Define: Nonprobate Asset

A nonprobate asset is any property or asset that does not need to go through the probate process upon the owner’s death. These assets typically pass directly to the designated beneficiary or joint owner.

Common examples of nonprobate assets include life insurance policies with named beneficiaries, retirement accounts with designated beneficiaries, jointly owned property with rights of survivorship, and assets held in a living trust.

A nonprobate asset bypasses the probate process and transfers directly to the designated beneficiary or joint owner upon the owner’s death. In contrast, a probate asset requires court supervision and approval before it can be distributed to heirs or beneficiaries.

No, nonprobate assets cannot be included in a will because they pass outside of the probate process. These assets are governed by beneficiary designations or joint ownership agreements.

In general, nonprobate assets are not subject to contestation because they pass directly to the designated beneficiary or joint owner. However, there may be certain circumstances where a nonprobate asset’s validity or ownership is disputed, such as cases involving fraud or undue influence.

Nonprobate assets may be subject to certain taxes, such as estate taxes or inheritance taxes, depending on the jurisdiction and the value of the assets. It is advisable to consult with a tax professional or attorney to understand the tax implications of nonprobate assets.

Yes, nonprobate assets can be transferred during the owner’s lifetime. For example, a person can change the beneficiary designation on a life insurance policy or transfer ownership of jointly held property.

Nonprobate assets are generally not used to pay the deceased person’s debts unless they are specifically designated for that purpose. Debts are typically paid from the probate estate, which consists of assets subject to probate.

Yes, nonprobate assets can be revoked or changed by the owner as long as they have the legal capacity to do so. This can be done by updating beneficiary designations, changing joint ownership agreements, or amending the terms of a living trust.

Yes, it is important to include nonprobate assets in your estate plan to ensure they are properly accounted for and distributed according to your wishes. Consulting with an estate planning attorney can help you navigate the complexities of including nonprobate assets in your overall estate plan.