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Probate Estate Assets: Find Out What is Included

By Howard C. Stross
March 24, 2014

Probate administration is a court process by which a deceased person’s assets are transferred to his or her beneficiaries. However, the probate process only oversees the transfer of assets that are part of the decedent’s probate estate. Not all assets owned by a deceased person are part of the probate estate. Some assets pass outside of the probate process.

Many people incorrectly believe that their last will and testament controls all of their assets. This is not always true. For example, a mother’s last will and testament may state that all of her property is to be split equally between her three children. Later, she may add her daughter to her checking account for convenience so that her daughter can pay bills. This change in ownership can have unforeseen consequences in the future.

When the mother passes away, the checking account is not part of her probate estate. Instead the checking account goes 100% to her daughter as the surviving owner of the account. The daughter may legally keep it all and does not have to share it with her siblings. She may want to respect her mother’s intentions and try to split it with her siblings but that may cause the daughter gift tax consequences. For example, if the account has $60,000 in it, she may want to give $20,000 to each sibling. However, if she gives more than $14,000 to each of them, she will have to file a gift tax return.

When someone passes away it is important to know how they owned their assets in order to determine which assets are part of the probate estate.

Examples of probate estate assets:

  • Bank accounts that are titled in the decedent’s individual name, with no co-owner and no beneficiary designation
  • Real estate that is owned by the decedent individually
  • Real estate that is co-owned as tenants in common
  • Proceeds from a life insurance policy that is payable to the decedent’s estate. Sometimes an insured person forgets to name a beneficiary or sometimes all of the beneficiaries named have passed away. In those situations, the insurance contract may state that the company will pay the proceeds to the probate estate of the insured individual.

Examples of assets that would not be part of the probate estate:

  • Assets that are titled in the decedent’s revocable living trust. Instead of going through probate, these assets will be controlled by the trust document.
  • Real estate that is co-owned as joint tenants with rights of survivorship. By operation of law, this real estate will pass to the surviving owner and will not be part of the deceased person’s probate estate. However, sometimes joint ownership only delays probate because if it is left in the survivor’s individual name, the real estate will be part of the survivor’s probate estate.
  • Bank accounts with payable on death (POD) or transfer on death (TOD) beneficiary designations. These assets are controlled by the bank paperwork instead of your last will and testament.
  • Retirement accounts with beneficiary designations. These assets are controlled by the retirement account documents. For example, a father may make his children fifty-fifty beneficiaries on the retirement account. His last will and testament may state that if something happens to one child, their 50% share goes to their children (his grandchildren). However, if the retirement beneficiary form says that it goes to the surviving named beneficiary, the surviving child will receive 100% of the account. It is standard language on most beneficiary forms for the account to go to the surviving named beneficiary because companies don’t want to search for unnamed beneficiaries.
  • Proceeds from a life insurance policy that has a beneficiary designated. Similar to the retirement account scenario, life insurance proceeds are controlled by the life insurance contract and beneficiary designations.

This article is for general information only and is not intended to provide legal advice. If you need to probate a will, you can talk to a Florida probate attorney at our office. Call us at 813-852-6500 to schedule a free 30-minute consultation.

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