An estate plan is not a stack of documents. At its heart, estate planning involves arranging one’s property and affairs for use during life and disposition after death. A person’s “gross estate” generally includes two types of property: probate and non-probate. This article provides a brief overview of these two approaches to property distribution after death.
Probate property refers to assets that must pass through the Probate Court system before being distributed to heirs. A probate case begins when a person (usually a potential heir of the deceased) asks the Court to open a proceeding for the administration of a decedent’s estate. The Court will determine whether the deceased had a valid will. If so, the Court will appoint the executor named by the will to manage the estate’s affairs. Estate property will be distributed in accordance with the testator’s (the will maker’s) intent.
If the Probate Court decides that the deceased did not have a valid will, the Court will name an administrator to oversee the financial affairs of the estate and dispose of the decedent’s assets. After satisfying the costs of administration, probate fees, and debts of the estate, the Court will distribute the deceased’s property in accordance with the laws of intestacy (“intestacy” means “without a will”). The laws of intestacy vary from state to state. In Connecticut, intestate succession is codified in the General Statutes.
In contrast, non-probate property refers to assets that have been transferred either during a person’s lifetime or after death according to a survivorship mechanism. Non-probate property passes to an heir automatically upon the owner’s death, either by operation of law or as a result of contract rights. This means that the property is distributed privately, without the involvement or oversight of the Court.
Most people have some form of non-probate property. These assets are held in joint bank accounts, payment on death accounts, trusts, retirement accounts like IRAs and 401(k)s, life insurance policies, and some forms of titling real estate. Basically, any account or title that requires a beneficiary to be named is likely non-probate property.
In Connecticut, real estate is probate property by default. Hence, title would pass to the deceased’s heirs according to the provisions of the Will or the state intestacy statute. However, if the title to the property names the owners as “joint tenants with rights of survivorship,” an owner’s interest will pass to the surviving owner(s) upon his death by operation of law, thereby avoiding probate proceedings. The deceased owner’s interest in the property is extinguished upon his death, and it cannot be inherited by his heirs unless he is the last surviving owner. In the latter scenario, when the last owner passes away, the property will descend to his heirs.
Descent and distribution of property is dependent on a few factors. Non-probate property avoids Court and passes automatically upon a person’s death. The Probate Court distributes probate property according to the provisions of a Will or, in the absence of a Will, according to the laws of intestacy codified in the Connecticut General Statutes.