustee” who owns the property rather than you individually. When you pass away, your successor trustee simply assumes control.
Other assets, such as life insurance and retirement accounts, traditionally rely on beneficiary designations rather than probate to transfer ownership when the owner dies. In fact, the companies that administer these assets require you to name at least one beneficiary who will automatically receive ownership of the asset upon proof of your death. The asset itself never goes through probate because the contract makes it the beneficiary’s property.
Other types of assets that can be transferred in a similar manner to beneficiary designations. You can name a “payable-on-death” or “transfer-on-death” beneficiary for your bank accounts, stocks, vehicles, and even real estate in Virginia. Such designations effectively remove the asset from your probate estate, as once again they automatically pass to the beneficiary upon your death without the need for formal administration although in some circumstances a creditor can require them to be used to pay your debts if your probate assets are insufficient to do so.
Beneficiary designations do not make the beneficiary your “co-owner” during your lifetime. You are free to change beneficiary designations as often as you wish. The beneficiary has no ownership rights in the asset until after you have died.
Contact Probate Estate Attorneys Today
If you have additional questions about Virginia’s probate process, and the best way to help protect your own assets now and after your death, please call Promise Law today at (757) 690-2470 or contact us here to enroll in one of our free educational workshops by clicking here.