When somebody dies, you might find yourself having to navigate the process of probate, which can be overwhelming, especially at a time of heightened emotions. Probate is a legal procedure that helps to ensure that a deceased person’s debts are settled and that their assets are appropriately distributed, either by following the will or by law.
When it comes to probate, there are two types of assets. These are probate assets and non-probate assets. Understanding the difference between the two can help give you a clearer picture of what things are included in probate and which are not.
Let’s take a closer look at the typical types of assets that may be in a person’s estate and whether they are probate or non-probate assets. We will also explore how these two types of assets differ from each other.
What are probate assets?
Probate assets are the possessions, cash, and property that are included in the probate process. Typically, these assets are solely owned by the deceased and will not automatically pass over to a joint owner or beneficiary. Common probate assets include:
- Solely owned property or land (domestic or commercial)
- Bank and building society accounts in the deceased sole name
- Investments
- Personal possessions
- Digital assets such as cryptocurrency
- Insurance policies that name the estate as the beneficiary
- Debts owed to the deceased
- Business interests
Examples of non-probate assets
One of the significant differences between probate and non-probate assets is who owns them. Probate assets are those that are solely owned by the person who has passed away. Whereas, non-probate assets are things that were co-owned with another person or have a named beneficiary.
For example, this could be a life insurance policy with a named beneficiary in its documentation. This leads to the next key difference: how they are transferred. Probate assets cannot be transferred to another person or beneficiary until a grant of probate is obtained. This can make the process longer and more complicated.
However, non-probate assets are jointly owned or already have a designated beneficiary, so they do not need to be included in probate. Co-owners or beneficiaries will usually need a copy of the deceased’s death certificate to begin the transfer process.
Finally, probate assets are part of the official estate, which means they go through legal processes and are included in inheritance tax calculations. Non-probate assets, while they avoid probate, still need to be reported when calculating inheritance tax but aren’t part of the formal probate process.
If a loved one has recently died and you’re not sure where to begin with probate, then Hughes Probate is here to help. The probate process might seem overwhelming and complex, but it doesn’t have to be if you have the right support.
Please contact Julie to arrange a free initial consultation.
