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What Assets in the State of Michigan Are Considered “Non-Probate”?

In Michigan, probate refers to the process of distributing assets after an individual has passed away. However, a decedent’s estate could also include assets that do not pass through the probate process.

Understanding Probate vs. Non-Probate Assets

Probate assets include all assets that an individual owns at their death, including bank accounts, investments/brokerage accounts, real estate, vehicles, and household or personal items. However, individuals may have an interest in assets that qualify as “non-probate.” Individuals can also change the ownership of other types of assets to make them “non-probate.”

A probate asset must go through the estate administration process before the asset can pass to another party according to the decedent’s will or Michigan intestacy laws. Conversely, non-probate assets do not go through estate administration but pass directly to a beneficiary upon the decedents’ death.

Types of Non-Probate Assets

Common examples of non-probate assets include:

  • Property owned in a joint tenancy or tenancy by the entirety – You might hold titled assets like real estate or vehicles in a joint tenancy with right of survivorship, or for married couples, in a tenancy by the entirety. In a joint tenancy, when one co-owner dies, their interest automatically passes to the surviving co-owners.
  • Beneficiary designations – Certain assets, such as insurance policies or retirement accounts, allow holders to make a beneficiary designation, which nominates one or more people to receive the benefits or funds from the asset.
  • Transfer/pay-on-death designations – Financial account holders can place a transfer/pay-on-death designation on their account to transfer ownership to another party or require the financial institution to distribute the assets in the account to that party.
  • Trusts – Individuals and families can pass assets and wealth outside the probate process by placing those assets in a trust. The trust takes ownership of the assets and manages them to benefit the trust’s beneficiaries.

Advantages of Non-Probate Assets

Non-probate assets have several advantages over probate assets when distributing wealth after one’s death. Non-probate assets usually pass automatically to beneficiaries after a person’s death, which means beneficiaries do not have to wait for the probate process to conclude to receive their inheritance. Non-probate assets also avoid the time and expense of probate, including court filing fees, legal expenses, and potential taxes. Non-probate assets also allow families to preserve their privacy by avoiding probate, which involves a public court proceeding.

Designating non-probate assets comes with other considerations, including maintaining and updating beneficiary designations as your estate planning goals change. Non-probate assets may also lead to legal or regulatory challenges, especially if your estate plan doesn’t follow all legal requirements and rules. Working with an experienced estate planning attorney can help you develop a holistic estate plan that avoids unintended consequences.

Contact an Estate Planning Attorney Today

When you need help with estate planning or determining which assets to place in probate, our Michigan probate lawyers can provide the advice and guidance you need to protect your assets and your family’s future. Contact Bingham Legal Group today for an initial consultation with an experienced probate lawyer to discuss your legal options.