What Are Non-Probate Assets?
A common goal of estate planning is to reduce the amount of probate assets in a person’s estate in order to minimize or even eliminating probate proceedings. This helps save costs in terms of taxes and attorneys’ fees, as well as the time necessary to probate and close an estate. By converting as many of your assets to non-probate assets, you may be able to save your surviving family members a considerable amount of time and money.
Defining Non-Probate Assets
A non-probate asset is any type of asset that automatically transfers to another person upon your death, without the need for going through probate. These assets do not belong to any estate that is filed for probate, and as a result, they are not subject to inheritance taxes. Essentially, these assets do not belong to the individual upon his or her death; rather, the assets belong to the person who is named as the beneficiary or joint owner of the asset.
Types of Non-Probate Assets
Some common examples of non-probate assets include the following:
Life insurance policies – The proceeds of life insurance policies automatically go to the person whom you have designated as a beneficiary for the policy. The life insurance money would directly pass to the named beneficiary, without ever entering your estate or becoming subject to probate.
Retirement accounts – Like life insurance policies, the proceeds of a retirement account go directly to the beneficiary or beneficiaries whom you have named for the account.
Certain bank accounts – Bank and investment accounts can have designated beneficiaries if they are structured as payable on death accounts. Under South Carolina law, the proceeds of these accounts also would pass directly to the beneficiary upon your death.
Trusts – All of the assets that you have transferred to a trust during your life legally belong to the trust, not you, at the time of your death. The assets automatically to the beneficiaries that you have named in the trust when you pass away, without any need for probate proceedings as to these assets.
Jointly held property with rights of Survivorship – Assets that are titled jointly in two or more persons’ names are non-probate assets. If one owner dies, the other owners automatically have ownership of the property. Common types of jointly held property in South Carolina include real estate, boats, vehicles, and anything else that requires a title for ownership.
Protecting Non-Probate Assets
There is one word of caution for those who primarily own non-probate assets. As time goes on and major life changes occurs, including divorces, births, and deaths, there is likely to be a need to change beneficiaries at some point. If you fail to change beneficiaries for these assets, and the named beneficiaries are deceased, for instance, then the property will convert to probate property, thus defeating the original purpose of making it non-probate property.
Contact Your Aiken Estate Planning Lawyers for Assistance Today
While no one likes to contemplate death, the reality is that death is inevitable and can result in very high expenses for your loved ones, in addition to their grief. Take the steps necessary to minimize these burdens for your family and engage in comprehensive estate planning that will only benefit your family. Call us today at the Surasky Law Firm, LLC at (803) 593-3912 and set up a consultation with our South Carolina estate planning attorneys.
