Probate and non-probate assets play quite disparate roles in estate planning and the inheritance process and understanding their contrast is crucial in financial and estate planning.

In this article, we delve into the details of each type of asset and portray the salient differences between them, thereby providing an informative guide for individuals planning their estates.

What are Probate Assets?

Probate assets are those owned solely by a decedent at the time of death, without a designated beneficiary. As per legal mandate, these types of assets cannot pass onto heirs without going through probate - a legal process to validate the deceased's will, representative appointment and proper distribution of assets. The supervising probate court assesses that creditors are paid and the remaining estate reaches legitimate inheritance claimants.

The probate process, inherently protracted and expensive, is usually overseen by an executor if there's a will, or an administrator if there isn't. Common examples of probate assets include:

1. Solely owned real estate properties
2. Bank accounts in the decedent's name only
3. Personal items such as vehicles, jewelry, and artwork
4. Investment accounts in the decedent's name

What are Non-Probate Assets?

Non-probate assets, on the other hand, are types of property that automatically pass onto someone else upon the owner's death, bypassing the probate process. These assets are typically owned jointly or have a designated beneficiary. Since the ownership transition is immediate and smooth, there is no need for court intervention to distribute these properties.

Common types of non-probate assets include:

1. Jointly held properties with rights of survivorship
2. Retirement accounts such as 401(k)s or IRAs
3. Life insurance policies
4. Payable-on-death or transfer-on-death accounts
5. Trust assets

Probate Vs. Non-Probate Assets: A Comparative Assessment

Duration

The probate process can be drawn-out lasting months or years to conclude, dependent on the size and complexity of the estate. Non-probate assets, however, transfer almost immediately to the beneficiary following the owner’s death. The time difference adds a significant advantage to non-probate assets, facilitating a quicker, more efficient inheritance procedure.

Cost

Running an estate through probate can prove expensive due to court fees, legal fees, and executor fees and in some instances estate taxes. For non-probate assets, these fees are eliminated as the assets more directly to the beneficiaries, therefore making the transition less costly.

Privacy

Probate proceedings fall under public records making the details of the deceased’s estate accessible to anyone. This can be unfavorable for families requiring privacy. Since non-probate assets bypass the court system, these transfers remain private and only concern the involved parties.

Control

In finalizing estate planning, the control of assets post-death should be taken into account. Probate assets allow the testator to distribute their wealth as they wish through their will. Non-probate assets, however, usually pass to the surviving joint owner or named beneficiary bypassing any specifications in a will.

What Happens if You Include a Non-Probate Asset in Your Will?

Including non-probate assets in your will is a common mistake due to misunderstandings about the probate process. Non-probate assets, including jointly held properties, life insurance policies, and assets placed in a living trust, bypass the need for probate due to their transfer-on-death or payable-on-death designations. However, some individuals, unaware of this distinction, still include such assets in their wills.

Such an inclusion doesn't typically change the asset's non-probate status. Regardless of what the will says, if a beneficiary or joint owner is specified with the asset, the wishes expressed in the will do not apply. This can confuse matters significantly.

Let's look at some examples:

1. Joint property: If you include your home, which you jointly own with rights of survivorship, in your will bequeathing it to a child, the property will still pass directly to the surviving joint owner at the time of your death, not the child named in the will.
2. Life insurance policies: If you name a particular relative as the beneficiary of your life insurance in your will, but another person is named as the beneficiary on the policy with the insurance company, the latter person will receive the benefits upon your death, not the person named in your will.
3. Retirement accounts: Similar to life insurance policies, if a beneficiary is designated directly with the retirement account institution, like your 401(k) or IRA, the assets will be distributed to that individual, irrespective of what your will stipulates.

It's essential to know that any discrepancies between your will and the named beneficiary can lead to familial conflicts, legal issues and delay the asset distribution. Therefore, it's crucial to differentiate your probate and non-probate assets before you draft your will. Consulting with an estate planning attorney or financial advisor is recommended, to help ensure that all assets are appropriately allocated to avoid these complications.

