Probate assets are anything owned by a deceased person that has no way of passing to a living beneficiary without a court-supervised probate process. Life insurance proceeds, bank accounts with payable-on-death designations, some retirement accounts, and some forms of real estate ownership pass directly to named beneficiaries by operation of law, so probate isn't required.
Everything else forms the decedent's probate estate—their probate assets. The estate will be subject to a court proceeding to take these assets out of the deceased person's name and transfer them into the names of their rightful heirs and beneficiaries. There are four common types of probate assets.
Individual assets include all property titled in the decedent's sole name without co-owners or payable-on-death and beneficiary designations. They commonly include bank accounts, investment accounts, stocks, bonds, vehicles, boats, airplanes, business interests, and real estate. They can also include personal property that may or may not have much value, such as artwork, memorabilia, and electronics.
Tenant-in-common assets include property titled in the decedent's name as a tenant-in-common with one or more other individuals. Each owner has a percentage interest in the property, such as 80 percent and 20 percent, or 50 percent and 50 percent.
Real estate is often titled this way between unmarried owners, but other types of assets can be titled this way as well, including bank accounts, investment accounts, stocks, and bonds.
This type of property should not be confused with assets held by joint tenants or other arrangements with rights of survivorship. Property held with rights of survivorship passes directly to the survivor when one owner dies. It does not require probate and is not included in the decedent's probate estate.
If the decedent retitles their tenant-in-common interest into the name of a living trust before their death, this converts the tenant-in-common interest into a non-probate asset. It won't require a probate court proceeding to pass to a new owner.
Beneficiary Assets With Predeceased Beneficiaries or No Beneficiary Designations
Even assets with beneficiary or payable-on-death designations can become part of the deceased's probate estate if the beneficiary dies before the owner. These assets might include health savings or medical savings accounts, life estates in property, life insurance policies, retirement accounts including IRAs and 401(k)s, and annuities.
When all named beneficiaries of an account or policy predecease the decedent, the asset typically diverts to their estate and becomes part of their probate estate. The same applies when a decedent fails to name any beneficiaries at all, or if they name their estate as the beneficiary.
Assets Left out of a Trust
It occasionally happens that someone will create a living trust and move their property into it, but this doesn't necessarily mean that none of their property will be probate assets at their death.
Living trusts do avoid probate of the property held by them, but years may go by during which the decedent acquires additional assets, and they may neglect to pass all of them to their trust.
A common solution to this dilemma is to create a pour-over will to direct property outside of the trust into the trust at death, but these assets are still subject to probate and contribute to the decedent's probate estate.