What kind of property can be distributed through a Will?
This week’s podcast broke down the basics of a Last Will and Testament and answered the question, should I have a will. This week we will answer some other common questions about wills, starting with this: What kind of property can I distribute through a will?
The probate court only has jurisdiction to divide property that is known as probate property. Some of a decedent’s property will likely be a probate asset. But there may also be a significant amount of the estate that is known as non-probate property.
Probate property is property that is solely owned by the decedent, or that is jointly owned but there is no right of survivorship. For example, if the decedent owned a car in his name, held a bank account solely in his name, or owned real estate as tenants in common with someone else. That property would be probate property.
The will – or state law if there is no will – will determine exactly how the probate property will be distributed. For example, the car that was solely owned by the decedent will be transferred to whomever he specified in his will.
In contrast, non-probate property is property that is not subject to probate court jurisdiction and is not transferable by will. Examples of non-probate property include jointly owned real estate where there is a right of survivorship. This is the default in some states for married spouses who purchase real estate together. Most life insurance policies, 401(k) plans or Individual Retirement Accounts have beneficiaries listed so those assets would not be transferable according to the will.
Since the will cannot transfer non-probate property it does not matter if the will states something different from the way the property is currently jointly owned. For example, Husband dies and has a retirement account worth $100,000.00. In his will he states that it is his desire for his brother to receive his retirement account. But, he never changed his beneficiary for that account. The beneficiary on the account is his wife. Since the retirement account is a non-probate asset it passes directly, outside of probate and the wife will take the asset free from any claim of the brother.