Non Probate Assets and Debts of the Estate

Probate is a technical sounding term to many non-lawyers, but it is really just the legal process of properly paying the debts owed by the decedent and his or her estate, as well as distributing the remaining estate assets to the beneficiaries designated in the decedent’s will or by Minnesota law.  The personal representative of the estate is the person responsible for making sure that the correct debts are paid in the correct order.  The personal representative is also responsible for making sure that the estate’s assets are properly identified and gathered.  However, even though some assets may be in the decedent’s name, this does not mean that these assets will pass through probate.  Some assets are non probate assets. money underneath a calculator

Non probate assets are those assets which transfer immediately upon the death of the decedent and do not require further assistance from the court to affect this transfer.  Some common examples of these non probate assets are life insurance proceeds, property titled as joint tenants, trust assets, accounts with payable on death designations, or retirement plans with beneficiary designations.  These type of assets will not be gathered by the personal representative to be distributed like the probate assets, some common examples of which are personal property, property owed as tenant in common, or assets that designate the estate as the beneficiary.

One of the personal representative’s responsibilities is to make sure that the probate assets are properly gathered.  The personal representative will use the estate assets to pay the debts of the estate.  These debts will commonly include such examples as medical costs, funeral expense, and lawyer fees.  Personal representatives must pay the estate debts in order of particular priority, which is set according to Minnesota law.  Personal representatives use the probate assets to pay these debts.  However, this begs the question, what about the non probate assets?  Can the personal representative use the non probate assets to satisfy the estate’s debts?  The answer is “no.”  The non probate assets pass automatically outside of probate.  The ownership of these assets is automatically shifted to the new owner.  In other words, the assets do not belong at all to the estate, and so cannot be reached by the estate’s creditors to satisfy the debt.

We have extensive experience helping our clients understand payment of debts from an estate and how property flows through probate. Call us today at (651) 371-9117 to talk about your case.