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Non-probate assets refer to assets that are not subject to the probate process upon the death of the owner. When a person passes away, their estate goes through a legal process called probate. Probate is the process where the court oversees the distribution of assets and payment of debts to beneficiaries or heirs.

However, certain assets are designated to pass directly to specific beneficiaries outside of probate. These assets typically have beneficiary designations or other features that allow them to transfer directly to the intended recipients upon the owner’s death.

Non-Probate Assets Examples

Non-probate assets include:

  1. Beneficiary Designations: Assets with named beneficiaries are considered non-probate assets. Common examples include life insurance policies, annuities and retirement accounts (e.g., IRAs, 401(k)s). The law in Louisiana is complex when it comes to payable-on-death (POD) or transfer-on-death (TOD) accounts, and you should consult with an attorney to make sure these assets will stay out of the probate process if that is your ultimate goal.
  2. Revocable Living Trust Assets: If a person creates a revocable living trust and transfers assets into it during their lifetime, those assets are not subject to probate. The trust outlines how these assets should be managed and distributed after the person’s death, and it is administered by a trustee.
  3. Gifts: Assets that were gifted to someone during the owner’s lifetime will not go through probate. Once gifted, they belong to the recipient and are not part of the deceased person’s estate.
  4. Assets Held in Trust: Apart from revocable living trusts, other types of trusts (e.g., irrevocable trusts) can also hold assets and bypass probate, subject to the terms and conditions specified in the trust document.

It’s essential to review and update beneficiary designations regularly to ensure they align with your current wishes and life circumstances. Proper estate planning can help you maximize the distribution of your assets while minimizing potential complications and costs for your loved ones after your passing. For legal advice and assistance with estate planning, it’s recommended to consult an attorney specializing in this area.