It is extremely important to understand the difference between probate and non-probate assets. Probate refers to the process of how a court determines how to distribute your property after you pass away. Probate assets are distributed to family members by the court, while non-probate assets are assets that go directly to your beneficiaries, bypassing the court process.
In the probate process, you must file a will and appoint and executor, collect assets, pay bills, file taxes, distribute property and file the final account. Since the probate process can be time-consuming and expensive, people often try to avoid it and have non-probate assets.
Probate assets are any assets owned only by the decedent. This can include real property, personal property, bank accounts, an interest in partnership or any life insurance policy.
Non-probate assets include property held in joint tenancy, bank or broker accounts in joint tenancy, property held in a trust, life insurance listing someone else’s name and retirement accounts.