In Minnesota, an “estate” is everything a person owns – like a house, vehicles, land, money, bank accounts, and personal assets. All of these assets together make up a person’s estate.
When someone dies, the value of their estate is the value of everything they own minus what they owe- like bills, debts, or taxes.
There are two different kinds of assets in an estate: Probate and Non-Probate.
The key difference is whether or not the owner has set things up so that the ownership of the property can transfer automatically after they die without the probate court having to get involved.
Probate Estate
The probate estate includes everything owned by a person that does not automatically go to someone else like a joint owner or beneficiary, or is not in a trust.
To make sure the estate is divided and given to the right people, it has to go through the a court process called probate.
Examples:
- House or other land that is only in the person’s name when they pass
- Bank or investment accounts that are only in the person’s name when they pass
- Stocks or investments that are only in the person’s name when they pass
- Vehicles – like cars, motorcycles, or boats that are only in the person’s name when they pass
- Life insurance without a named beneficiary
- Retirement benefits without a named beneficiary
A person can avoid probate for many of these assets by taking steps like listing account beneficiaries or filing a Transfer on Death Deed (TODD). This moves the asset into the non-probate estate.
Non-Probate Estate
This is the part of someone’s estate that does not have to go through probate court in order to change ownership. These assets go directly to the person’s joint owners or beneficiaries.
Examples:
- Property jointly owned with right of survivorship
- Property given by a Transfer on Death Deed (TODD)
- Accounts that are jointly owned
- Accounts that have a payable on death (POD) designation
- Life insurance with a named beneficiary
- Retirement accounts with a named beneficiary
