Estate Planning to Avoid Probate

The term probate refers to a legal process of property distribution upon your demise. An attorney consulted by the heirs of the estate is the one who typically initiates probate. In this process, a probate court will validate your will and authorize your will’s executor to distribute your property to the beneficiaries as well as pay all taxes owed on your property.

What If You Do Not Have A Will?

If you do not have a will, another administrative proceeding (called an “heirship”) will take place for the court to decide how to divide your estate. In this scenario, the probate court will judicially determine who your heirs are, in accordance with the Texas Estates Code, and assign an administrator for your property and estate. This administrator will then follow the judge’s order on the distribution of your estate.

Importance of Avoiding Probate

While Texas probate is a relatively simple and easy process to distribute your estate upon death, many people wish to avoid it – and there are some good reasons for that. The first reason is that probate can be a slow process and may take years for the court to finalize. This is especially true if the will is too complicated or someone contests your will, but even in the “ideal” case of a smooth probate, the process can take a few months. Secondly, avoiding probate can reduce costs. A complex or contested probate can also be a costly affair between attorney’s fees, executor fees, and other administrative costs. While an uncontested probate in Texas tends to be fairly cheap, even a relatively small amount saved, is still a savings. Third, avoiding probate enhances privacy. As it is a legal proceeding, it takes place in public courts and becomes a public record. Many executors find this to be quite a significant annoyance as they will receive a flood of unsolicited mail and calls offering to buy their dead relative’s house and/or belongings.

Ways to Avoid Probate

In light of the above, many people desire to structure their estates to avoid the probate process. Here are a few ways that we can assist you with estate planning to avoid probate.

Exemption by Size of Your Estate

Having a small estate may give you an exemption from probate; the small estate affidavit is an expedited process due to small size, as is the affidavit of heirship. But these probate alternatives have very restrictive conditions for when they may be used. What if your estate is larger or composed differently and your estate is not eligible for a small estate affidavit or affidavit of heirship?

Giving Away the Assets While You are Alive

You can give away your property and assets to your loved ones while you are still alive. This way, no one will have to wait or go to court to get their share. You can give away your estate and assets to whomever you want as a gift, and there is no fee or court proceeding needed for such division of assets. Additionally, you will not have to pay any taxes or any other associated fee that you need for probate, if your gifts fall within the annual gift tax exemption or you have remaining estate tax exemption, etc.

Establishing a Living Trust

You can avoid probate by establishing trust because property held by a trust does not count as a part of your estate. This is because a trustee and not you are the owner of the trust property. Therefore, a trustee will be under no obligation to abide by the rules and regulations of your will.

Leveraging Account Payable on Death or Beneficiary Designations

You can designate bank accounts as payable to a designated distributee upon the account holder’s death (this is called “payable on death” or POD for short). You can also nominate a beneficiary to receive all the assets of your 401(k), IRA, Pension, etc upon the primary holder’s death. Both of these methods pass by contract, directly to the beneficiary(-ies), outside of the probate process. A skilled estate planning attorney can assist you in using these mechanisms properly, in concert with the other elements of your comprehensive estate plan so that your heirs can bypass the probate process.

Life Insurance

Life Insurance will often function similarly to a POD or Beneficiary Designation. The proceeds will pas directly to the named beneficiaries by contract. It can help to have a skilled estate planning attorney help you harmonize your life insurance policy with the rest of your estate plan.

Joint ownership of the Property

Can make your partner or spouse a joint owner of your property. In this case, if you die, the property will automatically go to your spouse without any need for a probate process.

Lady Bird Deeds & Transfer On Death Deeds

If the only real asset of the estate is a homestead, using one of these automatic transfer deeds could allow you to bypass probate. The Lady Bird Deed in particular may even carry some added benefits when it comes to Medicaid issues

Conclusion

If you are a resident of San Marcos, Texas or San Antonio, Texas, and looking for advice on estate planning to avoid the probate process, get in touch with Law Offices of Ryan Reiffert, PLLC. We can  guide you on how to streamline your estate planning whether your goal is to avoid probate in the state of Texas, or not.