When people think about estate planning in South Carolina, the term “probate” often comes to mind. Probate is the legal process of validating a will, paying debts, and distributing assets under court supervision. But many assets are labeled “non-probate” because they transfer outside of probate.
Common examples include payable-on-death accounts, jointly held property with rights of survivorship, and certain retirement accounts. These assets might seem untouchable by disputes or legal claims, yet the law recognizes situations where even non-probate assets can be contested.
At The Nelson Law Firm, we help families in Bluffton, South Carolina, and throughout Beaufort County plan for the future and protect their assets. We work closely with clients to explain how probate and non-probate assets interact, and we guide them through the legal options available when disputes arise.
What Are Non-Probate Assets?
Non-probate assets are financial accounts or property that transfer automatically to a named beneficiary or co-owner upon the original owner's death. Because these assets bypass the probate court, they usually pass directly to the beneficiaries, often more quickly than probate assets. Examples include:
Bank accounts with payable-on-death (POD) or transfer-on-death (TOD) designations
Life insurance policies with named beneficiaries
Retirement accounts such as IRAs and 401(k)s
Property held jointly with rights of survivorship
While non-probate assets don’t go through the probate court, that doesn’t mean they’re completely shielded from challenges. Family members, creditors, or other interested parties may still attempt to contest these transfers under certain circumstances.
Why Non-Probate Assets Might Be Contested
Even though non-probate assets avoid the typical probate process, disputes can arise. Some of the common reasons include:
Allegations that the account holder lacked mental capacity when designating beneficiaries
Claims that undue influence or coercion was used to change ownership
Conflicting claims from multiple beneficiaries or heirs
Creditor claims seeking to access funds before they pass to beneficiaries
In South Carolina, the law provides avenues to challenge non-probate assets, especially when there’s evidence that the transfer didn’t reflect the deceased's true intentions or violated legal requirements. Courts may get involved to resolve disputes, even if the property didn’t go through probate initially.
Legal Grounds for Contesting Non-Probate Assets
There are several specific legal grounds for contesting non-probate assets. These include:
Lack of capacity: If the original owner wasn’t mentally competent when the beneficiary designation was made, a court may invalidate the transfer. Mental capacity at the time of signing is a crucial factor.
Undue influence: If someone exerted pressure on the account holder to change beneficiaries or co-ownership, that designation can be challenged.
Fraud or forgery: Misrepresentation or falsified documents can provide grounds for a contest.
Mistake: Clerical errors, such as incorrect names or account numbers, may result in disputes over who is entitled to the asset.
Creditor claims: Even non-probate assets may be reachable by certain creditors, depending on the timing of the debt and the type of asset involved.
These challenges aren’t automatic, and the party contesting must provide evidence that the transfer was improper or invalid under South Carolina law.
Steps Beneficiaries and Executors Can Take
Handling disputes over non-probate assets often requires careful documentation and legal action. While every situation is unique, some practical steps can help protect the intended transfers:
Verify account titles and beneficiary designations to confirm they reflect the owner’s intent.
Keep copies of relevant documents, including account forms, letters, and communications.
Monitor for any conflicting claims or disputes from other potential heirs or creditors.
Consult an experienced estate attorney if a challenge arises or seems likely.
Maintain clear records of any communications with banks, retirement plans, or insurance providers.
It’s also important to understand that even well-planned non-probate transfers can face challenges, especially if beneficiaries or family members question the validity of designations or claim undue influence. Working with an experienced estate attorney can help clarify the legal standing of these assets and provide guidance on the steps needed to defend them in court.
Attorneys can draft affidavits, prepare evidence, and advise on timing and procedures to respond to disputes effectively. By taking proactive measures and involving legal counsel early, South Carolina residents increase the likelihood that non-probate assets will transfer as intended, reducing stress for families and supporting the deceased’s wishes.
How Probate Intersects With Non-Probate Assets
Even though non-probate assets typically bypass probate, challenges to them can draw them into proceedings that resemble probate. For instance, if a beneficiary designation is contested, the court may have to review evidence, determine the validity of the claim, and issue a judgment.
In some cases, disputes over non-probate assets can delay distributions and create situations requiring probate-like oversight.
It’s also important to remember that while non-probate assets can transfer automatically, other estate assets that do go through probate may interact with them. For example, creditors might file claims against both probate and non-probate assets to satisfy outstanding debts.
Understanding how these different parts of an estate interact is critical for minimizing legal complications.
Protecting Non-Probate Assets From Challenges
While it’s impossible to eliminate the chance of a dispute altogether, there are steps South Carolina residents can take to reduce risks:
Regularly review and update beneficiary designations on accounts and policies.
Communicate clearly with family members about your intentions.
Keep thorough documentation showing capacity and intent at the time of designation.
Consider using trusts or other legal structures to add a layer of protection.
Work with a qualified estate planning attorney to align non-probate transfers with overall estate plans.
In addition to these steps, working with an experienced attorney can provide critical guidance in anticipating potential challenges before they arise. An attorney can help identify assets that may be vulnerable to disputes, suggest strategies to strengthen designations, and ensure all legal requirements are met.
They can also provide advice on how to document your intentions clearly, so if a disagreement does occur, there’s credible evidence to support your wishes. Having professional legal support can make the process smoother and reduce stress for families, offering greater confidence that non-probate assets are protected and transferred in accordance with your intentions.
Speak With an Experienced Attorney
Non-probate assets in South Carolina offer a way to transfer wealth outside the traditional probate process, but they’re not immune to challenges. Beneficiaries may face disputes over capacity, undue influence, fraud, or errors in account designations. Even assets that bypass probate can become part of legal proceedings if someone contests the transfer.
At The Nelson Law Firm, we work with clients in Bluffton, South Carolina, and throughout Beaufort County to protect non-probate assets and resolve disputes when they arise. By reviewing account titles, beneficiary designations, and estate plans, we help families reduce the likelihood of contests and provide clarity for intended transfers.
If you’re dealing with a contested asset or want to review your estate planning strategy, contact us today to discuss your options and safeguard your legacy.
