Probate assets include any property or assets owned by a decedent that must pass through the probate process. The counterpart to probate assets is non probate assets: a decedent’s property or assets that are not part of the estate and thus do not pass through the probate process. One of the reasons why the probate process is public and takes time is to provide individuals and creditors the opportunity to contest any claims to the estate. What if a mistake was possibly made, and a piece of property got left out of the estate? This guide explores whether you can contest non probate assets, and how to go about challenging something you believe to be wrong.
Can you contest non probate assets?
Yes, non probate assets can be contested. One of the reasons that the probate process can take a long time is because the courts are providing individuals and entities to make any claims against the estate. This is also true for any claims against assets that aren’t included in the estate, and are thus non probate assets.
When an individual passes away, their assets and property go into two buckets: probate assets and non probate assets. Probate assets are assets and property that are a part of their estate and thus must pass through the probate process. Non probate assets are any assets or property that are not included in the estate. Examples include assets that were transferred into a Trust, financial or contractual accounts that are made payable to a beneficiary, as well as property that is jointly owned. The latter type of property often has a right of survivorship, meaning that they transfer automatically to the surviving joint owner.
However, there are instances when non probate assets can get overlooked. For instance, the person preparing their Last Will and Testament might overlook these assets, or attempt to make a statement about a non probate asset in their Will.
To minimize potential instances of conflict, the individual preparing their Will should be careful not to mix up probate and non probate assets. This is because non probate property typically have their own specific procedures for how they are passed on to a beneficiary. When these procedures are ignored, it can result in someone needing to contest that asset later on.
Here’s an example. Let’s say an individual is preparing their Will, and they arrange to transfer their two pieces of real estate into a Trust. Here, the plan is to remove the real estate from their estate so that they don’t have to go through the probate process. Unfortunately, this individual forgets to properly record new deeds that transfer these two pieces of real estate to the Trust itself. He passes away, and the Trustee of the Trust figures out that the transfer of the properties were not effective and are still part of the decedent’s estate. Here, they would need to contest the property.
This is just one example of how non probate assets, or assets that were intended to be non probate assets, may be contested.
How can I challenge non probate assets?
Non probate assets are typically arranged by the decedent to pass outside of the probate process. However, what if these assets shouldn’t have been transferred? Here, a party can seek to challenge the transfer if they have proper grounds to do so.
For instance, a party can challenge a deceased person’s Last Will or Testament if they believe that the decedent was under undue influence or weren’t fully competent at the time of the execution of the Will. On similar grounds, a party can challenge the transfer for non probate assets.
Note that the process of challenging non probate assets can look different from their probate asset counterparts. Mentioned earlier, non probate assets typically have individual sets of policies and procedures for how they should be transferred. For instance, the transfer of a piece of real estate depends on the type of deed and ownership structure. A financial institution’s policy for how a retirement account is passed to a named beneficiary is also unique. These assets may be subject to their own set of statutes and procedures, and they may also necessitate different standards of proof.
How can I avoid having non probate assets?
The concept of non probate assets may seem like a headache at first, but when handled correctly, can be an asset to your Estate Plan. Remember, a non probate asset is simply any asset or property that isn’t part of your estate. There are many types of assets that can be excluded from your estate, such as assets transferred into a Trust, gifts made during your lifetime, and assets that are transferred via a survivorship mechanism. Because probate can be lengthy and costly, many individuals actually find it advantageous to have as many non probate assets as possible.
Instead, the question you should really be asking is what you can do to avoid creating conflicts and discrepancies within your estate plan. Common mistakes include forgetting about certain assets, or writing statements in your Will about assets when they should be treated as non probate assets. When such mistakes are made, it may become necessary for an heir or beneficiary to challenge a claim in court.
The best way to avoid such circumstances is to be diligent and detailed in the construction of your Estate Plan so that there are no gaps or oversights. Navigating the estate planning process alone can be confusing, so partnering up with a third party can make your life much easier and help you feel more confident in the process! Here at Trust & Will, we’re here to help you keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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