Probate can be time-consuming, but not all assets go through this legal process. In Texas, certain assets pass directly to beneficiaries without court involvement. Understanding which assets bypass probate can help you streamline estate planning.
Jointly owned property with survivorship rights
If you own property with someone else under a joint tenancy with right of survivorship, the property automatically transfers to the surviving owner. This is common with homes and bank accounts. The state also allows community property with right of survivorship for married couples, ensuring that the deceased spouse’s share goes directly to the surviving spouse.
Payable-on-death and transfer-on-death accounts
Financial institutions allow you to designate beneficiaries for bank accounts, retirement funds, and investment accounts. Payable-on-death (POD) accounts transfer directly to the named beneficiary after the account holder’s death. Similarly, transfer-on-death (TOD) designations apply to securities and brokerage accounts, allowing them to pass outside of probate.
Life insurance policies and retirement accounts
Life insurance policies and retirement accounts like 401(k)s and IRAs do not go through probate if a beneficiary is named. The proceeds are paid directly to the designated person, avoiding delays and court costs. Keeping beneficiary designations updated ensures that the intended person receives the assets.
Revocable living trusts
A revocable living trust allows you to transfer assets into the trust while you are alive. Upon your death, the trust property is distributed according to your wishes without going through probate. This method provides flexibility and privacy while simplifying the transfer process.
Simplifying asset transfers
Proper estate planning can help you avoid probate for many assets. Knowing what steps to follow can ensure a smooth transfer of property. Understanding these options can make asset distribution easier for your loved ones.