Probate & non-probate assets: how are they distributed?

Due to how asset distribution after death is portrayed in movies and popular media, it is easy for many to assume that their wills or trusts are the only things that control how assets are distributed after their deaths. However, in reality, these documents only control some of the deceased's assets. How a person's assets will be distributed after death depends largely on whether the asset in question is a probate or non-probate asset.

Distribution of probate assets

Probate assets, as the name suggests, are assets subject to probate. During probate, the court examines the deceased's will, determines whether it is valid and oversees the distribution of probate assets according to the terms of the will. In cases where the deceased died without a will, the probate process is necessary to ensure that probate assets are distributed according to the intestacy laws of Massachusetts. These laws serve as the default rules of distribution in cases where there was no will or the will was deemed invalid.

Essentially, the will (or intestacy laws, if applicable) controls how probate assets are distributed. What are probate assets? In general, these are assets that are titled solely in the name of the deceased. It may include cars and real property (titled in the deceased's name only), stocks, bank accounts, investments and personal belongings.

Distribution of non-probate assets

Of course, not every asset is a probate asset. A non-probate asset is property that does not have to go through the probate process before it may be distributed. As a result, the terms of the will do not control the distribution of non-probate assets. In general, non-probate assets include property that it jointly owned with someone else or has its own beneficiary designation. Common examples include:

• Annuities

• Pensions

• Assets within a trust

• Life insurance proceeds

• Bank accounts with payable-on-death or transfer-on-death designations

• Retirement accounts

• Real property co-owned with someone else who has right of survivorship

• Most other assets containing a beneficiary designation

Generally speaking, non-probate assets are distributed according to the instructions in their beneficiary designations. This is the case even if the will says otherwise. Because of this fact, it is vital for everyone to periodically update their beneficiary designations after major events in life (i.e. births, deaths, divorces etc.). A failure to do so can result in complications. For example, a person may mistakenly leave significant assets to their ex-spouse, since they failed to update their life insurance and other documents after the divorce. Unfortunately, the heirs of the deceased can do little to correct such errors if they occur.

We say each week on our Legal Talk Show, Legal Ease that if you fail to plan then you plan to fail! At Cohen Law Services, we do not want that to happen to you. To ensure that your estate/action planning documents are regularly updated to reflect the new realities of your life, it is important to check in periodically with the experienced estate planning attorneys at Cohen Law Services, LLC.

Our attorneys can review your documents and ensure that everything is in order to carry out your wishes. We also publish our rates, which is very unusual for most attorneys. We believe that knowledge is power. At Cohen Law Services, we provide you with information that will assist you in advocating for yourselves and your loved ones. Call the professionals at Cohen Law Services today!