Tips to Update Your Estate Plan

An up-to-date estate plan is essential to ensure that your family and assets are appropriately taken care of in the event of your death or incapacitation. Here are some essential tips to keep your estate plan current and effective:

Review Your Estate Plan Regularly

As a rule of thumb, you should review your estate plan every 3-5 years. This periodic review entails examining your will, trusts, and other critical documents to ensure they're in line with your current needs and goals.

Update Your Will and Beneficiaries

Take the time to review and update your will to reflect any significant changes in your life. This could include the addition or removal of beneficiaries, changes in your choice of executor or personal representative, distribution of assets, and guardianship assignments.

Additionally, revisit the beneficiary designation on your life insurance policies, retirement accounts, and other non-probate assets. Keep them in line with your current wishes and coordination with your will.

Address Changes in Financial Status

Your estate plan should evolve in tandem with your financial status. If you've acquired significant assets since drafting your estate plan, update it to include those assets and carefully assign their beneficiaries.

Consider Changes in Family Dynamics

Marriage, divorce, the birth of a child or grandchild, or untimely death of a spouse or beneficiary necessitate updating your estate plan. Ensure the impacted legal documents are amended to accurately represent your choices and avoid potential disputes among family members.

In conclusion, while both probate and non-probate assets make distinct contributions to estate planning, non-probate is often viewed favorably for its swiftness, lower costs, privacy, and simplicity. However, the appropriateness of probate or non-probate assets heavily depends on individual circumstances, objectives, and the complexity of the estate. Consulting with a financial advisor or an estate planning attorney is recommended to make informed decisions and optimize the estate planning process.

Probate litigation encompasses a wide range of disputes involving the interpretation, administration, and disposition of a person's estate and assets after their death. Probate lawsuits can be emotionally charged, complex, and costly exercises. Therefore, finding suitable strategies for conflict resolution is paramount to avoid prolonged litigation.

This article will delve into the specifics of strategies for resolving disputes and controversies related to probate litigation. Each of these strategies presents a unique method of approaching dispute resolution.

Probate Litigation: An Overview

Probate litigation refers to legal disputes that arise during the process of administering a deceased person's estate, most often when a will or other estate planning document is challenged. Probate is the legal procedure of administering a deceased person’s will, resolving all claims, and distributing the deceased person's property under a valid will.

Probate litigation is a broad field, encompassing disputes surrounding wills, trusts, guardianships, and conservatorships. These can vary from simple disputes regarding the authenticity of a will to complex disputes over the interpretation of testamentary documents or allegations of breach of fiduciary duty by the estate's executor or trustee.

Key Aspects of Probate Litigation

The key aspects and cases of probate litigation include:

1. Will Contests: This is the most common form of probate litigation, where a party (usually a family member or beneficiary) challenges the validity of a deceased person’s will. Grounds for a will contest can include undue influence, lack of mental capacity, fraudulent misrepresentations, or the discovery of a newer will.
2. Trust Disputes: Trusts are another aspect of estate planning that can lead to litigation. Disputes can arise over the interpretation of a trust document, the management of the trust by trustees, or even the validity of the trust itself.
3. Guardianship and Conservatorship: Disputes surrounding an appointed guardian or conservator can also lead to probate litigation. These disputes can involve allegations of financial mishandling, abuse of authority or neglect.
4. Breach of Fiduciary Duty: Executors, trustees, conservators, or guardians have a 'fiduciary duty' to act in the best interests of the estate, or the person they are appointed to protect. Breach of this duty includes actions that are negligent, self-dealing, or intentionally harmful and can lead to litigation.

Probate litigation can be a complex and emotionally taxing process, often involving family members, close friends, or business partners. It presents unique challenges and requires a deep understanding of not just probate law but also aspects of contract law, property law, and tax law. Thus, legal advice and assistance are highly recommended to navigate the intricacies of probate litigation.

Strategies for Resolving Disputes and Controversies

Probate litigations, largely intimate and personal, can often become the epicenter of familial discord, economic dispute, and legal strife. While many stakeholders are commonly embroiled within these spats, their effective and timely resolution is paramount, going a long way to preserve relationships, honor the deceased's intentions, and ensure the fair application of the law.

