What Assets Go Through Probate and What Assets Do Not Go Through Probate in Tennessee?

When we first sit down with a client and discuss what is most important to them we immediately start discussing their family, their children, and making sure their family is taken care of after they are gone. This may consist of avoiding probate, making sure the children will be able to access the necessary funds so their college education will not be interrupted, or making sure that their spouse will not have to complete any extra difficult financial decisions in their time of loss. 

When a client stresses that the most important aspect to them is to make things simple for their family, we will almost immediately discuss probate and planning to avoid probate. However, during this discussion, it is always important to discuss that not all assets will have to go through probate, or will need to be retitled in order to avoid probate at death. 

As we have previously written in prior blog articles, probate is the process of the transfer of all of your assets to the family that you leave behind after your death. However, even if your family went through the long and drawn out probate court process at your death, not every asset would be required to go through probate. 

The most common types of assets that are required to go through probate include bank accounts, real estate, stocks and bonds, mineral interests, and investment accounts just to name a few. However, there are other assets that do not have to go through probate, and these are referred to as non-probate assets. A non-probate asset is an asset that immediately transfers to a designated beneficiary upon the death of the owner of the asset. Since these assets immediately transfer to the designated beneficiary, these types of assets do not need to go through probate. A few common non-probate assets that have beneficiary designations include such assets as 401(k) accounts, life insurance, annuities, and IRA accounts. 

However, there are probate assets that can be designated as non-probate assets with the proper type of estate legal planning. For example, you can set up your bank accounts at your bank as having transfer on death (TOD) designations. This means that if you have proper TOD designations on these accounts, then the account would immediately transfer to the person designated at your death without having to go through probate. In addition, you could also set up your bank accounts by giving an individual signature authority over the bank accounts. If a person has signature authority at your death, then that person would be able to continue to access the accounts after your death without the account being frozen and having to go through a drawn out probate court process.