People try to avoid having their assets go through the probate process because it can be a long, expensive, and complicated procedure. The probate process involves court proceedings that determine how an individual’s assets are distributed after they pass away. It also requires that all of the deceased’s debts be settled before any remaining funds or assets can be distributed to heirs. This means that family members may have to wait for months or even years before receiving their inheritance due to the lengthy legal procedures involved in settling estates. Additionally, estate taxes and other fees associated with probate can significantly reduce the amount of money available for distribution among heirs. Therefore, many people attempt to plan by utilizing various probate alternatives such as trusts and joint ownership arrangements to minimize costs and ensure that their assets are distributed according to their wishes without delay.
If the remaining estate is small enough – less than $75,000 in property or the estate’s debts exceed its worth, the administrator can close the estate by filing a small estate affidavit and avoid the probate process.
Texas Legal Services Center (TLSC) Legal Hotline, 800-622-2520 provides counsel and advice to Texans over the age of 60 or medicare beneficiaries. It is staffed Monday through Friday, 830 am – 5 pm (except holidays. View their website or reach out for guidance on several civil legal matters to have that peace of mind.
Living Trusts:
In Texas, you can make a living trust to avoid probate for virtually any asset you own – real estate, bank accounts, vehicles, and so on. You need to create a trust document (it’s similar to a will), naming someone to take over as trustee after your death (called a successor trustee). This person will manage the trust and make sure it is managed according to your directions within the document. Tips on creating a living trust in Texas on Nolo.com.
Joint Tenancy with Rights of Survivorship
Real property (land) and personal property can be owned jointly. There are two kinds of joint tenancy and the distinction is important. In a joint tenancy (without rights of survivorship), when one owner dies, their share of the property passes to their heirs or people named in their will. In a joint tenancy with the right of survivorship, the decedent’s share of the property goes to the other owners. This arrangement is created by a writ
Payable-on-Death accounts
You can create bank accounts that are designated as “payable on death.” After your death, the person you chose automatically becomes the account owner. These are not joint accounts; you have total ownership of the account while you are alive.
Download Wells Fargo information on the pros and cons of payable on death accounts and TODD
Transfer-on-death Deeds
As of September 1, 2015, Texas law says that a homeowner can prepare a Transfer on Death Deed (TODD). A TODD allows the owner, the transferor, to name a beneficiary who will receive the property described in the deed after the transferor has died. In the meantime, the transferor continues to live in the home as usual. As the transferor, you can also still sell the property if you need to. The beneficiary originally named would not receive the property upon your death in this situation. The TODD must be recorded in the deed records of the county where the property is located before the transferor’s death. A Transfer on Death Deed governs over the will. This texaslawhelp.org article explains: If your will states Property A goes to “my daughter” but the TODD names “my son” as the beneficiary of Property A, your son will receive the property no matter which of the documents was executed first. The title can transfer without going through probate.
Life Insurance
Benefits from your life insurance and retirement accounts should pass directly to the beneficiaries upon death without going through probate – you can purchase additional life insurance policies to designate beneficiaries and avoid having your assets go through probate.
Gifts and Charitable Donations
A charitable deduction can reduce the estate’s total value and overall tax rate. The deduction is available for gifts made at death through wills, life insurance contracts, IRA’s, 401k plans, or trusts. To take advantage of the deduction, the property must be given to a qualified organization . Examples include nonprofit groups that are religious, charitable, educational, scientific, or literary in purpose, or that work to prevent cruelty to children or animals. Reference IRS.gov Publication 526 (2022), Charitable Contributions for further details. The value of the deduction is typically the fair market value (FMV) of the property.
DISCLAIMER: Nothing in this article should be considered legal advice. It is solely for informational purposes. Nor does it substitute for consultation with a competent probate attorney. Please make sure to contact a qualified probate attorney in your preferred jurisdiction to obtain advice tailored to your specific situation. For more information, please visit https://www.texasbar.com/AM/Template.cfm?Section=Find_A_Lawyer&template=/Customsource/MemberDirectory/MemberDirectoryDetail.cfm and search for an attorney in your area who handles probate matters.
It is important to remember that the best way to avoid probate is through proper planning and preparation before death occurs, so contact a legal professional or financial advisor for additional information on how you can prepare for the future today. With their help, you can ensure that your wishes are carried out with minimal stress and time
