Which Of The Following Assets Do Not Go Through Probate?

Discover which assets bypass probate, saving you time and money. Understand Utah laws, real-life examples, and tips for smooth estate planning. Read more now!

Which Of The Following Assets Do Not Go Through Probate?

Navigating the intricacies of probate law can feel overwhelming, whether you’re facing it due to a loved one’s passing or planning your own estate. Knowing which assets bypass probate can save you time, money, and stress. In this article, you’ll get a friendly walkthrough of probate basics, specific Utah laws, real-world applications, and practical advice you can use today.

Understanding Probate in Utah

First, it’s essential to grasp what probate is. Probate is the legal process of verifying and executing a will, ensuring debts are paid, and distributing the remaining assets to beneficiaries. This process is overseen by Utah’s probate courts, typically located in the county where the deceased resided. For instance, if your loved one lived in Salt Lake County, the probate proceedings would take place there.

The Utah Code, specifically Title 75 known as “Utah Uniform Probate Code,” outlines the state’s probate laws. Probate can be a lengthy and costly process, so understanding which assets do not go through probate can be immensely beneficial.

Assets That Bypass Probate

Not all assets have to go through probate in Utah. Some can be transferred directly to beneficiaries upon death, avoiding the probate process altogether. Here’s a list of assets that typically do not go through probate:

1. Jointly Held Property

If you own property jointly with someone else, that property can bypass probate. Joint tenancy with the right of survivorship ensures the other tenant’s interest passes directly to the surviving joint tenant without probate. According to Utah Code § 75–2–804, any joint tenant arrangement will automatically transfer to the surviving joint tenants.

2. Beneficiary Designations

Certain accounts allow you to designate beneficiaries. Upon your death, these accounts transfer directly to the named beneficiaries, bypassing the probate process.

• Life Insurance Policies: These policies typically have designated beneficiaries who will receive the policy’s proceeds without going through probate.
• Retirement Accounts: Accounts like IRAs, 401(k)s, and pensions are also payable to designated beneficiaries outside of the probate process.
• Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts: Bank and brokerage accounts can have POD or TOD designations, allowing them to bypass probate.

3. Trusts

When you place assets into a trust, those assets do not go through probate. A living trust, for example, allows you to remain in control of your assets while you are alive, and those assets transfer to your beneficiaries upon your death without probate. Utah Code § 75–7–101 provides the legal framework for creating and managing trusts in the state.

4. Real Estate with Transfer on Death Deed

In Utah, you can make use of a Transfer on Death Deed (Uniform Real Property Transfer on Death Act, Utah Code § 75–6–401). This deed allows you to name a beneficiary who will inherit the property upon your death without going through probate.

5. Small Estates

Under Utah law, if the total value of the deceased person’s probate estate (excluding non-probate transfers) is $100,000 or less and doesn’t include real estate, the estate may qualify for a simplified probate process known as a small estate affidavit (Utah Code § 75–3–802). This can bypass formal probate.

Real-World Scenarios

Example 1: Life Insurance in Salt Lake City

Imagine you live in Salt Lake City and have a life insurance policy worth $500,000. You’ve named your spouse as the beneficiary. Upon your passing, the life insurance company pays the $500,000 directly to your spouse without going through probate, providing immediate financial support.

Example 2: Joint Tenancy in Provo

Consider a scenario where you own a house in Provo jointly with your sibling, with the right of survivorship. If you pass away, your interest in the house automatically transfers to your sibling without the need for probate proceedings, ensuring a smooth and swift transition.

Example 3: Living Trust in Ogden

You’ve set up a living trust in Ogden and transferred all your valuable assets, including property and investments, into the trust. Upon your death, the assets held in the trust are distributed to your designated beneficiaries per your trust instructions, entirely skipping the probate process.

Why It Matters

Understanding which assets bypass probate has significant real-life implications.

• Speed and Convenience: Assets that skip probate mean faster distribution to your beneficiaries.
• Cost Savings: Probate can be expensive; avoiding it can save on legal and court fees.
• Privacy: Probate records are public. Non-probate transfers keep matters private.
• Less Stress: Simplifying asset transfer processes can ease the burden on grieving family members.

Common Misconceptions

Misconception 1: All Assets Go Through Probate

Some people believe all assets must go through probate, which isn’t true. Assets like life insurance, retirement accounts, and jointly held property with rights of survivorship often bypass probate.

Misconception 2: A Will Avoids Probate

Many think creating a will avoids probate. While a will directs asset distribution, it still needs to be verified and executed through probate courts.

Misconception 3: Probate Is Always Quick

The reality is probate can take months, even years, especially if disputes arise or if the estate is complex. Avoiding probate can significantly speed up the process.

Misconception 4: Small Estates Don’t Need Probate

Even small estates might need some probate involvement, but Utah’s small estate affidavit can simplify and expedite the process for qualifying estates.

Misconception 5: Probate Is Always Expensive

While probate can be costly, small estates or uncontested wills can sometimes be managed cost-effectively. However, avoiding probate through proper planning is typically the most economical route.

Actionable Insights

• Plan Ahead: The best way to ensure that your assets bypass probate is to plan ahead. Establish trusts, update beneficiary designations, and consider joint ownership where appropriate.
• Consult a Professional: Estate planning can be complex. Consulting with a probate lawyer who understands Utah laws can provide peace of mind and ensure your assets are distributed according to your wishes.
• Keep Records Updated: Life changes such as marriage, divorce, or the birth of a child can affect your beneficiary designations and estate plans. Regularly review and update your plans.

Frequently Asked Questions

1. What happens if an asset doesn’t have a beneficiary designation?

If an asset doesn’t have a designated beneficiary, it typically goes through the probate process and is distributed according to the will or state intestacy laws if there’s no will.

2. Can you change joint tenancy to avoid probate?

Yes, you can change ownership forms to avoid probate. For instance, converting sole ownership to joint tenancy or adding a TOD designation can help bypass probate.

3. Are there special considerations for digital assets?

Digital assets like online accounts or cryptocurrencies require careful planning. You can use a digital estate plan to provide access instructions to your executor or trustee.

4. How can revocable and irrevocable trusts help in avoiding probate?

Both types of trusts can bypass probate. A revocable trust can be altered during your lifetime, whereas an irrevocable trust generally cannot. Upon death, assets in these trusts can be transferred to beneficiaries without probate.

5. Does Utah’s small estate process apply to out-of-state assets?

Utah’s small estate process applies to assets within Utah. If the deceased has assets in another state, those assets may be subject to the probate laws of that state.

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To speak with a probate lawyer, call attorney Jeremy Eveland at (801) 613–1472.

Thank you for reading! Understanding which assets bypass probate can make a significant difference in how efficiently and smoothly an estate is managed. Empower yourself with this knowledge, and take the necessary steps to plan effectively. Jeremy Eveland 8833 S Redwood Rd West Jordan Utah 84088 (801) 613–1472

The information contained in this article is for information purposes only and is not legal advice. For legal advice, hire a competent lawyer in your jurisdiction.