Probate

Probate Assets

Learn what happens when your assets go through probate, and ways to keep your assets out of probate court.

Probate assets are assets that have to go through probate. You can avoid having any of your assets become probate assets by funding. This means that all of your valuable assets have been transferred into a living trust. Assets include bank accounts, stocks, bonds, property and sometimes other possessions with titles, like vehicles. Doing this requires paperwork and often a deed transfer.

Here is a list of assets that, if not transferred into your trust, will become probate assets:

Real Estate

Surprisingly, an oversight in the process to transfer your home into your living trust is by far the most common mistake that attorneys make. To facilitate this process, you’ll need to change title on the property to reflect your living trust name. Ask your attorney to create a quit claim deed with your name as the trustee and the trust name. In most states, the quit claim deed must be filed with your county recorders office. While this may seem like a lot of work, it is better than your house becoming a probate asset.

Beware if you refinance! If your home has already been transferred to your trust, it may have to come out if you refinance. Your new lender will be happy to create the deed to get the home out of the trust but they seldom create one to put it back in, making it a probate asset. You need to talk with your lender or attorney to make sure this second transfer takes place and that the house goes back into the trust name after the refinance.

Out-of-state real estate

This is the same procedure you need to follow when making sure your home is transferred to your living trust, but is usually more complicated. You need to work with your attorney to transfer out-of-state property to the trust.

Every state’s laws vary, so the paperwork and filing entities for your out-of-state property will likely be different. You can call the recorder’s office in the appropriate county to have the proper forms sent to you, or better yet, spend a little money and have a title company close to your out-of-state property send you the appropriate forms. Again, the work is worth it if it can keep your property from becoming a probate asset.

Savings, checking accounts, CDs

These can easily become probate assets, so all of your non-qualified accounts need to be transferred to your living trust. Inform your bank that you have a trust and want to transfer your accounts to it. They’ll provide paperwork for you to complete.

This information is usually limited to the name of trust, names of the trustees and the names of the successor trustees. You can provide the certification document to your bankers to help facilitate the transfer.

Credit Unions

Your credit union accounts need to be transferred to your living trust or they will become probate assets. Typically, you follow the same procedure that you would if you were dealing with a bank. The only difference is all of your trustees may need to be members of the credit union. This usually isn’t a problem unless your trustees are not immediate family members. If not, ask your credit union if you can complete a POD (payment on death) to your trust for your credit union accounts.

Safety deposit boxes

Transferring your safety deposit boxes is usually just a routine matter that you can conduct with your bank. It normally requires a simple change authorization form, changing access to the trust and its trustees. This can prevent the possessions in your safety deposit boxes from becoming probate assets.

Stocks, bonds, mutual funds in a brokerage account (non-IRA)

Assigning the transfer of your portfolio to your trust is also a simple procedure you can do yourself that will prevent them from becoming probate assets.

Personal Property

Most personal property can be covered with a simple “personal property assignment” form that states that all personal items are to be owned by the trust. This can keep your personal property from becoming probate assets without you having to name every little item. Most forms will simply state that all of the following items are to be transferred to the trust:

Automobiles

Household Furnishings

Clothing

Jewelry

Contents of Safe Deposit Box

China

Silverware

Appliances

Books

Computers

Pictures

If you have one or two items that are very valuable, your attorney may create a specific assignment form for each. For many individuals, even though the monetary value of their personal property is insignificant, personal property constitutes their most sentimental assets, family mementos, and the artifacts that define who we are and what is meaningful. This are the things that people are usually most protective of and do not want to become probate assets.

By transferring all of the above into a living trust, you prevent any of these things from becoming probate assets. This saves a lot of time and money for your family, and ensures that your assets go to the people you want them to.