The Value of Non-Probate Assets

When lawyers say “probate,” they are generally referring to the court proceedings where a deceased person’s estate assets are transferred to their heirs in accordance with the decedent’s Will or Texas law. In many states, these proceedings are lengthy, costly, and confusing.  While it is often difficult to avoid probate in its entirety, there are certain tools you can use to transfer assets outside the probate process.

Probate assets are those assets which pass under the provisions of someone’s Will or in accordance with Texas law if they died without a Will.  Non-probate assets, on the other hand, are those assets which pass according to a beneficiary designation or other contract.  Some non-probate assets include:

  • Insurance

  • IRAs

  • KEOGHs

  • Pensions

  • Profit sharing plans

  • 401(k) plans

  • Property owned in joint tenancy with a right of survivorship

  • Assets in trusts

  • Money held in Transfer on Death (TOD) or Payable on Death (POD) bank accounts

  • Money held in Joint Accounts with Right of Survivorship (JTWRS) accounts

For each of these types of accounts, the owner of the account has the option to complete a beneficiary designation wherein they designate who shall receive the proceeds of the account upon their death.  When an account owner completes a beneficiary designation, a contract is created with the financial institution holding the money, requiring the financial institution to distribute the funds following the beneficiary designation, rather than under the Will.  If no beneficiary is ever designated or if the named beneficiary dies before the owner of the account, then the account or life insurance will revert to the estate of the account owner, and it will pass according to the provisions of the Will or under Texas law. 

It is important to designate estate assets, both probate and non-probate appropriately, and plan for their distribution as part of a comprehensive estate plan.  Contact Rosenblatt Law Firm to learn more.