Probate simply means the process of presenting a person’s Last Will and Testament at Court, formally opening an estate with the court, and taking care of the person’s bills, assets, and tax returns until everything is finished and the estate is closed with the court.
A lot of assets have beneficiary designation forms and are not subject to probate. This means that the beneficiary designation form is a contract that says what happens.
Life insurance, for example, is paid to the beneficiary you list on the beneficiary designation form you filled out when you purchased the policy. It does not matter what your Will says – if your life insurance beneficiary designation form was completed by you years ago and you named your sister at that time as your beneficiary, the company is going to pay the policy to your sister when you die– the company will not pay it to your wife, child or anyone else. For this reason it’s critical that you keep up with your assets that have beneficiary designation forms, and you update those forms if your family situation changes. Many ex-spouses have collected life insurance because their ex-spouse ‘just forgot’ to update their policy when they got divorced.
Other examples of assets not subject to probate include 401K plans, IRAs and Roth IRAs. You can also make an asset, such as a bank account or brokerage account “Payable on Death” (POD) or “Transfer on Death” (TOD) if your bank or brokerage company allows this – in which case that paperwork controls what happens to the asset – your Will has nothing to do with it.
So keeping up with your accounts and beneficiary designation forms is a best practice to make it easier for family members.