Nonprobate Assets and How They Affect Estate Distribution

Probate is a legal process where the court oversees the distribution of assets and ensures debts and taxes are paid after someone passes away. However, not all assets go through probate. Some pass directly to beneficiaries, and these are sometimes referred to as nonprobate assets.

Having an understanding of what qualifies as a nonprobate asset and how these assets are handled can help families avoid confusion and potential disputes. In some cases, consulting with a Pompano Beach estate litigation lawyer is essential to protect your rights and ensure that the estate is distributed properly.

What Are Nonprobate Assets?

Nonprobate assets are assets that automatically transfer to designated beneficiaries upon the owner’s death, without the need for court involvement. These assets are typically established through contracts or ownership structures that specify who inherits them.

Common examples include:

• Life insurance policies with named beneficiaries
• Retirement accounts, such as IRAs or 401(k)s
• Payable-on-death (POD) or transfer-on-death (TOD) bank and investment accounts
• Jointly owned property with rights of survivorship
• Trust assets held in a revocable or irrevocable trust

Because these assets bypass probate, they can be distributed more quickly but they can also create complications if beneficiaries are unclear or if multiple claims arise.

When Do These Assets Impact the Settling of an Estate?

While nonprobate assets don’t go through the court-supervised probate process, they still play a major role in how an estate is distributed overall. For instance, if the majority of a person’s wealth is held in nonprobate assets, the will may govern only a small portion of their estate. This can sometimes leave certain heirs with less than they expected, or lead to conflicts if the estate’s overall distribution appears unbalanced. They may also significantly affect a surviving spouse’ statutory right to an elective share of the estate.

Another issue is when beneficiary designations are outdated. So, if an individual forgets to update a life insurance policy after a divorce, the proceeds might still go to an ex-spouse, even if the will says otherwise. This kind of conflict often leads to dispute as family members seek clarification or challenge the validity of those designations.

The handling of nonprobate assets depends largely on how they were set up. In most cases, the financial institution or entity managing the asset releases funds directly to the named beneficiary after receiving a death certificate. These transfers typically occur outside the probate court’s oversight.

Arguments are possible if beneficiary designations are missing, conflicting, or improperly executed. Additionally, concerns about whether the deceased was under undue influence may arise. When these disputes occur, courts may become involved to determine rightful ownership.

Estate distribution can be complex, especially when nonprobate assets are involved. Having support from a Pompano Beach estate litigation lawyer ensures your loved one’s wishes are honored and that your rights are fully protected.

Want to learn more about nonprobate assets? If you believe a nonprobate asset is being distributed unfairly, or if you’re unsure whether certain property should be considered part of the probate estate, it’s important to seek guidance from the estate attorneys at Mark R. Manceri, P.A. Schedule a confidential consultation today.