When individuals begin the estate planning process, it is important to understand which assets are included in their estate and which assets are excluded. Knowing what assets are excluded from an estate can help individuals plan for the distribution of their wealth more effectively and minimize potential taxes or probate issues for their heirs. In this article, we will explore what assets are commonly excluded from an estate under New York State law.
Assets that are typically excluded from an estate include:
Retirement Accounts:
Retirement accounts such as 401(k)s, IRAs and pension plans are generally not considered part of an individual’s estate. These assets pass directly to the designated beneficiary outside of the probate process. It is important to review and update beneficiary designations regularly to ensure they reflect your current wishes.
Life Insurance Proceeds:
Life insurance policies often pay out directly to the named beneficiary upon the death of the policyholder. These proceeds are typically exempt from probate and are not considered part of the deceased’s estate.
Jointly Owned Property:
Property owned jointly with rights of survivorship automatically passes to the surviving co-owner upon the death of one owner. This property is not included in the deceased owner’s estate.
Assets in Trusts:
Assets held in a trust are generally not considered part of the grantor’s estate. Trusts allow individuals to transfer assets to beneficiaries without going through probate and can provide additional privacy and control over the distribution of assets.
Payable-on-Death (POD) Accounts:
Bank accounts, brokerage accounts, or real estate held as payable-on-death assets pass directly to the named beneficiary. These assets are not subject to probate and are excluded from the deceased’s estate.
Annuities:
Annuities are contracts that provide regular payments to the annuitant. Upon the annuitant’s death, the remaining balance of the annuity may pass directly to a named beneficiary, bypassing probate.
Personal Property with Designated Beneficiaries:
Personal property such as jewelry, artwork, or collectibles with designated beneficiaries named in a will or trust are excluded from the estate and passed directly to the designated beneficiaries.
While these assets are generally excluded from an estate, it is essential to consult with an experienced estate planning attorney to ensure that your specific assets are properly accounted for in your estate plan. Proper planning can help minimize estate taxes, avoid probate delays, and ensure that your assets are distributed according to your wishes.
In conclusion
Understanding what assets are excluded from an estate is crucial for effective estate planning. By identifying and properly managing these excluded assets, individuals can ensure that their wealth is distributed efficiently and according to their wishes. Working with a knowledgeable estate planning attorney, such as the experts at Morgan Legal Group in New York City, can help individuals navigate the complexities of estate planning and secure a sound financial future for their loved ones. Contact Morgan Legal Group today to discuss your estate planning needs and secure your legacy for future generations.
What Assets Are Excluded From an Estate?
Understanding which assets are excluded from your estate can help streamline the inheritance process and ensure that your assets are distributed according to your wishes. Here are common types of assets that typically bypass the probate process.
Jointly Owned Property
Real estate or other property held in joint tenancy with rights of survivorship passes automatically to the surviving owners, avoiding the probate process.
Retirement Accounts
Retirement accounts like IRAs and 401(k)s usually have designated beneficiaries and pass outside of the estate, directly to those beneficiaries.
Life Insurance Policies
Life insurance proceeds are paid directly to the named beneficiaries, not through probate, unless the estate itself is named as the beneficiary.
Payable-on-Death (POD) Accounts
Bank accounts with a payable-on-death designation allow the funds to go directly to the named beneficiary upon the account holder’s death.
Transfer-on-Death (TOD) Securities and Vehicles
Securities and vehicles registered with transfer-on-death provisions can be transferred immediately to designated beneficiaries without probate.
Trust Assets
Assets held in a living trust are controlled by the trust and pass to beneficiaries according to the trust’s instructions, not through the probate estate.
Small Business Interests
Certain small business interests may be designed to pass directly to co-owners or heirs without being part of the probate estate, depending on local laws.
Personal Property with Right of Survivorship
Some types of personal property may include rights of survivorship that allow them to pass directly to co-owners.
Gifts and Donations Made Before Death
Gifts given during a person’s lifetime are not part of the probate estate, provided they qualify as completed gifts under local law.
Each jurisdiction has specific rules that affect how these assets are handled after death. To ensure your assets are managed and distributed as you intend, consulting with an estate planning attorney, such as those at Morgan Legal Group, is advisable.
