Real Estate For most families, their homes and rental properties are their most valuable assets. When a person dies, it is important to identify each and every piece of real property that they either own outright, or that they own with someone else. Not only will this help the family to marshal assets, but it gives you a better idea of whether a Court supervised administration is needed.
Any property owned jointly with a spouse (where the deed does not specifically state otherwise) is presumed to be owned as tenants-by-the-entirety, and passes immediately on death to the surviving spouse. Property owned with right of survivorship passes to the other joint owners.
For all other real property (owned as tenant-in-common), next you should consider if the deceased left a Will. By default, title to property vests in heirs at law or the beneficiaries under a Will automatically. If there is a Will, though, read it carefully to see if it either (1) directs the sale of property or (2) states that real property will be administered by the Executor like personal property (or "personalty").
Even if tenant-in-common property vests without the action of an Executor, you may still need to file certain documents. Title companies often require, at a minimum, a Muniment of Title probate in order to sell real property if the deceased had a Will. If there was no Will, then you may be able to use a document called an Affidavit of Heirship. Bank Accounts Next, you should review all of the known bank accounts of the deceased person. Most accounts owned jointly with another person became the sole property of that other person immediately upon the decedent's death (this is one of the potential dangers of using joint accounts instead of a Will for estate planning). Accounts that were not owned jointly will, almost always, require a probate. That being said, there are certain provisions in the law allowing the transfer of very small accounts, and more limited types of probate that certain banks will accept. An attorney should help you understand your options and the best choice for moving forward in that situation. Insurance Policies Most insurance policies are payable to named beneficiaries. The insurance company should be able to assist you in determining that a claim is necessary--but they may not share much information with you if you are not the named beneficiary.
Probate is-typically-only required for insurance policies that pay out to a deceased person's estate. This can happen intentionally, or when a person does not name a beneficiary to a policy. Retirement Accounts Retirement accounts are governed by special rules, especially ones funded with pre-tax money. Usually, retirement accounts are designated to named beneficiaries (and this is often the best way to designate accounts from an income-tax perspective, unless you are using sophisticated retirement account planning strategies). On rare occasions, retirement accounts can be payable to an estate. If that is the case, it is a good idea to consult with an attorney to confirm that fact, and to speak with your CPA regarding how that designation will impact taxes for the estate and its beneficiaries/heirs. Stocks and Brokerage Accounts While many of our older clients own paper stock certificates, those are quickly becoming things of the past. Paper certificated stocks often require a probate. However, stocks held with a transfer agent like Computershare may be held "TOD" or otherwise payable on death to a specified person. Joint stock holdings, provided that they are designated as having "right of survivorship," typically pass to the joint owner. Furthermore, brokerage accounts with national firms will often have joint owners or transfer on death provisions. Usually the transfer agent (not necessarily the company that issued the stock) will be able to tell, but again they may only share this information with the actual joint owner or beneficiary.
Stocks held without a joint ROS owner and without a TOD designation or other beneficiary may require probate. Again, there may be more limited options available depending on the nature of the estate and the value of the assets--an attorney can help you decide what approach makes the most sense for your situation. Conclusion Probate is never a forgone conclusion. While many believe that a probate is always required when someone dies, there are many circumstances where that is not the case. This guide lists several types of assets to consider, but there are certainly other things that can make a difference (such as, but not limited to, debts, mortgages, other types of accounts). In any event, good probate practice requires--at the outset--a careful consideration of the options available, the facts of the case, and the client's goals.
I hope that this guide has been helpful in starting the process of determining if probate will be necessary for your situation.Our firm regularly practices before the probate courts of East Tennessee, and we would be happy to meet with you to discuss your specific situations and the options available to you.