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  • Writer's pictureMarlow Law, LLC

Probate vs. Non-Probate Assets: The Importance of Title and Beneficiary Designations

Updated: Sep 5, 2018

When I meet with clients to discuss their estate planning needs, many are surprised by which of their assets are and are not distributed pursuant to the terms of their estate planning documents, specifically their Last Will and Testament. Contrary to popular belief, the only assets that are distributed in accordance with the terms of a person’s Last Will and Testament are probate assets. These probate assets include those assets that do not pass automatically at death pursuant to title and/or beneficiary designation.

Financial accounts with a “Pass on Death,” commonly abbreviated as “POD,” financial accounts with a “Transfer on Death,” abbreviated as “TOD,” and other upon-death titling designations are non-probate assets. These non-probate assets pass automatically upon death to whoever is named as the POD/TOD on the account. There is no need to look to the terms of a decedent’s Last Will and Testament to see who will receive the funds in these accounts upon the decedent’s death. Take for example, John Smith’s checking account, which is titled as follows: “John Smith, POD Susan Smith.” Upon John Smith’s death, if Susan Smith survives him, she is now the owner of John Smith’s checking account. There is no need to list the checking account as a probate asset in administering John Smith’s estate. The same applies to accounts with a beneficiary designation, such as a retirement account, investment account, or life insurance policy. If Susan Smith is listed as the beneficiary on John Smith’s 401(k) Plan, upon his death, Susan Smith becomes the owner of the 401(k) Plan account value. Life insurance policies with a beneficiary designation also pass automatically to the beneficiary designated on the policy. That is, the death benefit provided for within the policy is paid to whoever is named as the beneficiary. Typically, financial institutions only require a few completed forms and the decedent’s death certificate to transfer the account value to the POD/TOD/beneficiary on the account. Even if clients are adamant that accounts are titled in a certain manner and/or that a specific beneficiary designation is in place, I always insist that they reach out to each financial institution where assets are held to verify that information. Some clients find that a beneficiary was never designated on their respective accounts and unless a beneficiary is added, upon death, the accounts would be deemed probate assets and they would need to be accounted for through the probate process. Or worse, some clients find that they never updated their accounts accordingly and their ex-spouse or an estranged family member is named as a beneficiary on one or more of their accounts. If the beneficiary designation is not updated, an unintended recipient could inherit the client’s assets.


Bank accounts, investments, and life insurance policies aside, titling is especially crucial when it comes to the distribution of real property upon death. Real property includes land, as well as the improvements on land, such as a client’s home. When it comes to estate planning, it is critical to first examine deeds to real property in determining how the property will be distributed upon death. It is not only important to decipher the number of other individuals with an interest in the real property, but also, specifically how the property is titled to those individuals. If real property passes automatically by title, it is not necessary to look to the terms of the Last Will and Testament to determine who inherits the property upon death. Tenants by the entireties is a form of title in Maryland that is available only to married couples. Property titled as tenants by the entireties offers special protections to married couples during their lifetimes, and upon the death of one spouse, real property titled to two spouses as tenants by the entireties passes automatically to the surviving spouse. There is no need to draft a new deed, transferring full ownership of the property to the surviving spouse, and there is no need to list the real property as a probate asset when administering the deceased spouse’s estate. Real property titled to two individuals as joint tenants with the right of survivorship works in the same fashion. The property passes automatically to the surviving joint tenant. Real property titled to two individuals as tenants by the entireties or joint tenants with rights of survivorship will only become a probate asset upon the death of the last surviving spouse/joint tenant. That is when the terms of the Last Will and Testament are implicated. It is important to note the distinction between real property titled to two or more individuals as tenants by the entireties or joint tenants with right of survivorship and real property titled to two or more individuals as tenants in common. Property titled as tenants in common will not pass automatically to the surviving tenant in common listed on the deed. The interest that the deceased tenant in common has in the property will be distributed in accordance with the terms of his/her Last Will and Testament.


Some clients find that most of their assets will pass automatically upon death to their surviving spouse or to another individual named on title and/or designated as the beneficiary on an account. However, a Last Will and Testament is still a necessity. Who will receive property upon the death of the surviving spouse? Who will receive non-titled personal property items? Who will be responsible for ensuring that probate property is distributed appropriately? Who will serve as the custodian of property and the guardian of minor children? A carefully drafted Last Will and Testament provides the answers to these questions and guarantees that the client’s after-death wishes are carried out.


Contact Marlow Law, LLC, to schedule your free, 30-minute initial consultation to discuss your estate planning needs. If you have never prepared a Last Will and Testament or need to amend or update your current Last Will and Testament and/or other estate planning documents, contact us today.


Disclaimer: The information in this blog post (“Post”) is provided for general informational purposes only. No information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through this Post, without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction. Please note that an attorney-client relationship can only be created by a written, signed, fee agreement entered into with an attorney.

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