Experienced Will Preparation Attorney Serving Austin and all of Texas

When a person dies in Texas leaving a Will, many people assume that the Will answers all of the questions as to how the decedent’s assets will pass to his or her beneficiaries and heirs. A Will is a valuable legal document that allows the testator to designate who will receive his property, though a Will still needs to be probated in the local county probate court. However, not all assets necessarily pass through the probate process. There are some assets, known as “non-probate assets,” that pass to others outside of a Will.

In this article, we will discuss generally assets that pass separately from a Will in Texas. If you are in the Austin and Pflugerville areas and have questions about what Wills do and don’t do, contact Austin probate lawyer Farren Sheehan for an initial consultation.

Probate Assets vs. Non-Probate Assets

When a person dies in Texas, assets can pass to heirs and beneficiaries either through probate or non-probate.

Only property owned by the decedent at the time of his or her death can be disposed of by a Will. If the person did not leave a Will, his or her assets pass by intestacy, to heirs designated by law. Probate assets are those which pass pursuant to a Will or by intestacy in a probate proceeding in court.

A Will cannot dispose of “non-probate assets,” assets which pass at death other than through a Will or by intestacy. Common types of non-probate assets include property that:

  • Passes by contract (i.e., life insurance);
  • Passes by survivorship (i.e., joint and survivor bank account); and
  • Is held in trust.

Examples of Non-Probate Assets

Typical examples of property that pass by contract include life insurance proceeds, annuities, IRAs, along with employee benefit, pension, or retirement plan proceeds. The decedent will have named a person in an appropriate beneficiary designation, and these assets pass outside the Will to those named persons.

Property held by the decedent and another person as Payable on Death (POD) and Joint Tenancy With Right of Survivorship (JTWROS) accounts pass outside the Will directly to the survivor. Common examples of these types of assets include certain types of bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds issued by the United States Government, such as Series EE savings bonds. When an account holder completes a beneficiary designation card, this is like a contract with the bank and, at the time of the account holder’s death, the bank or financial institution will deliver the money to the beneficiary.

Property held in a trust for the benefit of the decedent is another kind of property that passes outside of probate. The trust may have been created by the decedent during his or her lifetime for property management purposes or by someone else, perhaps a parent of the decedent. Trust assets pass under the terms of the legal trust rather than under the terms of the decedent’s Will.

Advantages of Non-Probate Assets

Non-probate assets pass to beneficiaries independently of the Will and generally are available to them much quicker than those that pass by probate or intestacy. Non-probate assets often pass according to a contract or a beneficiary designation card.

For example, life insurance can be a vital source of funds for surviving family members. The death proceeds can be readily available if the owner of the policy designated a beneficiary, other than the estate, upon the passing of the insured.

Obtaining the proceeds of the policy is done by simply filing a claim with the insurance company. The company will generally require a certified death certificate, a surrender of the original policy, and completion of the claim form.

The timeline for receiving the proceeds is generally just a couple of weeks. This speedy transition time is also true for the Payable on Death (POD) and Joint Tenancy With Right of Survivorship (JTWROS) accounts as well as retirement plans and annuity contracts. With a Revocable or Living Trust, the assets are distributed to the beneficiaries of the trust pursuant to the trust terms.

It is important to have proper legal guidance when establishing your estate plan. If you have non-probate assets, you want to make sure that you coordinate those assets with your probate assets. Failure to integrate probate with non-probate assets may lead to an unintended disproportionate distribution of your assets to the beneficiaries, and result in greater estate taxes due on larger estates. Austin probate attorney Farren Sheehan can help you through the estate planning process.

Questions?

If you have any questions about what a Will does and doesn’t do in Texas, or anything else regarding probate law, please do not hesitate to contact us by phone at (512) 251-4553 for an initial consultation. Other contact information is listed in the upper right-hand area of this page, and a contact form is also available on our contact page.