“I Don’t Want to Go Through Probate!”

I have clients come in quite often wanted to avoid the dreaded probate courts. What I tell them depends on what they are there to see me for. If a client comes to me wanting to get their estate plan in order to avoid probate for a number of reasons, we can talk. However, if a client wants to move someone else’s estate to another party outside of probate, I instead ask, “what’s in the estate.”

First, there’s not a whole lot you can do to avoid probate after a person has passed. The nature of their assets will determine what passes through probate, and what doesn’t.

Second, as I’ve discussed before, probate is not all that terrible in Texas. It is usually a pretty straightforward process, as it was designed from the ground up for rural communities to handle things themselves. For a quick look at the process, take a look at our article here.

To avoid probate the word you hear the most often is “trusts.” Beware, there’s a lot of trust scams out there. Don’t misunderstand, trusts are great, but you really need an attorney to get you going with one in my opinion. If your interested, we did a quick overview of the basic types of trusts in Texas.

However, today, I’m going to list three things that move outside of probate that you can take a look at yourself.

  1. POD Account Designations – POD account designations are a pretty flexible and straightforward tool that most banks have as an option for the account holder. A POD account, or Payable On Death account, simply has a beneficiary named on the account that is entitled to the funds once valid proof of the account holder’s death is received. If you have a POD set up, that account will move straight to the designated party without needing to pass through probate.
  1. 529 Educational Accounts – 529 educational accounts have enjoyed increasingly popularity since they were introduced in 1996. These accounts are through state agencies and/or state educational institutions to help families save for college. These accounts have some tax advantages that you will want to discuss with a CPA, but for probate purposes, 529 accounts usually have the other spouse designated as a successor account manager for a named child. This managing status will usually pass intact to the named party without having to going through probate.
  1. Life Insurance – Usually life insurance policies will pay out upon proof of death being submitted to the company that holds the policy. The life insurance is a contract between the company and the account holder, so it will move outside of probate.

That’s it. Keep in mind differing situations might make it necessary for one or more of the above types of assets to be part of the probate estate. When in doubt, give a call to your local counsel and have a sit down with them.


 

Zane Frisbie is a Partner at Regan & Frisbie, PLLC, a law firm focusing on Wills, Trusts, Probate, Contracts, Business Formations (LLC, Corporation, S-Corp Designation), and Business Disputes,

Regan & Frisbie, PLLC is located at 7160 Preston Road, Suite 100, Plano, Texas 75024.

Comments or questions, feel free to email him at Zane@rfplawfirm.com or call him at 469.200.4737.

*Nothing in this Article is to be considered as the rendering of legal advice for specific cases, or creating an attorney-client relationship, and readers are responsible for obtaining such advice from their own legal counsel. This article is intended for educational and informational purposes only, and no warranty or representation is made as to the accuracy or completeness of the information contained herein.

 

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