When someone dies, their assets are usually divided into two legal categories: probate and non-probate assets.
But what are probate assets? And what does it mean when something is categorized as non-probate?
Whether an asset is considered probate or non-probate property will determine how it will be distributed after a person’s death.
In this post, the Austin probate attorneys at Massingill explains the difference between probate and non-probate assets in Texas.
With a decade and a half of estates, trusts, and probate experience in Texas, our team understands how to identify the assets that must go through probate in Texas and how to make it easier for our clients to navigate the loss of a loved one while handling the disposition of an estate.
What Are Probate Assets?
Probate assets in Texas are assets that are directly and solely owned by a deceased person, also known as the decedent.
These assets do not pass directly to a designated beneficiary or co-owner upon their death.
Probate assets require using the probate process to transfer ownership to the intended beneficiaries or the decedent’s heirs.
When considering what assets go through probate, the general guideline is that probate assets in Texas usually include:
- Real estate held in tenancy-in-common with others,
- Personal property,
- Many bank accounts and investments,
- Business interests held solely by the decedent, and
- Life insurance policies where the estate is the named beneficiary.
The defining characteristic of probate assets is that they are owned individually by the person who died.
But remember that many non-probate assets may look like probate assets, but they aren’t because they pass through a beneficiary designation or other transfer mechanism that does not require probate.
What Are Non-Probate Assets?
Non-probate assets in Texas are assets that pass to designated beneficiaries or co-owners outside of the probate process.
These assets do not require court supervision and can be distributed to the beneficiaries or co-owners quickly and easily.
Non-probate assets typically include:
- Property owned as joint tenancy with right of survivorship;
- Community property with right of survivorship, which is a type of property ownership usually limited to married couples;
- Payable-on-death (POD) accounts and transfer-on-death (TOD) accounts, which are financial accounts that pass either the account or account balance directly to the named beneficiary upon the account holder’s death;
- Life insurance policies if the estate is not the beneficiary;
- Retirement accounts if the estate is not the beneficiary, and
- Trust assets.
Non-probate assets can still be subject to taxes, creditor claims, and other legal issues, so be sure to consult with an attorney or other qualified professional to ensure your estate plan is structured to protect your assets and provide for your loved ones.
Speak to a Trusted Texas Probate Lawyer Today
Probate is complex, but the estate planning lawyers at Massingill strives to simplify the process as much as possible for you.
We understand that you have just lost a loved one, and we make every effort to handle probate matters expediently and with compassion.
We offer flat fees, so our clients are not worried about costs or left with concerns about diminishing an estate.