Do All Assets Pass Through Probate in New York?

You need to understand the difference between these assets so that you can determine proper distribution upon your demise. Without understanding these classes, most of your assets might end up in probate, which means the process will drag on for months on end.

While you might invest your time and efforts to come up with a will that communicates your last wishes, you might end up being frustrated if you overlook non-probate assets as well.

Let us look at the two common types of ownership of a house – full ownership and joint ownership. With the former, it is clear that that you own the house entirely, and when you pass away, an executor that so appointed by you or a law court handles the distribution.

Alternatively, we have a joint tenancy form of ownership, which means that your share automatically goes to your partner when you pass away, and it doesn’t have to pass through probate.

This is property whose ownership cannot be granted to the heir short of going through probate. The property has to go through a court-supervised process that will transfer ownership from to the named beneficiary.

These include:

Individual assets

This is anything that you own, which titled in your name minus any co-owners. These include a bank account, stocks and bonds, vehicles, planes, houses, and business shares.

Tenants in Common

This is the property that you have shares in. this property has your name in it as a tenant in common. You might own a percentage; say 30 percent or even 60 percent depending on the initial decision.

Many people believe that a tenant in common account can only be held for rental property alone – wrong. It also works for financial accounts, automobiles, stocks and bonds, and other fiscal accounts.

You can, however, convert this mode of ownership into a non-probate asset by making it part of a living trust before you pass away. This way, it bypasses the probate process.

Assets Whose Intended Heir has Died

When you have assets with payable-on-death designations, and the intended beneficiary passes away, they are automatically converted into probate assets. These include health and medical benefits; retirement accounts for example 401(k) and IRAs insurance policies.

When all the heirs that have been named in the will pass away before you do, then the property reverts to your estate, and goes through probate.

Assets Not Included in a Trust

Assets included in a living trust avoid probate. You might decide to exclude the assets you have in the trust, which means that the remaining ones are have to go through probate.

These are those assets whose ownership transfers by pact or by law. The will doesn’t control the succession process.Let us look at the different forms of ownership under the joint ownership statutes.

Tenants by Entirety

This form is only for married couples. Assets are transferred to a surviving spouse upon death of her partner. The aim is to protect the mutually-owned assets against creditors of the dead spouse. This means that even if you have debts, the creditors cannot claim the share of the deceased spouse.

Rights of Survivor

Here, the joint owner that survives ends up with the whole estate. In this case, when your co-owner passes away, you end up with a more significant share of the asset in question.

Tenant in Common

Here, you hold a portion of the assets in your name. The part is treated as separate property. This portion that you share usually goes through probate since it is regarded as a separate asset. When you decide to transfer it using a contract or a deed, it can avoid probate.

Contracts

These refer to written agreements that define what the owners will do. A good example is the life insurance policy.

When you decide to start planning your estate, you need to consider the asset categories because they dictate how your property is distributed. Assets owned entirely by a person have to go through probate unless they become a part of a living trust.