Upon the passing of a loved one, there is a good chance that their estate will go through the probate process. Probate involves many things, but generally refers to the process of distributing assets of the deceased to the heirs. While often necessary, probate can be time consuming and complicated. Fortunately, Rhode Island not only allows for some estates to be exempted from the full probate process, but there are also a substantial number of assets that may fall outside of the probate process.
What Does Not Go Through Probate?
First, it is important to note that, in Rhode Island, not all estates will have to go through the full probate process. There is a “small estate” exception where, if an estate’s size falls below a certain threshold, it will not have to go through the court supervised probate process in order to be settled.
Second, it is important to be aware that not all assets of the deceased will need to pass through probate. Some assets are not subject to probate and will automatically pass to a beneficiary. These assets include:
- Jointly held property: Property that is held in joint tenancy or tenancy by the entirety with right of survivorship will pass to the surviving owner when the co-owner passes away. The transfer is automatic and does not require a court order.
- Payable on death accounts: Also referred to as transfer on death accounts, these can include things like bank accounts, brokerage accounts, or other financial accounts that allow for beneficiaries to be designated. The assets in the account will be transferred to the named beneficiary upon the death of the account holder.
- Retirement accounts and life insurance policies: When you establish a retirement account or purchase a life insurance policy, you will name beneficiaries that will receive the proceeds of the account or policy upon your passing. There is no need for these assets to go through probate. The proceeds will be distributed to the named beneficiary or beneficiaries.
- Living trust: Creating a living trust is a popular way to avoid assets having to go through probate. You can create a living trust to hold assets both large and small. You transfer the ownership of the asset to the trust and can then name yourself as trustee of the trust. Name a successor trustee to take over management of the trust after your passing and also name trust beneficiaries. Upon your passing, the successor trustee will distribute the trust assets to the named beneficiaries per the terms of the trust. The assets held in trust will be distributed outside of probate.
Sound Legal Counsel for All Estate Planning Needs
There are many considerations that people neglect when approaching estate planning. Probate and the possibility of avoiding probate are among the often sidestepped issues. It is important to take these kinds of issues head on as the probate process can have a substantial impact on your friends and family after you are gone. It can be a lengthy, expensive, and frustrating process that you may want to consider av
