What Assets Are Not Considered A Part Of The Estate

Estate planning is an important process that ensures your assets go to the right people when you pass away. But not only that, an effective estate plan also addresses the minute details involved in transferring assets to your heirs such as real estate and income taxes.

Yet, the process is anything but simple and there seems to be an endless amount of restrictions and benefits for each of the options at your disposal. This is exactly why hiring a qualified attorney is an absolute must when planning the transfer of your estate to your beneficiaries. 

To illustrate, many people are unaware that the law doesn’t recognize particular types of assets as a legitimate aspect of a person’s estate. 

By familiarizing yourself with these laws and regulations, you’ll be able to account for all the eligible assets. More importantly, you’ll also make certain proper arrangements are made for assets that don’t qualify. 

Continue reading to learn what assets are not considered a part of the estate and how you can address this issue.

First, let’s go over the basics.

Understanding Probate

Having a clear understanding of what assets are not considered a part of the estate is imperative because all estate assets generally need to go through probate. While it’s true that trusts and other legal arrangements may help minimize the number of assets required to go through probate, the fact of the matter is that avoiding probate altogether is not always possible.

Probate is a process in which the court assesses applicable assets that belonged to a deceased person, and settles any government dues such as court fees or taxes. During the probate, the court officials will also read the will and confirm whether it’s legally binding: Upon determining the legality, the court then releases the assets to the person designated as the executor of the estate - an individual who will ultimately distribute the assets accordingly. 

When it comes to assets that don’t fall within the estate, they won’t have to go through probate, meaning they’re not subject to debt repayment or taxation. As such, it’s necessary to make alternative arrangements to make sure these assets end up with the right beneficiaries. For instance, many opt to hold belongings that don’t need to go to probate (or even those that do) outside their estate, thus ensuring assets remain within the family without incurring any government taxes (but more on that later).

Which Assets Are Disregarded From The Estate?

The question of what assets are not considered a part of the estate has a relatively straightforward answer. Just a small number of assets don’t fit into the estate designation, primarily retirement accounts. 

For individuals who possess these accounts, it’s necessary to make prior arrangements to see to it that they are fairly distributed.

Generally speaking, assets not accounted for by the estate plan include the following:

• Pension plans
• Savings bonds
• Living trust assets
• 401 (k) accounts
• Savings accounts (in select circumstances)

In most situations when creating these accounts, you’ll get to choose the beneficiaries for the funds in the chance of your death. That way, assets will be distributed to a designed beneficiary even without going through probate court. 

For saving accounts, the procedure is a bit more complicated. Your named beneficiary will acquire the funds unless the account is joint, in which case, the other individual will receive the assets.

If you don’t name a beneficiary for the savings account, the funds automatically get transferred to your estate where they’ll be subject to probate.

Which Assets Are Considered A Part Of The Estate?

As opposed to what assets are not considered a part of the estate, ones that fit the estate category include a much larger variety of assets, including:

• Real estate and land holdings
• Physical assets
• Intangible assets
• Personal belongings
• Investments
• Household items
• Collectibles

Many wonder if this includes cash. The short answer is yes. Cash is considered a part of your estate and is subject to state and federal taxes. To minimize the financial impact of the probate process, consider putting the cash into a savings or checking account and designate a “transfer-on-death” beneficiary. That way, the beneficiaries will receive the money immediately after you pass away and won’t have to pay taxes. 

Why You Should Hire An Estate Planning Attorney

Considering you’re already researching what assets are not considered a part of the estate, our guess is that you’re probably in the process of putting together an estate plan. Despite the fact you can draft up your own legal documents and use DIY templates, estate planning law is infamously complex. 

As you can see from what we discussed above, a few wrong moves will leave your heirs to deal with an excessive amount of taxes. By hiring an attorney to create your estate plan, your family can:

• Limit the number of assets that go to probate
• Save you time and energy, and decrease the number of costly mistakes
• Receive updated estate planning documentation to stay compliant with any new laws and regulations

It’s also worth noting that estate planning is typically an emotional process for the family, which makes it hard to put together an impartial estate plan. An estate attorney can be a voice of reason in these matters and bring in some well-needed objectivity to make sure your family stays protected and everyone is well taken care of. 

Put Together An Estate Plan With Doane & Doane

Your wishes matter, and if you need any help ensuring your beneficiaries go through the least amount of hassle when you pass away, reach out to estate planning attorneys at Doane & Doane. 

We’ve worked tirelessly for over twenty years, and we managed to become the go-to firm for many Palm Beach County residents who need assistance with tax or estate planning. Our clients come first and we’ll go to great lengths to see to it that their assets are handled as intendedf - in life and death. 

Dial 561-656-0200 or fill out our contact form to book your free consultation now

Note: 

The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.