In Texas, you can choose whether many of your assets pass under your Will (probate assets) or outside your Will (non-probate assets).
Your probate assets are those which pass under your Will. Your Will, what you own, what you owe and who should get the rest must be “probated,” or proved, in Court. In Texas this involves presenting the Will, filing an inventory and notifying creditors and beneficiaries.
Your non-probate assets are those which pass outside your Will.
- You can hold bank accounts “pay on death” (POD) or “joint with right of survivorship” (JTROS).
- You can hold brokerage accounts “transfer on death” (TOD).
- You can file Form VTR-122 with the Department of Motor Vehicles to transfer ownership of your vehicle when you die.
- You can file a Lady Bird or Transfer on Death Deed with the county clerk to transfer real property when you die.
- You can draft or amend the governing document of a limited liability company, partnership or closely held corporation to transfer ownership of your interest to someone else when you die.
- You can name individuals or the “then serving” trustee of a trust as the beneficiary of your life insurance policy.
- You can name people or the “then serving” trustee of a trust as the secondary or contingent beneficiary of an IRA, 401(k), 403(b), 457 or other retirement account.
Always provide for two tiers of beneficiaries: the first may not be around to inherit. This is especially true if you name your spouse or a sibling.
Check your retirement plan’s rules on who you can name as a beneficiary and under what circumstances. To make sure that these have not changed, and decrease the likelihood that future changes will affect you, get the plan administrator’s written consent even if the retirement plan document does not require consent.
Estate Planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people administering estates.