Estate administration involves making important decisions about what happens to the assets of a loved one after their passing. Typically, someone is designated in a will to administer the estate; this person is sometimes called an executor, a personal representative or an administrator. If the named individual cannot fulfill this role, or if there is no will, the court may appoint someone.
To effectively manage an estate plan, it’s important to distinguish between probate and non-probate assets. Estate administration handles these assets differently, as in jurisdictions such as New York. Given this, it’s essential to know these asset types for proper estate management.
Assets that go through probate
Probate property refers to assets that are subject to the probate process. Probate is a process where the court validates the deceased person’s will and oversees the distribution of their assets. These assets are items a person owns solely at their time of passing. So, the executor must distribute these assets to the heirs after they undergo the probate process.
Examples of probate property include solely owned assets such as:
- Real estate
- Bank accounts
- Investments
- Personal belongings
In New York, the Surrogate’s Court manages probate. This court oversees the distribution of assets as per the deceased’s will. If no will exists, intestacy state laws determine the distribution. While the provided examples are typical probate assets, this is not an exhaustive list. Any property specified in the deceased person’s will can undergo probate.
Assets that are excluded from probate
Non-probate assets, also known as non-probate property, bypass the probate process. Beneficiaries can receive non-probate assets directly without the time and cost of probate because these assets have a built-in beneficiary mechanism. Common examples of these assets include:
- Jointly held property
- Life insurance policies
- Retirement accounts
- Payable/transfer on death accounts
- Assets in a trust
Understanding how probate and non-probate assets differ is crucial for managing an estate. This knowledge can lessen the time and costs associated with probate. Regardless of the type of asset, executors or administrators must focus on what’s best for the beneficiaries. While estate administration can be challenging, it’s possible to ensure that assets are distributed according to the decedent’s wishes with the right guidance.