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Estate Planning 101: To Probate or Not to Probate? It’s All in the Planning

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Probate court proceedings (during which a deceased person’s assets are transferred to the people who inherit them) can be long, costly, and confusing. It’s no wonder so many people take steps to spare their families the hassle. Different states, however, offer different ways to avoid probate.
Here are your options in Texas.

1. 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). Then — and this is crucial — you must transfer ownership of your property to yourself as the trustee of the trust. Once all that’s done, the property will be controlled by the terms of the trust. At your death, your named successor trustee will be able to transfer it to the trust beneficiaries without probate court proceedings.

2. Joint ownership

If you own property jointly with someone else, and this ownership includes the “right of survivorship,” then the surviving owner automatically owns the property when the other owner dies. No probate will be necessary to transfer the property, although of course it will take some paperwork to show that title to the property is held solely by the surviving owner.

In Texas, two forms of joint ownership have the right of survivorship:

Joint tenancy. Property owned in joint tenancy automatically passes to the surviving owners when one owner dies. (The survivor must, however, live at least five days longer than the deceased co-owner. Tex. Estates Code sec. 121.152.) No probate is necessary. Joint tenancy often works well when couples (married or not) acquire real estate, vehicles, bank accounts or other valuable property together. In Texas, each owner, called a joint tenant, must own an equal share. To establish joint tenancy, owners must sign a joint tenancy agreement.

Survivorship community property. Married couples can sign an agreement to own property together as “survivorship community property.” Owning property this way avoid probate when one spouse dies and the other becomes sole owner. (Tex. Estates Code sec. 112.051 and following.)

3. Payable-on-death designations for bank accounts

In Texas, you can add a “payable-on-death” (POD) designation to bank accounts such as savings accounts or certificates of deposit. You still control all the money in the account — your POD beneficiary has no rights to the money, and you can spend it all if you want. At your death, the beneficiary can claim the money directly from the bank, without probate court proceedings.

Transfer-on-death registration for securities- Texas does not let you register stocks and bonds in transfer-on-death (TOD) form.

4. Transfer-on-death deeds for real estate

Texas allows you to leave real estate with transfer-on-death deeds. These deeds are sometimes called beneficiary deeds. You sign and record the deed now, but it doesn’t take effect until your death. You can revoke the deed or sell the property at any time; the beneficiary you name on the deed has no rights until your death.

As the laws change, and as your family situation changes, (marriage, divorce, birth of a child, death of a named agent), it is crucial that you have an estate planning attorney review your current documents to make sure your goals for your hard-earned assets are fulfilled in the event the unthinkable happens.

This article does not constitute legal advice. Please seek the advice of a competent lawyer in your state. Margie Connolly is a practicing attorney in Sugar Land, TX. To schedule a free consultation, call 281-433-9488, or visit mmconnollylaw.com.

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