Nonprobate estate is a term that refers to the assets that pass onto beneficiaries without court oversight or approval in a person’s will. These assets are typically conveyed or transferred in accordance with a contract such as an insurance policy, living trust, or specific contract. Nonprobate estates can be valuable tools for those seeking to avoid the time and expense of probate court and to make sure that their assets are conveyed with certainty and in a timely fashion.
How Does a Nonprobate Estate Work?
With a nonprobate estate, the assets are transferred to the beneficiary in accordance with the contract that created the estate. In the case of life insurance policies, retirement plans, or bank accounts with a designated beneficiary, the assets will go to the beneficiary upon the death of the owner without any probate court proceedings. In the case of living trusts, the assets will be held in trust and will be transferred to the beneficiaries according to the terms of the trust.
Examples of Nonprobate Estates
Some common examples of nonprobate estates include life insurance policies, retirement accounts with designated beneficiaries, bank accounts with designated beneficiaries, and joint accounts that transfer the assets to the remaining joint owner upon the death of one owner. Additionally, trusts can be created that will pass the assets to the beneficiaries according to the terms of the trust without the need for probate.
Benefits of Nonprobate Estates
Nonprobate estates can be beneficial in many ways. For one, they typically allow for the assets to be transferred quickly after the death of the owner without the need for court proceedings. They also offer added assurance to the beneficiary that the assets will be distributed according to the wishes of the owner. Additionally, they provide for the potential of avoiding probate fees in some cases, which can save significant amounts of money in certain situations.
Conclusion
Nonprobate estate is a term that refers to any asset that passes to a beneficiary without court involvement. Examples of nonprobate estate include life insurance policies, retirement accounts, bank accounts, and living trusts. Nonprobate estates can be beneficial as they often allow for quick asset transfers, added assurance that assets will be distributed according to the wishes of the owner, and potential for avoiding probate fees. Business professionals should be aware of these benefits when it comes to planning for their own estates.