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What assets do not go through probate?

When it comes time for your estate to be probated after your passing one of the surprising truths that many families come to learn is that not all your property will have to go through the probate process. The probate process occurs when your will or your estate is reviewed by a probate court judge in order so that your property may be distributed, and your debts may be paid by the terms of your will or but Texas probate code. The probate process is known for being somewhat tedious, long, and expensive. As a result, you may already be thinking about how your family may be able to avoid having to go through probate to attend to the financial matters associated with your passing.

Not all your property will have to go through probate. Items like your bank accounts, investments, family home, and another real estate will likely need to be probated. Additionally, if you have a motor vehicle that you would like transferred out of your name and into the name of another person then this two will have to go through probate. In most cases, only a probate court can have the authority to get your name off a car title and put someone else’s name onto the title in its place.

There are three categories of property that typically do not need to go through probate to be distributed or attended to after the time of your passing. In today's blog post from the Law Office of Bryan Fagan, we are going to discuss those three categories. The first category is jointly owned property that automatically transfers to the owner who survives you. The next category is a property where you can designate a beneficiary before your passing. Finally, assets and property that are held in a trust do not have to go through probate. 

However, one thing that I will note is that there are always exceptions to rules, and it is impossible to predict with 100% accuracy exactly how property is going to be treated by a court after your passing. The trouble with this discussion is that once it becomes a relevant one to have you will no longer be with us. With that, it is crucial for the health of your family for you to have a very good understanding of the probate process, as well as what kinds of property, do not have to go through probate. If you can come to an understanding about this subject then you can save your family a lot of time, hassle, and money. 

With that said, if you read through today's blog posts and have questions about the material, we share with you then I encourage you to contact the Law Office of Bryan Fagan today. Our probate and estate planning attorneys can sit with you and talk to you about end-of-life scenarios as well as how to plan for them. If you are a person who owns a substantial amount of assets and property, then you will very likely want to know more about this subject. If possible, you will want to avoid putting your family into a position where they have to go through probate to have property distributed to them after your passing.

Sometimes all it takes for you to come up with a terrific end-of-life plan or a state planning mechanism is simply to hear the perspectives of someone else. A lot of times when we have a problem on our hands, we tend to internalize the problem and think about it over time and time again to ourselves. However, if we do not seek any outside opinions, we may be leaving a lot of good ideas on the table. Rather than assume that there are no good options for you to pursue in terms of estate planning why not contact our office today? A consultation with one of our estate planning attorneys can be had for free. You can go over your specific circumstances with our attorney and her perspective on what you may want to do regarding that situation. Once you hire our office to represent you, we can provide you with specific advice in perspective that may be helpful when it comes to creating a will, trust you're any other type of end of life document.

Property owned jointly with another person

When it comes to jointly owning assets and property this is the first category of property that I would like to discuss with you today. Typically speaking, jointly owned assets are transferred to the surviving owner without having to first go through probate. In a legal sense, this designation for the property as joint tenants with the right of survivorship. Keep in mind that if you own property under this designation without another owner or you and the other owner pass away at the same time then the property will have to be probated to being inherited by heirs or distributed to beneficiaries under a will.

The thing about joint tenancy with the right of survivorship is that now you pass away ownership of the property immediately goes to your joint owner. This is true even if you happen to include something in your will that contradicts this. For example, let's suppose that you and your spouse own a home together. In the event of your passing, your spouse would automatically acquire ownership of the home as the surviving owner. This is true even if you attempted to leave your share of the home to your children from a prior marriage. 

In this situation, the real property would go to your spouse. He or she would then have full authority under the law 2 make decisions about selling the home, remaining in the home, or doing whatever he or she deems fit. The effect of all of this is that your children from the prior marriage would essentially be disinherited and would have no right or say-so over the family home. Again, this is even though your will may explicitly state otherwise.

As opposed to a joint tenancy with the right of survivorship is a legal relationship known as tenants in common. This is another type of joint ownership where, if you pass away before your tenant income, your share of the real property will be distributed to your beneficiaries as directed by your will. Or the state laws of Texas on intestate distribution will apply if you do not have a will. This means that the property will not go to your tenant in common unless your will indicates that it should. Bear in mind that this is a double-edged sword. While you still have some autonomy over who gets what as far as property is concerned the downside is that the property would need to go through probate likely.

The property where you can designate a beneficiary before your passing

There are some assets or property that will allow you to name a beneficiary before the time that you pass away. This is an interesting discussion to have just from a planning perspective. After reading this blog post my recommendation would be for you two to look through your accounts and determine what type of property like this you may own. What you can do is then look through the paperwork or files associated with the property and determine whether you have designated a beneficiary to take ownership of the property when you pass away. 

