After a person dies, their estate goes into probate. That means the court will make sure that a will is valid or, if there is no will, someone is appointed executor of the estate to pay bills, taxes and distribute the state’s assets.
Not all estates have to go through probate, however.
A ‘small estate’ in Tennessee
If all the assets add up to less than $25,000, then an estate falls under Tennessee’s “small estate” category and can avoid probate. The key to declaring a small estate designation is to remember the items that are excluded:
- Retirement accounts with named beneficiaries
- Insurance policies with named beneficiaries
- Property that has right of survivorship
- Payable-on-death bank accounts, transfer-on-death deeds and transfer-on-death brokerage accounts
These items are excluded because they go straight to a beneficiary regardless of whether there is a will.
Property owned with another person (usually the spouse) has “tenancy by the entirety,” which means the property goes to the survivor upon death without having to go through probate. Bank accounts with pay-on-death or transfer-on-death documents can avoid probate, as can retirement accounts or life insurance policies with a designated beneficiary and property that is in a living will or revocable trust.
There are a number of types of trusts, but the basic types are revocable and irrevocable. With a revocable trust, the trustee can move property into and out of the trust during their lifetime, but once the trustee is dead, the property stays in the trust for the beneficiaries and does not go to probate. In an irrevocable trust, the property is moved into the trust and cannot be taken out, changed or modified. The main difference between the two is that a creditor can seize property in a revocable trust but cannot touch property in an irrevocable trust.
Assets in the name of the deceased alone are the ones that go through probate. They include bank accounts without a payable-on-death beneficiary, property where right of survivorship doesn’t apply, investments, stocks and bonds, clothes, jewelry, cars and other personal items.