As a Houston probate lawyer, I am often asked if every asset a person owns will have to go through the probate process when they die. The short answer is that it depends.
While most real estate owned by a person does go through the Harris County probate court following the loss of a loved one, a few asset classes are exempt. They are referred to as non-probate assets.
Instead of being distributed through a will, non-probate assets are automatically transferred to the survivors/beneficiaries, outside of probate. The assets are transferred at the death of the testator regardless of any instructions in the will. As an example, if a husband and wife own a piece of property together, the property is automatically transferred to the surviving partner. There is no distribution of property needed.
There are other assets besides jointly owned assets that are distributed outside of probate. Any assets with a named beneficiary typically avoid probate. Life insurance is one such example where payouts go directly to the beneficiary. In addition, retirement money is a non-probate asset. Life estate and inter vivos trust also are considered non-probate assets. Here is a brief list of the most common assets that are passed outside of Harris County probate for your reference:
- Assets held in joint tenancy with rights of survivorship
- Retirement accounts such as IRAs or 401(k)s that have a beneficiary named
- Life insurance proceeds that do not have the estate named as a beneficiary
- Assets held in a living trust
- Money in a payable-on-death bank account (POD)
- Securities, bonds, real estate, or other assets with a transfer-on-death provision
- Pension plan distributions
Remember, non-probate assets are distributed immediately. Simply contacting the bank or company where the asset is located and presenting the death certificate is usually enough to get the ball rolling to distribute the funds. On the flip side, the probate process can take a year or more to get to the point where assets can be distributed to a beneficiary.
The good news is that there are ways to structure your assets so that none of them have to go through probate—even if the assets you are leaving to your loved ones fall outside of this list. An attorney can help you utilize legal tools and planning to minimize your exposure to probate, or avoid it all together. But, only an experienced estate planning attorney can help you set up your assets to ensure that outcome.
If you would like to speak to a probate lawyer today to set up an estate plan to best protect your assets and minimize the impact of probate court, call our office at (281) 885-8826 to set up a consultation.