What are Not Probate Assets which do not pass under a Will

What are Not Probate Assets which do not pass under a Will

Not all assets must go through probate to be transferred to a beneficiary. Some assets pass automatically (by operation of law) to other persons (beneficiaries) without the need for probate. Whether a particular asset to be transferred must go through probate or not depends on how ownership (title) to the asset is held.

If Title to an Asset is Held in the Testator’s Name Alone

Real estate and personal property, such as bank accounts, stocks, bonds, motor vehicles, etc. held in the testator’s name alone, and monies owed to the testator, are “probate property” which are transferred in accordance with the testator’s Last Will & Testament. These assets cannot generally be transferred without going through the probate process. However, some brokerage firms provide beneficiary designation forms, which may transfer these accounts without probate.

If Title to an Asset is Held by the Testator Jointly with a Right of Survivorship

Assets held by the testator and another person jointly, with a right of survivorship, are said to be held as “Joint Tenants with Right of Survivorship” (JTWROS); and pass by operation of law at the testator’s death to the surviving joint tenant. Bank accounts, securities and real estate are often held in joint tenancy. Assets that are titled this way are not subject to probate. The name on the bank or securities account application and the deed for real estate may read: “John Smith and Jane Doe, as Joint Tenants with Right of Survivorship.” Be careful changing title to existing assets because there can be tax and other consequences.

If an Asset Provides for a Beneficiary Designation

“Beneficiary designation property” is generally non-probate property, which passes in accordance with beneficiary designations assigned by the testator. Life insurance proceeds, 401(k) plans, IRA’s, employee death benefits (e.g., pension, profit-sharing, etc.) and accounts titled “Payable on Death” (POD) and/or “In Trust For” (ITF) are typical beneficiary designation property. Generally, the insurance company, pension plan administrator, or employer will have the beneficiary’s name in their records, or a copy of a form signed by the owner of the property indicating the beneficiaries. Language in the policy or plan may also be important.

Source https://www.bergencountysurrogate.com/probate.html

Tenancy by Entirety

Under NJ law If the two people are married, unless otherwise expressly provided, they typically acquire the real property as “tenants by the entirety”.

The NJ statute states 46:3-17.2.  Tenancy by entirety 

    A tenancy by entirety shall be created when:

    a.  A husband and wife together take title to an interest in real property or personal property under a written instrument designating both of their names as husband and wife; or

    b.  A husband and wife become the lessees of real property or personal property under a written instrument containing an option to purchase designating both of their names as husband and wife; or

    c.  An owner spouse conveys or transfers an interest in real property or personal property to the non-owner spouse and the owner spouse jointly under written instrument designating both of their names as husband and wife.

    Language which states "....... and ......., his wife" or "........ and ........, her husband" shall be deemed to create a tenancy by the entirety. 

NJSA 46:3-17.5.  Surviving spouse sole owner 

    Upon the death of either spouse, the surviving spouse shall be deemed to have owned the whole of all rights under the original instrument of purchase, conveyance, or transfer from its inception. 

Upon the death of one spouse, the entire estate and interest belongs to the other spouse, not by virtue of survivorship but by reason of the title vested under the original limitation. See Dorf v. Tuscarora Pipe Line Company, Ltd., 48 N.J.Super. 26 (App. Div. 1957); Capital Finance Company of Delaware Valley, Inc. v. Asterbadi, et al., 389 N.J.Super. 219 (Ch. Div. 2006).

A Will cannot change who receives assets under Tenancy by Entirety.

Assets which pass by Title, not Will

A Will cannot change who receives assets if a beneficiary is already listed or property owned by Tenancy by Entirety or Joint tenancy.

House- husband and wife is owned by Tenancy by Entirety, the house goes to surviving spouse

Bank Accounts- If POD, JT property goes to surviving person

    Assets which pass by Contract

IRA- property goes to whoever is listed as beneficiary

401K- property goes to whoever is listed as beneficiary

Life insurance - property goes to whoever is listed as beneficiary

Annuity- property goes to whoever is listed as beneficiary

Pension plans- property goes to whoever is listed as beneficiary

-other items which set forth a beneficiary

A creditor cannot force the sale of a property owned by one spouse that has a judgment against them.

       Current law presumes that, unless otherwise expressly provided, two or more people unmarried who acquire undivided interests in real property take ownership of the property as tenants-in-common(rather than joint tenants). 

Joint tenancy is when the Deed states the property goes to the survivor.