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What is Probate and What are Probate Assets?
I was thinking about the course of conversations with many estate planning clients. One common theme occurred to me I spend some amount of time with every client explaining the basics of probate. As lawyers, we admittedly can get bogged down in the intricacies of legal nuances, but most of the time, the basics are the most helpful. So, that's where we're going today.
What is Probate?
Probate is the legal process by which final claims against the decedent are settled and probate assets of a decedent are distributed. As with any simplified definition, it is over-simplified, but it is a good starting point. Probate is handled by the county in Tennessee wherein the decedent lived when he or she passed away. Within that county, a specific court is designated to handle probate matters. The name of the court varies slightly from county to county. Ultimately though, all of the probate courts in Tennessee follow the same Tennessee law so the process is similar in each court. Every probate will be slightly different because the facts will be different for each decedent. Was there a Will? Was there a Trust? Are minors involved? Are there any creditors of the estate? There are many variations on what probate can specifically entail.
What is a Probate Asset?
The definition of a "probate asset" is important for our understanding of the probate process since only probate assets are distributed through probate. (Yes, I used "probate" four times in one sentence.) In the most basic definition, a probate asset is something that is owned individually by the decedent. However, this definition has quite a few exceptions and additions. It may be easier to define a "probate asset" by focusing on what it is not (the "non-probate assets").
It is not something that has a legally designated beneficiary. The most common example of this is life insurance. Life insurance usually has a designated beneficiary to whom the money will flow almost immediately upon a person's death. The probate court does not consider this transfer except to note the amount of the life insurance that was passed. One lesser known example is a payable on death (POD) beneficiary on a basic checking or savings account. Most of the time, you can designate a POD beneficiary on your bank accounts that you own. This will allow the bank to immediately transfer that account to your beneficiary upon your death, removing the bank account from probate.
Assets that are owned jointly by spouses are also typically a non-probate asset. Here, homes are commonly found. A home that was bought by a married couple will automatically belong to the surviving spouse, individually. A word of caution here if you are married be sure that both your name and your spouse's name are on the Deed! If the property is only titled in one spouse's name, this does not apply and the home would be a probate asset.
Hopefully this is a helpful (brief) explanation of probate and probate assets. We would be glad to walk you through the process of discussing what probate would look like for your loved ones and strategize on how to ease that process. Quite a few assets can be removed from your probate estate by simple changes. We would be honored to show you how.
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