As you think about estate planning, it’s worth noting that not all assets are subject to probate. Special consideration must be made for these types of assets. Here are some of the most common assets not subject to probate in Massachusetts.
1 – Joint Tenancy Real Estate
When you purchase a home with someone else, you must decide how you each own that property. If you are tenants in common, your heirs will receive your share of that asset upon your death. Alternatively, if you are joint tenants, your ownership percentage automatically goes to the remaining owner(s) upon your death. Joint tenancy bypasses probate since it grants the remaining owners right of survivorship without any additional court process.
2 – 401(k) Accounts
401(k) and similar retirement accounts give you the option to list a specific beneficiary. Upon your death, your beneficiaries receive these assets. No court order is necessary given that beneficiaries are already named. Only in cases where no beneficiary is listed would this asset be included in probate proceedings. Additionally, in states like Massachusetts, you must name your spouse as beneficiary of 401(k) accounts. Only if your spouse signs a waiver can you name someone else.
3 – Life Insurance
Life insurance accounts also have designated beneficiaries. Upon receipt of a death certificate, life insurance companies will release funds directly to the named beneficiary. This occurs separate from any court process to settle the estate. Any estate disputes and heir designations do not affect life insurance proceeds. In fact, life insurance beneficiaries need not be related to a decedent at all. As with 401(k), only in cases where no beneficiary exists would this asset be included in probate proceedings.
4 – Trusts
Trusts aren’t an asset in and of itself, but they do have assets assigned to them. Many trusts are designed to avoid probate. However, if you forget to put particular assets into trust, they may still be subject to probate.
Other Assets Not Subject to Probate
There are other assets not subject to probate, such as payable upon death accounts, product licenses, subscription services, digital or social media accounts, etc. When preparing an estate plan, it’s critical to review all assets and to understand which ones are subject to probate and, more importantly, which ones are not.
If your goal is to include all assets in a trust, doing so correctly is key. Be sure to work with a Massachusetts estate planning attorney to protect all of your assets and bequeath them to your desired beneficiaries in a way that protects both of your interests and avoids complications. Contact us to schedule a free estate planning consultation to discuss your assets and other special circumstances.