If you have not designated a beneficiary, then you absolutely should. Your failure to do so would then place the property in a category that needs to be probated. There is no more simple way to avoid the time and money limitations of probate court than simply adding a beneficiary when you have an opportunity to do so. Bear in mind that none of us have complete control over when we pass. It is not as if you will be given a one- or two-day notice about the moment in time that you will pass. As a result, it is recommended that you take advantage of whatever opportunities you are given to plan for this eventuality. While there is very little that we can accurately predict about our passing the one thing that I can say is that none of us are getting out of this life alive. As a result, you should begin to take measures necessary to protect your family and yourself by naming a beneficiary on this type of account or property.

Life insurance policies, individual retirement accounts, retirement plans like 401K's, and some types of bank accounts allow you to name a beneficiary. And you can check with your bank or credit union to see if you can name a payable on death beneficiary. When you pass away, all the payable on death beneficiary would need to do is present some paperwork and a copy of her death certificate to the bank or credit union period from there, your beneficiary on this account would be able to take possession of the contents of the account without having to go through probate first

The same applies to this other type of asset. When you pass away these assets will be paid directly to the people that you named as beneficiaries. Again, avoiding probate is just one of the benefits of these types of accounts. Put yourself in the position of a family member that you intend to be a beneficiary of yours on property like this. Imagine having to wait months or even years to get your hands on property that has been promised to you long ago. It could be that your intended beneficiary needs the money now to pay for a medical procedure, a school for their children, or anything else. By not following through on the details associated with these designations you may be costing your intended beneficiary a great deal. 

However, there are some circumstances where these assets cannot be paid directly to your intended beneficiary without going through probate first period, for instance, suppose that your beneficiary passes away at the same time or before you do. In this type of situation, you are running into a circumstance where there is no living beneficiary designated on the account. As a result, the property will need to go through probate to be distributed just like the rest of your assets. It is wise to periodically check in on accounts like this that allow for beneficiary designations. You can ensure that at least all the beneficiaries you have designated are alive. Going through this simple step will help to prevent the property from unnecessarily having to go through property instead of being distributed immediately to the intended beneficiary.

Next, sometimes you may find yourself in a position where the beneficiary you have designated is deemed incapacitated by a court. This means that the beneficiary would be unable to enter into contracts, conduct business for themselves or even take care of their day-to-day needs. in this situation, a probate court judge would take control of the funds to promise to the beneficiary through a conservatorship proceeding. A retirement or bank account would likely investigate the intended beneficiary to determine that he or she is capable of handling the money responsibly. If not, then you can expect that a court will set up a conservatorship to control how the money is spent in distributed once you pass away.

One thing that I have seen people do that I would caution you against is to simply list your estate as the beneficiary. Listing your state as the beneficiary is likely done with the intention that your executor of the will can attend to distributing the property according to the terms of the will itself. This completely would defeat the purpose of being able to avoid having to go through probate. Do not shoot yourself in the foot by listing out property like this. Rather, you can and should list another entity or person as your intended beneficiary.

In some circumstances, you may choose to list your child, niece, or nephew as an intended beneficiary or even as he secondary beneficiary. If this child is under the age of 18 then as a minor beneficiary a probate court would likely need to get involved. It is unlikely that these assets could be distributed by a bank or other financial institution to a minor. As a result, a probate court would likely establish guardianship. The court would oversee how the money is distributed to your children over time.

Assets held in a trust

One of the primary motivators that many people have in creating trust during their life is to avoid probate. Property held in a trust typically does not have to go through the probate process. Rather, your death would be seen as a triggering event that would allow the trustee of that trust to distribute property according to the terms of the trust. Therefore, your family and other entities could receive property sooner rather than later and there will be no need for probate court administration.

An example of a trust that can be set up to hold assets during your life is a revocable living trust. Typically, these types of trusts are established through a will. In that case, they are known as a testamentary trust. You can establish who should act as the trustee, the terms of the trust, and how money can be distributed to persons named as beneficiaries. For example, many times married people will both setup mirror image wheels where their children will be cared for through a revocable living trust. The trustee would be able to distribute property at different periods or events based on your wishes.

Be aware, however, that if you set up a testamentary trust then these assets held in the trust will not avoid probate. Rather, both your will and the assets contained in that rest will have to go through a probate period until then, the trust cannot go into effect and will have no legal standing. Even property that you leave out of your living trust will still have to go through probate. For this reason, you should consider your options in terms of trust creation if your number one objective is to avoid going through probate. Even well thought out plans may have mistakes that ultimately require the probate courts to get involved. If you want to avoid probate and the headaches that it may cause for your family down the line, then you should contact an experienced probate and estate planning attorney with the law office of Brian Fagan to assist you in creating the state plan that is suitable to your goals.

Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning and probate law attorneys offer free of charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of probate and estate planning as well as how your family may be impacted by any number of end-of-life scenarios involving you and your family.

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