Odds are that you have assets that are not covered by your Will, and that’s not necessarily a bad thing.
Your Will covers your “probate” assets only. Your other assets are called “non-probate assets”.
Indeed, Minnesotans who wish to avoid the expense and delays of probate make an effort to get most of their assets in the non-probate asset category.
Generally speaking, if an asset passes automatically upon your death to others, then it is a non-probate asset. Jointly held assets such as bank accounts and real estate are non-probate assets. Any asset for which you designate a beneficiary – such as life insurance and retirement plan benefits – is also a non-probate asset as long as the beneficiary named is not “my estate”. Bank accounts held as P.O.D. (payable on death) accounts and securities accounts held as T.O.D. (transfer on death) accounts are non-probate assets. Assets titled in the name of your revocable trust are non-probate assets. And, Minnesota real estate on which a transfer on death deed has been filed is also a non-probate asset.
Probate assets require the probate court’s assistance in transferring ownership from the deceased to the new owner. If you have a Will, the probate court process determines whether your Will is valid. If valid, the terms of your Will are followed. If you don’t have a Will, the probate court is still involved to direct that your assets be distributed according to Minnesota’s laws for the situations in which there is no Will.
Probate assets include assets held in your name alone, which could include typically might include your checking account, savings account, stock investments, household possessions, cars, and real estate. As noted above, if you name “my estate” as beneficiary to your life insurance policy or retirement plan, those assets – which normally would be a non-probate asset – become a probate asset.
Do you still need a Will if your assets are mostly non-probate assets? Yes.
First of all, chances are that you will own assets in your name alone at death – especially if you are single or widowed.
Even if you have a revocable living trust, you still need a Will. If you have a trust, your Will scoops up any assets not already titled into the name of your trust and transfers those assets to your trust to be distributed according to the trust’s distribution plan.
Moreover, your Will enables you to make specific gifts to friends, family and charitable organizations whether or not you have a separate trust.
Your Will also nominates a guardian for your minor children.
If your beneficiaries on life insurance or other beneficiary-designated documents predecease you, your Will controls what happens with that asset. Also, many persons change the location and titling of their bank accounts, brokerage accounts, or other assets over time. In the event that you forget to take steps to make the changed asset a non-probate asset, your Will provides for the distribution of that asset.
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