Notes on Probate, Non-probate Assets, Wills, Trusts, and Intestacy (9/16/25)
Nonprobate assets and probate basics
Probate is the court process for distributing property that does not pass outside probate.
Wills are tied to probate: whenever we talk about a will, we’re talking probate; wills = probate in this context.
Nonprobate assets transfer without opening a probate estate; they bypass the court process.
The big idea: most people’s property is nonprobate, so understanding nonprobate transfers is crucial for planning.
Nonprobate assets: what transfers without probate
Joint tenancy with right of survivorship (JTWROS)
Auto-transfer to surviving co-owner at death; no probate required.
Not limited to real estate; can apply to bank accounts, vehicles, etc.
Property held in a trust
A trust is a third legal entity created by the grantor; the grantor transfers property into the trust.
The trust technically owns the property, but the grantor often retains control as the settlor.
Upon death, the trust terms govern how property is disposed of; a trustee administers per the trust instructions.
Trusts are often recommended because they avoid probate and can be faster and cheaper overall.
If property is not transferred to the trust, or if post-creation purchases are not transferred, those assets may still be subject to probate unless funded into the trust.
Life Estates : A legal arrangement that allows a person to use a property during their lifetime, with the title passing to a designated beneficiary upon their death. This can also help to avoid probate and ensure that the property is passed directly to the intended heir.
Payable-on-death (POD) / Transfer-on-death (TOD) designations
You can designate a beneficiary for certain accounts so that on death, the asset transfers to that person without probate.
Applies to bank accounts, some securities, etc.; requires the designation to exist and be current.
Not all institutions offer TOD/POD; check availability and keep designations up to date.
Life insurance
Beneficiary designation on the policy dictates who gets the payout upon death.
Typically bypasses probate; payout goes to the named beneficiary directly.
Retirement accounts (e.g., 401(k), 403(b), IRA)
Beneficiary designations on retirement accounts determine who receives assets at death, outside probate.
Tax treatment and planning differences exist across account types (traditional vs Roth, etc.).
Many people don’t update beneficiary designations after life events (marriage, divorce, birth, death, etc.), which can unintentionally disrupt intended plans.
Important cautions about nonprobate designations
If there is no beneficiary designation, or if the designated beneficiary dies before the account owner, those assets may no longer pass nonprobate and may require probate.
Nonprobate assets still interact with overall estate planning; they should be coordinated with wills and trusts.
Overview takeaway
Nonprobate assets bypass probate when properly designated or titled, which can save time and costs and can provide more control over who receives assets and when.
Why trusts are often favored over relying on a will alone
A trust is a separate legal entity (the grantor creates the trust, and a trustee administers it).
The grantor can transfer property (home, car, investments, etc.) into the trust; after death, the trustee distributes according to the trust terms.
A trust acts like a “shadow” of the grantor: the grantor remains involved during life, and the trust continues after death to manage and distribute assets.
Pour-over will
Often paired with a revocable living trust to catch any assets not transferred to the trust during life.
The pour-over will directs that any remaining assets be transferred into the trust upon death, ensuring they are distributed according to the trust terms.
Practical benefits of trusts
Avoid probate for assets funded into the trust.
Potentially faster and less costly administration.
Greater control over timing and manner of distributions (e.g., for children, heirs, or beneficiaries with special needs).
Can provide tax planning benefits depending on structure.
Important caveats
Trusts can be complex and require careful drafting; funding the trust (transferring assets into it) is critical.
Some assets may still go through probate (e.g., assets not funded into the trust or titled incorrectly).
Summary of trust functionality
A trust is a container you fill with assets (house, life insurance, investments, etc.).
Assets inside the trust are managed by a trustee for the benefit of beneficiaries you designate.
You decide the distribution rules and timing; the trustee enforces them.
How retirement accounts and beneficiary designations work (practical planning points)
Retirement accounts (401(k), 403(b), IRA) are generally nonprobate if a beneficiary designation is properly in place.
Employer matches and tax advantages (illustrative example):
Example: employer contributes a match to your retirement plan; this benefit accompanies pre-tax contributions (
tax-deferred growth) and potential employer matching can be a significant portion of retirement assets.Traditional accounts: contributions may be pre-tax; distributions in retirement are taxed as ordinary income.
Roth accounts: qualified withdrawals are tax-free;
beneficiaries may have different tax implications.
The role of beneficiary designations
A beneficiary designation on retirement accounts is a powerful nonprobate tool.
It requires proactive updating to reflect life events (marriage, divorce, births, deaths, changes in relationships, etc.).
If the designation is not updated, it may no longer reflect the owner's wishes, and assets may not pass as intended outside probate.
Takeaway
Retirement accounts, like other nonprobate assets, depend on current beneficiary designations; update them regularly as life changes occur.
The probate process (Michigan terminology and flow)
When probate is needed
If assets are not nonprobate (not properly designated or titled), probate is required to distribute the remaining property.
The court appoints a personal representative (Michigan uses this term; other jurisdictions may call this an executor).
Roles and duties of the personal representative (administrator)
Identify and inventory remaining property.
Have the property appraised for value.
Pay relevant taxes and debts.
Distribute property according to the will, or according to state law if there is no will or if the will is invalid.
Will vs intestacy in probate
If there is a valid will, the court determines the will’s validity and how to distribute assets per the will.
