Probate Law | What Does “Probate Property” Mean?

The term probate and probate property is, in my opinion, largely misunderstood by the public at large. Unfortunately, only a good probate lawyer will typically understand these complicated legal terms.

Why is it important to understand the meaning of the term “probate property”?  Because it has a significant impact on the administration of an estate in terms of creditor claims, distribution, and taxation.  If an asset or debt is not probate property, it isn’t included in the estate. This mean that the asset or debt is not subject to creditor claims, it is not subject to be distributing to heirs, and it is not subject to taxation.  Let’s take a look at the definition then, shall we?

Although the law varies from state-to-state, probate property is typically defined in a similar fashion in each state.  For variations, you should speak with a probate lawyer in your area about the definitions.

Probate v. Non-Probate Property

As I’ve discussed in prior posts, a deceased person is typically referred to as the “decedent” in the eyes of the law.  All of a decedent’s property can be divided into two basic categories:  probate and non-probate property.

Probate Property

“Probate assets” are those assets which are titled solely in the name of the decedent at death.  These asset can then be transferred to a new owner via the probate process.  “Probate property” can include any type of asset, including:

• real estate;
• bank accounts;
• brokerage and investment accounts;
• financial and promissory notes;
• contracts for deed;
• bonds;
• stocks;
• life insurance proceeds;
• vehicles;
• boats;
• other personal and real property.

The list of “probate property” could go on.  The assets listed above are common, but they are not necessarily all inclusive.

Non-probate property

The term “non-probate property” includes property which is owned jointly by the decedent and another person or where another person has a succeeding interest in property – usually via a contract.

The types of non-probate property typically include:

• assets owned as joint tenant with rights of survivorship;
• accounts established with “Pay on Death” (P.O.D.);
• accounts established with “Transfer on Death” (T.O.D.);
• beneficiary assets such as life insurance and retirement assets;
• life estate assets of the decent.

Again, like probate property, the list above is not all inclusive.  It is important to remember that non-probate property is property that is no longer owned by the decendent at death.  Instead, the assets are typically transferred by operation of contract to another person immediately upon the decedent’s death.  In other words, it’s not the decedent’s money anymore.

Talking with a qualified Minnesota probate lawyer about probate and non-probate property is the first step that personal representatives and other interested person should take after the decedent has died.  The probate process is all about legal definitions of property.  A lawyer will know the difference and it will have a large impact on the administration of the probate estate.