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Tips for Avoiding Probate

While probate serves its purposes such as disposing "probate assets," which are generally assets owned only in the decedent's name, a will does not have the ability to dispose of "nonprobate assets" which pass outside of probate. A lot of us have heard of tactics employed to avoid probate court, but we don't necessarily know why. In general, people want to avoid probate because it ties up property for months, sometimes more than a year and it incurs additional expenses.

The majority of what happens during probate is clerical and in most cases there isn't any conflict with probate itself. The probate process rarely calls for legal research or a lawyer's negotiation or adversarial skills. In some cases a client of ours may want to avoid the headache of probate for their loved ones and reduce expenses as much as possible.

While it may make sense to avoid probate altogether, sometimes probate is necessary to prove that a will is valid. In the very least, one can consider reducing the amount of property that is subject to probate, which in effect can reduce fees and ensure that one's beneficiaries receive a portion of their inheritance sooner.

Understanding Nonprobate Assets

Probate applies to property owned by the decedent at death that can be disposes of through a will. A will cannot dispose of "nonprobate assets" which are assets that are not subject to probate. The principal types of nonprobate assets include:

  • Assets that pass through a contract (life insurance, IRAs, retirement plans)
  • Property that passes by survivorship (CDs, bank accounts, stocks and bonds, savings bonds)
  • Property held in a trust
  • Joint ownership of property
  • Payable-on-death bank accounts
  • Gifts

Property that passes by a contract such as a life insurance policy or a retirement plan passes outside of a will because of a beneficiary designation. Thus, it's a good idea to periodically review your beneficiary designations to update them as necessary.

Without appropriate planning, a significant portion of one's property may go towards the payment of death taxes instead of to the intended recipients. There are estates planning techniques available which can minimize death taxes and in the case of a married individual, defer payment on taxes until after the death of the surviving spouse. However, an individual doesn't have the ability to take advantage of such techniques without creating an estate plan.

Essentially, probate assets are those that are held in your name only. If you want to avoid, or at the very least minimize the costs of probate, you can set up your estate in such a manner where you have as little probate assets as possible. Nowadays almost every state has shortcuts through probate or ways to avoid it completely. Since no two situations are identical, we encourage you to contact a Houston probate attorney from Shepherd & Associates in order to determine which estate planning tools are right for you.

Categories: Estate Planning, Probate
Shepherd & Associates - Houston Estate Planning Lawyer
Located at 14090 Southwest Freeway, Suite 300
Sugar Land, TX 77478
Phone: (713) 993-7791

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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