Items That Are Not Part of Probate of Estate in Pennsylvania
In Pennsylvania, as in other jurisdictions, certain assets always bypass the probate process. Non-probate assets are different from probate assets as they are typically contractual in nature. Assets such as trusts, retirement funds and life insurance proceeds always pass to beneficiaries outside of probate. In Pennsylvania, probate assets such as real estate and personal property are passed to beneficiaries during the probate process.
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Life Insurance Proceeds
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The beneficiary designation in a life insurance policy serves the same function as a beneficiary in a will. Life insurance proceeds are not probated because life insurance policies are much like contracts. These policies are typically payable upon the death of the policy holder. Life insurance proceeds are not probated because they are paid by the life insurance company and not out of a decedent's estate.
Retirement Funds
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In Pennsylvania, retirement funds/pension accounts are non-probate assets often arranged through a decedent's employer. Individual Retirement Accounts (IRAs), made through financial intermediaries, are also non-probate assets. Pension plans always bypass the probate process because they contain designated beneficiaries to whom the account passes if the owner has not exhausted the funds during his lifetime. Retirement funds are separate from a decedent's probate assets and always bypass probate courts in Pennsylvania.
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Revocable Living Trusts
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Revocable living trusts involving a deed of trust require a creator/settlor, a trust corpus and a trustee. In Pennsylvania, revocable living trusts bypass the probate process because a trustee is directed to administer the trust. Thus, there is no need for a probate court's guidance. Revocable living trusts are considered non-probate assets because legal title to the trust belongs to the trustee.
Joint Tenancies and Payment on Death Bank Accounts
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Joint tenancies with right of survivorship are considered non-probate assets in Pennsylvania and elsewhere. The probate process is unnecessary in a joint tenancy with right of survivorship because the decedent's interests in property automatically pass to any surviving tenants. Payment on death bank accounts have named beneficiaries to whom money passes upon the death of the account owner.
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