If there is no will or the will is invalid, the court follows state intestacy statutes to distribute the decedent’s property.
Important interplay with nonprobate assets
Assets that are nonprobate (e.g., jointly owned, POD/TOD, designation-based assets, etc.) generally do not go through probate and are not distributed by the will; they bypass this process.
Requirements for a valid will (statutory basics)
Written document (statute of fraud applies to real estate transfers).
Signed by the testator (the person making the will).
Two non-biased witnesses to the signing, ensuring the testator was of sound mind and not unduly influenced.
Purpose of witnesses is to provide testimony about the testator’s capacity and the signing circumstances.
The testator and the witnesses
Testator: the person whose will is being signed (the one who died or will die).
Witnesses must be non-biased to avoid conflicts of interest and ensure credible testimony.
The holographic will exception
A holographic will is handwritten by the testator and may not require witnesses in some jurisdictions.
The rationale is to provide accessibility and ensure there is at least some indication of the decedent’s intent when time is critical (e.g., before surgery).
Courts generally require the material portions to be in the testator’s handwriting and may still scrutinize capacity, even in holographic wills.
Pour-over wills (clarification)
If assets exist outside the trust, a pour-over will directs those assets into the trust upon death for distribution according to the trust terms.
What if there’s no will or an invalid will?
The estate is settled under intestacy provisions.
The probate process then distributes property according to the state’s intestacy statute, which is a one-size-fits-all approach rather than tailored to individual circumstances.
Intestacy flowchart and practical implications
A quick mental model of the Michigan intestacy flow (as discussed) follows a priority based on relationships:
Start: Is there a surviving spouse?
If yes: the spouse’s share is prioritized, sometimes with a forced share; the chart indicates the spouse is favored in many scenarios, with various splits depending on whether there are children and whether the children are with the surviving spouse or with someone else.
If no spouse: move to children; if children exist, children take the estate.
If no spouse or children: check living parents; if parents exist, they receive; otherwise check for surviving siblings; if none, move to more distant relatives depending on jurisdiction.
Michigan-specific notes mentioned in the transcript
Forced share for spouses: the surviving spouse is allocated a guaranteed portion regardless of other arrangements.
If a decedent has a spouse and children, the distribution tends to favor the spouse, with the precise amounts depending on whether the child is with the spouse or with another partner.
The chart illustrates the prioritization of spouses and children and why this design exists: to create a practical, broadly applicable rule for distribution when there is no will.
Critical reflection prompts
Consider how well this statutorily determined flow matches a family’s actual structure and wishes.
Think about scenarios where the statute might work poorly (e.g., estranged family members, close friends acting like family, blended families, or non-traditional caregiving arrangements).
Recognize that this is a simplification of a complex set of rules that vary by jurisdiction and by year; always consult current local law.
Practical implications and takeaways
Trusts can reduce or avoid probate costs and delays, and provide control over timing and beneficiaries.
Nonprobate designations (joint ownership, POD/TOD, beneficiary designations on life insurance and retirement accounts) should be reviewed regularly, especially after major life events (marriage, divorce, births, deaths, job changes).
Wills are still essential for assets that aren’t funded into trusts or designated for nonprobate transfer; however, the default intestacy laws will apply if there is no will or if it’s invalid.
The choice between placing assets in a trust vs relying on joint ownership or beneficiary designations depends on goals such as control, timing, privacy, tax planning, and potential avoidance of probate costs.
Ethical and practical considerations
The importance of aligning legal documents with family dynamics and financial goals.
The need for clear, updated plans to reflect life changes and to prevent unintended outcomes for loved ones.
The potential for legal conflict if documents are outdated or if relationships change, underscoring the value of periodic reviews with an attorney.
Quick glossary of key terms
Probate: court-supervised process of administering a deceased person’s estate not diverted to nonprobate transfers.
Nonprobate assets: property that passes outside probate (e.g., jointly held assets, trust assets, POD/TOD accounts, life insurance beneficiary designations, retirement account beneficiary designations).
Joint tenancy with right of survivorship (JTWROS): ownership where the surviving owner automatically gains full ownership on the other’s death.
Trust: a legal entity created to hold and manage assets for beneficiaries under specific terms; managed by a trustee.
Grantor/Settlor: the person who creates the trust.
Trustee: the person or institution that administers the trust according to its terms.
Beneficiary: person(s) who receive assets from a trust or will.
Pour-over will: a will that directs that assets not funded into a trust be transferred into the trust upon death.
POD/TOD: designations that allow assets to pass to a named beneficiary without probate.
Testator: the person who makes a will.
Personal Representative (Michigan term): the executor or administrator appointed to administer a probated estate.
Holographic will: a handwritten will that may not require witnesses in some jurisdictions.
Statute of Frauds: legal principle requiring certain contracts and, in real estate, wills, to be in writing.
Intestacy: the condition of dying without a valid will, triggering state laws to determine heirs.
Forced share: a statutory minimum portion of a deceased spouse’s estate guaranteed to the surviving spouse.
Note on applicability
The specific rules, thresholds, and percentages (e.g., the spouse’s share and how the balance is divided when there are children) can vary by state and over time. The numbers and examples in this transcript reflect a Michigan-based discussion and should be verified against current state law when applying in practice.