The death of a loved one can come out of nowhere. Probate is the process of distributing this dead person’s assets.
However, not all assets need to go through probate. Understanding what falls under the category of non-probate assets in Pennsylvania is important.
Real estate
Real estate owned jointly with rights of survivorship, such as a marital home, can avoid probate in Pennsylvania. When one owner dies, the property automatically transfers to the surviving owners. Similarly, properties held in a living trust also avoid probate. They pass directly to the beneficiaries named in the trust document.
Life insurance policies
Proceeds from life insurance policies generally do not need to go through probate in Pennsylvania. As long as there is a beneficiary named, the insurance company gives the funds directly to the chosen recipient. This process helps loved ones receive any financial help as soon as possible.
Personal property with transfer-on-death designations
Certain personal property, such as vehicles, stocks and securities, can have a transfer-on-death, or TOD, beneficiary. This allows these assets to go directly to the beneficiary outside of probate.
Bank accounts and retirement funds
Bank accounts that are payable-on-death or TOD go to the named beneficiary when the account holder dies. Additionally, retirement accounts like 401ks and IRAs typically have designated beneficiaries. This allows these assets to skip probate.
Jointly owned business interests
Business interests held jointly with rights of survivorship also avoid probate in Pennsylvania. When one owner dies, their share of the business goes to the surviving owner. This maintains the continuity of operations without court involvement.
When dealing with grief, the finer details of what assets go through probate may seem hard to know at first. By proactively structuring estate plans to include non-probate assets, individuals can ease the burden on their loved ones during this tough time.