Equipped to resolve who gets what, when, and how, probate litigation calls for the strategic handling of intensely emotional and economically complex situations. Consequently, a robust set of dispute resolution strategies is paramount to guide the heirs, executors, and beneficiaries through the labyrinthian probate litigation process.

Mediation

Mediation is a voluntary process used to resolve disputes in an amicable manner. Both parties meet with a neutral third-party mediator who facilitates communication between them with the aim of reaching a consensus.

In probate disputes, mediators can prove to be invaluable by helping the parties understand the issues under the probate code, thus reducing the hostility between the parties. They can provide creative solutions to dividing the estate property that the court might not have the power to order.

Negotiation

Negotiation involves the disputing parties discussing the issues between themselves seeking a compromise. It is a direct way of solving probate disputes without the need for court intervention. This strategy is often successful when the parties have a strong relationship and wish to maintain it.

In probate litigation, negotiation may involve splitting the estate assets, selling or buying assets, or agreeing on the interpretation of the will.

Summary Judgement

This strategy comes into play when one party believes that the facts of the case are undisputed and applies to the court for a summary judgement. An early judgement, as such, can save time and cost associated with a full-blown trial.

In probate litigation, summary judgements can be employed when the interpretation of a will is debated, and there is no ambiguity in the document.

Early Neutral Evaluation

Early neutral evaluation is a process where a third-party expert is appointed at an early stage in the litigation to give their opinion on the merits of the case.

This strategy helps the parties to have a realistic understanding of the strengths and weaknesses of their case, hence promoting early settlement negotiations. In a probate dispute, this could involve an expert in probate law or an industry expert (in case the estate includes complex assets like company shares).

Arbitration

Arbitration is another dispute resolution mechanism that involves a neutral third party (arbitrator). The arbitrator listens to the evidence and arguments presented by both sides and then makes a decision.

This method is essentially a private trial and can offer a speedier resolution to probate disputes. The decision by the arbitrator can be binding or non-binding as agreed by the parties involved. A clear understanding of each strategy, their applicability, and their potential advantages, will lend an auxiliary hand to proficiently navigate the often-turbulent waters of probate disputes and controversies.

In conclusion, probate litigation is a complex legal field that encompasses a variety of disputes and controversies. Each dispute requires a unique approach to ensure all parties involved come to a fair and just resolution. The strategies mentioned above can assist in achieving an efficient and effective resolution to probate disputes.

In an age where the future is more unpredictable than ever, it's paramount that we plan for the smooth transition of our treasured assets after we're gone. Estate planning, contrary to conventional opinion, isn't exclusive to the wealthy—it's for anyone who wishes for an orderly distribution of their belongings when they pass on. This process involves strategies and carefully drafted legal documents that ensure your hard-earned properties reach the right places or people without unnecessary complications.
In this comprehensive guide, we'll discuss the essential documents for estate planning, explaining each one's importance, and carefully explore detailed, practical tips to make the planning process a breeze. Whether you're just starting or revisiting your existing plan, this guide is designed to help you navigate estate planning's complexities with ease and confidence.

Last Will and Testament

The Last Will and Testament makes sure your assets are distributed according to your wishes upon your demise. It allows you to select an executor who carries out these wishes and acts as a custodian for minor children. If you die without a will, your estate will be divided according to state laws, which may not align with your desires.

Living Trust

A living trust is similar to a will but is recommended for larger estates. It allows you to put your assets into the trust while you're alive, and upon your death, your trustee distributes your property as per your request. Unlike a will, a trust avoids probate, a legal process that can be expensive and time-consuming.

Durable Power of Attorney (POA)

A durable power of attorney ensures that if you're incapacitated or unable to handle your financial affairs, someone you trust (the agent) will step in your place. The agent has the authority to manage your money, pay bills, and make investment decisions.

Health Care Proxy

Also known as a Medical Power of Attorney, this document enables you to appoint an individual (your health care agent) to make medical decisions on your behalf if you're unable to do so. This might involve deciding whether to withhold or withdraw life-sustaining measures.

