Many assets that a person owns have to go through probate after they pass away. This is the official process of distributing those assets, paying back creditors and taking other important steps.
That said, there are some assets that may skip probate entirely. It all depends on what type of assets a person owns and what steps they have taken when creating an estate plan.
1. A payable-on-death account
One example is known as a payable-on-death account. This is a financial account that has been set up with a beneficiary designation. Upon the death of the account owner, the beneficiary takes over, meaning that this account will bypass probate.
There are some advantages to this. Namely, a person may have access to a POD account relatively quickly, even if the rest of the probate process takes months.
2. A life insurance policy
Similarly, when someone buys a life insurance policy, they should also choose a beneficiary. When they pass away, the life insurance provider pays the beneficiary directly. The money does not have to go through probate because it never enters the deceased person’s estate.
There are some exceptions to this rule. Say that someone chooses a beneficiary who passes away before them, and they never update the designation. In that case, the life insurance policy may pay out into their estate, and then it goes through probate with everything else.
Understanding the types of assets that are being passed down is important during probate, and every case will be unique. It is crucial that those involved understand exactly what legal rights they have.