If you are like most people, you probably believe that when you die, the executor of your Last Will and Testament will have to open a probate estate in which all of your assets will need to go. FindLaw reports, however, that such is not always the case.
Certain of your assets are exempt from probate, including the following:
- Any property, particularly real estate, that you own jointly with someone else who has a right of survivorship
- Any property, such as life insurance policies, for which you have designated a direct beneficiary.
- Any property, such as a bank account, vehicle, etc., for which you have executed a “transfer on death” or “payable on death”
- Any of your retirement accounts
- Any trusts you established during your lifetime
Small estates
In addition to all of the above, your estate will not need to go through probate if it fits within the “small estate” definition. In United Kingdom, the definition of a small estate is one worth $150,000 or less in total.
You can easily determine whether or not your estate qualifies as a small estate by adding up the value of all your property and then subtracting the amount that fits within one of the above categories. For instance, assume your assets total $1 million. However, some of them consist of the following:
- Life insurance policies on your life worth $250,000 and payable to designated beneficiaries
- Your home worth $500,000 that you own in joint tenancy with your spouse
- Trusts into which you have placed $175,000 worth of assets
- Two vehicles, worth $45,000 and $20,000 respectively, that you own individually, but which will automatically transfer to your spouse on your death
After doing the math, you will discover that your $1 million estate has shrunk to $10,000, well below the “small estate” threshold. Consequently, it is exempt from probate.