Living Will

Unlike a Last Will and Testament, a Living Will has nothing to do with asset distribution. It allows you to lay out specific medical procedures and treatments you want in the event that you can't communicate your wishes directly.

Beneficiary Designations

Retirement accounts, investment funds, and insurance policies are transferred to the respective beneficiaries upon the owner's death. It is important to keep these designations updated as they override the instructions in your will.

Letter of Intent

It's not a legally binding document, but a letter of intent to your executor can provide essential details or express wishes that aren't covered in your will.

Tips for Estate Planning

Proper estate planning comes with multiple aspects, and following these tips can assist in making the process smooth and beneficial.

Start Planning Early

The future is unpredictable, and no one knows what lies ahead. Therefore, early planning of your estate is integral no matter your age or health status. Starting the estate planning journey early offers ample time to mull over your decisions, explore all possible contingencies, and ensure that you take precise and deliberate steps towards creating a plan that accurately reflects your wishes. An early start also means you're prepared for whatever unexpected twists and turns life may throw at you.

Keep Your Documents Updated

Life is fraught with changes - some planned, some unplanned. Major life events such as marriage, childbirth, divorce, death of a loved one, or a significant fluctuation in your financial status can greatly impact your estate planning. These events can alter your preferences and needs, necessitating updates to your estate planning documents.

Regular review and updating of these documents ensure your plans accurately reflect your current desires and the reality of your situation. Having out-of-date documents due to negligence can cause significant complications down the line.

Consult a Professional

Estate planning involves complex laws that can change depending on your location and situation. This makes it very easy to make costly mistakes if navigating the process alone. Hiring a professional, like an estate planning attorney, can provide the needed expertise to navigate legal complexities and tackle the nuances that come with this process.

They are also well-equipped to handle any tax implications involved with your estate, ensuring that your beneficiaries aren't left dealing with unnecessary tax burdens upon your passing.

Communicate Your Wishes

Transparency and open communication form the backbone of a well-executed estate plan. Sharing your estate plan with all the concerned parties - family members, loved ones, trusted advisors, and appointed executors ensures everyone understands your wishes and knows their respective roles and responsibilities.

It's equally important to let them know where to find crucial documents when the time comes. Clear communication can prevent misunderstandings and disputes, paving the way for a smoother execution of your estate plan.

Include Digital Assets

The contemporary world is largely digital, and with the rise of digital currency and online platforms, another form of asset has taken shape - digital assets. These range from cryptocurrencies like Bitcoin to online accounts (emails, social media) and even digital photographs stored in cloud-based services. Leaving these out of your estate plan can lead to complications and potential loss of these assets.

Conduct a regular inventory of your digital assets, store all necessary passwords securely, and ensure they are incorporated into your estate planning mechanisms. With the inclusion of digital assets in your estate plan, you bequeath not just your physical wealth, but also your digital legacy.

Estate planning is a process that requires careful thought and consideration. With the right planning and professional guidance, you can create an estate plan that ensures a stress-free legacy for your loved ones.

Remember, the goal is not only to express your wishes regarding your assets but also to ensure these wishes are carried out effectively and efficiently, minimizing confusion, discord, and legal entanglements. Approach your estate planning journey with consciousness, calm, and care, because it is essentially your final act of good stewardship with the wealth you've built and nurtured over your lifetime.

Evans Case is proud to announce that Aaron Evans and Andrew Rogers have been invited to speak at this year’s Colorado Trial Lawyers Association (CTLA) Convention. The Colorado Trial Lawyers Association is the largest specialty bar association in Colorado. With more than 1,300 members across the state practicing a broad spectrum of civil law, they are united by the shared vision that everyone deserves justice and that no one is above the law. The CTLA Convention is dedicated to protecting individual rights, improving trial advocacy skills, and upholding high ethical standards and Evans Case will be speaking on Estates and Probate Matters as they relate to personal injury and minor settlements. This is a great opportunity for Evans Case to come alongside trial lawyers in personal injury, medical malpractice, and professional negligence to robustly defend our clients.

To speak with one of our attorneys about your probate case, call us today at 303-757-8300.