Let us say that your Uncle Joe has died and, in his will, named you as his personal representative. You are wondering which of your uncle’s assets have to go through probate and which do not.
Probate is the legal process used to settle your uncle’s estate. His taxable estate consists of all the assets held in his name when he died, most of which will be subject to probate. However, some of Uncle Joe’s assets may be investment or retirement accounts that have transfer on death, or TOD, designations attached, which means that the proceeds transfer directly to the named beneficiaries.
Assets usually bound for probate
Cash or cash accounts that do not have TOD designations head for probate. Other assets that normally go through the process include real estate, certain items of personal property, assets held as tenants in common and assets that allow for beneficiaries, but for which there were no names.
Assets not normally subject to probate
In addition to retirement or investment accounts that have named beneficiaries, assets usually excluded from the probate process include insurance policy proceeds, trusts and joint ownership assets with right of survivorship.
If there is a conflict between information presented in your uncle’s will and the named beneficiary on a certain account, the latter takes precedence and acts as the recipient of the funds from that account. However, if the beneficiary on an account is missing or otherwise in doubt, the proceeds transfer according to the instructions in the will, in which case the account goes through probate. Uncle Joe may have considered adding alternates to the primary beneficiaries on his retirement and investment accounts. Alternates can receive the funds from such accounts if the first beneficiaries are not available.
Asking for help
As the personal representative for the deceased, you may feel overwhelmed by the task of administering the estate. Remember that you can rely on help from professionals to successfully navigate the legal and accounting aspects of estate administration. After the probate process ends, you can distribute the remaining assets to beneficiaries to complete your job.