Many people assume that all assets must go through probate when a loved one passes away, but that’s not the case. Some types of property transfer directly to heirs or beneficiaries without the need for court involvement. Understanding which assets bypass probate can help you plan your estate efficiently and ensure a smoother transition for your beneficiaries. Below, we break down the types of property that do not require probate and how they transfer upon death.
Property Passing to a Surviving Spouse
In California, married couples often hold property in a way that allows for a seamless transfer upon the death of one spouse.
- Community property – In community property states like California, each spouse owns half of all community assets. When one spouse dies, their half is passed according to their will or intestate succession if there is no will.
- Community property with right of survivorship – If the property is titled this way, it transfers automatically to the surviving spouse without probate. This requires an express declaration in the property deed.
- Spousal property petition – A surviving spouse can also use a simplified legal procedure called a spousal property petition to claim assets without going through full probate administration.
Joint Tenancy Property
Many couples and co-owners hold property in joint tenancy with the right of survivorship. This means that when one owner passes away, their share automatically transfers to the surviving joint tenant(s).
- Applies to real estate, bank accounts, and personal property
- Avoids probate but must be titled correctly
- Cannot be changed in a will
For example, if you and your spouse own a home as joint tenants and you pass away, your spouse automatically becomes the sole owner without needing probate court approval.
Property Transferred by Contract Provisions
Certain assets bypass probate due to built-in contractual terms. These include:
- Life insurance policies – Payouts go directly to the named beneficiary unless the estate is listed.
- Retirement accounts (IRAs, 401(k)s, pensions) – Beneficiary designations override wills.
- Annuities – Benefits are transferred directly to the named recipient.
If you own these assets, it is critical to update beneficiary designations to ensure they reach their intended recipients.
Life Insurance Benefits
Life insurance policies are designed to provide financial support to beneficiaries without the delays of probate. The only time life insurance proceeds go through probate is if:
- The named beneficiary has passed away, and no contingent beneficiary is listed.
- The estate is listed as the beneficiary instead of a person or trust.
To avoid complications, policyholders should regularly review and update their beneficiary designations.
Multiple-Party Accounts
Bank and financial accounts often allow owners to set up direct transfer mechanisms that avoid probate. These include:
- Payable-on-death (P.O.D.) accounts – The named beneficiary receives the funds directly upon the account holder’s death.
- Transfer-on-death (T.O.D.) securities – Stocks, bonds, and brokerage accounts can be set up to transfer to a designated beneficiary.
These account designations take precedence over any instructions in a will.
Trust Property
Trusts offer one of the most effective ways to avoid probate. When assets are placed in an inter vivos trust (a trust created during the owner’s lifetime), they are no longer considered part of the individual’s probate estate. Instead, the trustee distributes them according to the terms of the trust.
Benefits of using a trust:
- Avoids probate entirely
- Provides privacy, as trust assets do not become part of the public record
- Can include detailed instructions for how assets are managed over time
If you have significant assets, a well-structured trust can simplify inheritance matters and provide greater control over distributions.
U.S. Savings Bonds
U.S. savings bonds can also pass outside of probate under certain conditions:
- If they are co-owned, the surviving co-owner automatically inherits them.
- If a payable-on-death (P.O.D.) beneficiary is named, the bonds transfer directly upon the original owner’s passing.
If bonds are held individually with no beneficiary listed, they may be subject to probate.
Statutes Governing Non-Probate Transfers of Community Property
California has specific laws that regulate non-probate transfers of community property. These apply to assets such as:
- Employee benefits and retirement plans
- Life insurance policies with spousal beneficiaries
Understanding these laws is particularly important for married individuals who want to ensure that community property transfers smoothly without probate delays.
Statutes Governing Non-Probate Transfers to Former Spouses
California law automatically revokes non-probate transfers to a former spouse following a divorce unless the decedent explicitly reaffirms the designation after the divorce is finalized. For example, this rule applies to P.O.D. and T.O.D. accounts. If you have divorced and wish for your former spouse to remain a beneficiary, you will need to take legal steps to confirm your intentions.
Contact Our Experienced Orange County Probate Attorneys
Navigating probate can be a challenge, but many assets transfer directly to beneficiaries without court involvement. From jointly owned property to trusts, structuring your estate correctly can help streamline the process for your loved ones.If you want to ensure your assets are distributed according to your wishes while avoiding probate complications, OC Trial Group, APC can help you explore the best estate planning options for your situation. Contact us today to discuss your plan.