As you know, probate – or “estate administration,” as it is called in North Carolina – is the process for legally transferring a deceased person’s property and assets to their heirs and beneficiaries. Generally, the court authorizes a personal representative of the deceased person (decedent) to collect all of the assets, pay any remaining debts, file final taxes and distribute the remaining property to heirs.
That said, there are some assets that don’t need to go through estate administration. For example, in North Carolina, real estate is generally not administered through probate unless there is a will saying otherwise, or if the sale of the real estate is necessary to pay off the estate’s debts.
Assets that go through estate administration are called “probate assets,” while those that do not are called “non-probate assets.” Non-probate assets cannot be transferred in probate unless, for some reason, they cannot be successfully transferred to the designated person.
The main category of non-probate assets is those that pass to a beneficiary through the “right of survivorship.” This is relatively common. The right of survivorship simply means that the property automatically passes to a particular beneficiary upon the decedent’s death.
One of the most common features of these assets is that a beneficiary has been designated. Think of a life insurance policy or a retirement account. Similarly, joint bank accounts come with a right of survivorship, meaning that the joint owner automatically becomes the sole owner when their joint account holder dies.
Common examples of non-probate assets include:
- Assets contained in a trust
- Real estate owned in joint tenancy with right of survivorship
- Real estate held by a spouse as tenancy by the entirety
- Life insurance proceeds
- Joint accounts
- Retirement accounts
- Annuities
If you are called upon to administer an estate, you can exclude these non-probate assets from the process and from the estate.
If you have questions about administering an estate or whether a particular asset should be probated, contact an attorney with experience in estate administration.