Two Categories of Stuff
Did you know that there are two kinds of assets? And – more importantly – did you know that you cannot pass one of them via a will?
A probate asset is property that by law is subject to the claims of creditors or legacies, i.e. an asset that is transferred upon death via a will.
A nonprobate asset is property that passes to a named beneficiary upon the owner’s death according to the terms of some contract or arrangement other than a will. (Black’s Law Dictionary) Nonprobate assets are not part of the probate estate, though they are part of the taxable estate, and a will does not override the terms of the contract or other arrangement. Examples include life insurance contracts, joint property arrangements with right of survivorship, pay-on-death bank accounts, and inter vivos trusts.
When you meet with an estate planning attorney, he or she should review with you which category your assets fall into, as well as the implications for your family. The attorney should help you evaluate whether your current beneficiary designations help accomplish your planning goals, and make recommendations and perhaps even assist you with making changes if needed.