Estate Planning Series - Part 8 - Common Non-Probate Assets

This is the eighth blog in our Estate Planning Considerations series. In the previous blog, we explored various options for including charitable giving in your estate plan. In this blog, we will discuss common non-probate assets in Texas. When planning your estate, it is essential to consider not only your probate assets but also your non-probate assets. Non-probate assets are assets that transfer directly to beneficiaries outside of the probate process, allowing for a smoother and more efficient distribution of your estate. Understanding these assets will help you develop a comprehensive estate plan that encompasses both probate and non-probate assets.

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Jointly Owned Property

Jointly owned property is a common non-probate asset in Texas. When you own property jointly with someone else, such as real estate or bank accounts held as joint tenants with right of survivorship (JTWROS), the property automatically passes to the surviving joint owner upon your death. It is important to review the ownership structure of your assets to ensure they align with your estate planning goals.

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Retirement Accounts

Retirement accounts, such as 401(k)s, IRAs, and pension plans, are typically considered non-probate assets. These accounts allow you to designate beneficiaries who will directly receive the assets upon your death. It is crucial to regularly review and update the beneficiary designations on your retirement accounts to ensure they reflect your current wishes.

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Life Insurance Policies

Life insurance policies are another common non-probate asset. The proceeds from a life insurance policy are paid directly to the designated beneficiaries upon the policyholder's death. Review your life insurance policies periodically to ensure the designated beneficiaries are up to date and aligned with your estate planning objectives.

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Payable-on-Death (POD) and Transfer-on-Death (TOD) Accounts

Bank accounts, certificates of deposit (CDs), and brokerage accounts can be designated as payable-on-death (POD) or transfer-on-death (TOD) accounts. These accounts allow you to designate beneficiaries who will inherit the funds directly upon your death. POD and TOD accounts bypass the probate process and provide a streamlined transfer of assets.

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Trust Assets

If you have established a revocable living trust, the assets held within the trust are considered non-probate assets. Upon your death, the trust assets pass directly to the designated beneficiaries according to the terms of the trust. Trusts offer flexibility, privacy, and potential estate tax advantages, making them a valuable tool in estate planning.

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Assets Held in Business Entities

If you own assets through a business entity, such as a corporation, limited liability company (LLC), or partnership, the transfer of those assets may occur outside of the probate process. These assets pass according to the governing documents of the business entity, such as shareholder agreements, operating agreements, or partnership agreements.

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Conclusion

Understanding the common non-probate assets in Texas is crucial for comprehensive estate planning. By considering jointly owned property, retirement accounts, life insurance policies, POD and TOD accounts, trust assets, and assets held in business entities, you can have greater assurance that your estate plan encompasses both probate and non-probate assets.

Remember, estate planning is not a one-time task but an ongoing process. It's important to review and update your estate planning documents periodically to reflect any changes in your circumstances, such as births, deaths, marriages, or divorces. Working with an experienced estate planning attorney can provide valuable guidance and support throughout this process.

In the next blog of the Estate Planning Considerations series, we will explore the following topic: Choosing a Guardian for Minor Children.

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Contact Montgomery Legal today to discuss your estate plan. Schedule a Consultation or call (214) 432-6100.