How will my assets be distributed after my death?
Accounting for the differences in asset types can avoid estate complications.
People who are unfamiliar with how estates are distributed after death often assume that the will controls everything. However, this is not correct. In reality, there are two types of assets in estates-probate and non-probate. Each asset class is distributed differently after death. Because of the differences between the two, it is important to have a basic knowledge of the distribution rules of each in order to ensure that your wishes are carried out.
As the name suggests, probate assets must first clear probate before they may be distributed. During the probate process, the court examines the decedent’s will to ensure that it is valid. In addition, the court appoints a personal representative to carry out important estate functions such as paying bills and taxes, locating the heirs and managing the estate’s assets.
Once the probate process has been completed, the probate assets are distributed according to the provisions of the will. In cases where the decedent did not make a will, the probate assets are distributed according to Florida’s intestacy statutes. These laws serve as the “default” choices regarding distribution for those without a will.
In general, probate assets include property that is titled in the decedent’s name only. This may include real property (that is not owned with someone else), stock and investments, motor vehicles, bank accounts, and personal belongings.
Conversely, non-probate assets do not have to go through the probate process prior to distribution. Instead, they are immediately distributed upon the decedent’s death. Generally, these assets include property that is subject to a beneficiary designation. Common non-probate assets include:
• Jointly-owned real estate
• Life insurance
• Assets in a trust
• Joint bank accounts
• Pensions, annuities or retirement plans
• Any other assets or account with a payable-on-death, transfer-on-death or other designation
Non-probate assets are always distributed according to their beneficiary designations, even if the will says otherwise. As a result, if the non-probate assets are not coordinated with the rest of the estate plan, it can cause problems. Because of this, it is necessary to regularly update the estate plan after every major occurrence in life (e.g. marriages, deaths of heirs, births or divorces). Otherwise, it is possible that unintended results can occur, such as leaving life insurance proceeds to an ex-spouse, for example.
To ensure that everything is in order, it is wise to periodically check in with an experienced estate planning attorney. An attorney can review your estate plan, ensure that it is in line with your wishes, and make any adjustments that are necessary.