When a person passes away, their estate may go through probate. However, not all assets require court involvement. Some transfer directly to beneficiaries, saving time and money. Knowing which assets bypass probate can help you plan efficiently.
Jointly owned property
Property held in joint tenancy with right of survivorship automatically transfers to the surviving owner. This applies to real estate, bank accounts, and investments. If an asset has two owners with survivorship rights, probate isn’t necessary.
Payable-on-death accounts
Bank accounts, retirement funds, and some investment accounts allow a payable-on-death (POD) or transfer-on-death (TOD) designation. When the owner dies, the named beneficiary claims the asset without probate. Ensuring these designations are current helps avoid complications.
Life insurance and retirement accounts
Life insurance proceeds go directly to the named beneficiary. The same applies to retirement accounts like 401(k)s and IRAs. As long as a beneficiary is listed, these assets do not enter probate. If no beneficiary is named, they may become part of the estate and go through probate.
Living trusts
Assets placed in a revocable living trust bypass probate. The trustee distributes them according to the trust’s instructions. This method ensures privacy and avoids court delays. Real estate, bank accounts, and valuable personal property can be included in a trust.
Transfer-on-death deeds
Texas allows a transfer-on-death (TOD) deed for real estate. This document names a beneficiary who inherits the property upon the owner’s death. The deed must be recorded with the county clerk but remains revocable while the owner is alive.
Small estate exemption
If an estate qualifies as a small estate under Texas law, some assets can transfer without probate. This option is available when the total value of the estate is below a set limit and meets specific requirements.
Avoiding probate simplifies estate management for your loved ones. Reviewing asset designations and setting up the right legal tools ensures a smoother process.