What is nonprobate property?

The property which is not part of the estate distributed by the deceased’s will (if there is one) or the state intestacy statutes is known as nonprobate property. This nonprobate property is property which basically has already been taken care of, in terms of what happens it to it when its owner dies, so one does not need to look at a will or intestacy statutes to determine where the property goes.

Property may be made nonprobate property by the deceased him/herself, prior to dying, such as where there is an inter vivos transfer or where the property is life insurance payments. Property may also be made nonprobate property because of other applicable laws, for example, where the property is jointly owned by someone in addition to the deceased.

There are certain advantages to a person arranging for his or her property’s distribution prior to death so that it becomes nonprobate property - for example, it may help relieve tax-related issues for the party giving or receiving the property, it can protect the property from the deceased’s creditors and it can help reduce the burden of estate planning and estate administration.