What is a Probate Asset?
The notion of a “probate asset” as opposed to a non-probate asset causes a lot of confusion to those who are new to the probate process in Florida. The first step in identifying a probate asset is to determine how the decedent’s property was titled. If the property was titled in the decedent’s own name, it is a probate asset. For example, if John Doe had a bank account in titled solely in his own name, the money would become a probate asset upon his death. However if the bank account was jointly titled (joint owners) in the names of John and Jane Doe, the money in the account would become Jane’s immediately upon John’s death. Therefore it would be a non-probate asset. Only “ probate assets” are to be distributed according to John Doe’s Will. If John’s Will left his estate to a nephew, the money in the jointly titled bank account referenced above would not become part of the nephew’s inheritance.
Joint titles or payable upon death titles are known as beneficiary designations. These are also known as will substitutes. For instance if all the assets owned by a married decedent, were jointly titled with their spouse, there would be no need to open a probate in Florida.
If however, the payable on death designation of John Doe, was to “the estate of John Doe” then the assets would pass to the estate and become a probate asset. For example if John had signed a beneficiary designation on his 401K plan at work, naming his estate as his beneficiary as opposed to an individual, than the 401K plan would be a “probate asset” and distributed per the instructions in John’s will.
In other words the titling of assets becomes very important in a person’s estate plan. This applies to the titling of real property as well. Terms of art are important. Let’s take the example of John’s rental property. If the deed reflected the real estate was owned by him solely, then the real estate would be a probate asset and go to the beneficiaries in his will. If John owned the real estate as “tenants in common” with another person, then John’s beneficiary would obtain a one half interest in the property. However if John owned the real estate with another individual and was designated as “joint tenants with the right of survivorship” then the property would be wholly owned by the the joint tenant upon John’s death. A life insurance policy, contract of annuity, IRA, 401K, bank or securities account that is payable to an individual on death is not a probate asset.
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