Probate vs. Non-Probate Assets: What You Need to Know in Houston
Decisions about what happens after someone’s death are crucial when planning an estate. Understanding the difference between probate and non-probate assets is vital when distributing assets to heirs. An experienced probate lawyer in Houston can also help you distinguish between the two if the lines are blurred.
What are Probate Assets?
Probate is a legal procedure that starts once the court validates an individual’s will. An appointed executor takes charge, managing responsibilities such as addressing estate taxes, settling debts, and overseeing the distribution of assets. Probate assets, exclusively held in the individual’s name without specified beneficiaries or survivorship rights, include the following:
Real estate
This includes real estate owned individually or as a tenant in common. The properties could be solely in the individual’s name or shared with others as tenants in common.
Bank and brokerage accounts
Accounts held individually without joint ownership or payable-on-death designations fall under probate assets.
Life insurance policies
Policies where the estate is the beneficiary or doesn’t designate a beneficiary are considered probate assets.
Personal Property
This includes personal property such as cars, jewelry, or household furnishings. Any personal belongings solely owned by the individual are part of the probate estate.
Upon the individual’s demise, these probate assets are distributed as per the instructions in the will or, if absent, as per Texas laws of intestate succession.
What are Non-Probate Assets?
Non-probate assets operate outside the scope of the will and include a range of financial instruments and arrangements. Let’s delve into each of these non-probate items:
Insurance Policies
When they have a specified beneficiary, life insurance policies are non-probate assets. The funds are directly disbursed to the designated beneficiaries, circumventing the need for probate proceedings.
401(k) Plans
Retirement accounts like 401(k) plans with designated beneficiaries fall into the non-probate category. The assets smoothly transition to the designated beneficiaries when the account holder dies.
Pensions
Like 401(k) plans, pensions with assigned beneficiaries are considered non-probate assets. The beneficiaries receive the pension benefits without probate involvement.
Funds Held in Trust
Assets placed in a trust are non-probate. The trust document designates how the assets are distributed, allowing for a smoother transfer outside the probate process.
Joint Tenants with Right of Survivorship (JTWROS)
Jointly-owned property with survivorship rights guarantees that, upon one owner’s death, the surviving owner inherits the deceased owner’s share without involving probate.
Payable on Death (POD) Bank Accounts
Bank accounts with payable-on-death designations operate as non-probate assets. The account assets transfer directly to the named beneficiaries upon the account holder’s death.
These non-probate assets can encompass both tangible and intangible forms. Properly identifying and valuing these assets is crucial to ensure they align with the testator’s wishes. Chapter 111 of the Texas Estates Code provides a comprehensive list of non-probate assets and examples.
Understanding the distinction between probate and non-probate assets is fundamental to effective estate planning. While probate assets undergo a court-supervised process, non-probate assets provide a direct and efficient means of distribution.
Contact J. Jackson Law Offices – Secure your Legacy
Take the first step toward securing your legacy. Contact a probate lawyer in Houston from J. Jackson Law Offices for personalized guidance tailored to your unique estate planning needs. Our experienced team is here to assist you every step of the way. Don’t leave your legacy to chance—call us today for a comprehensive consultation.
