While keeping your entire estate out of probate sounds like an excellent plan, it is impossible to predict the future. Having a legally binding will in place serves as an additional layer of protection in the event that you have assets that are not addressed by other estate planning tools or in the event that unforeseen issues arise.
That said, there are important steps you can take to keep the vast majority of your estate out of probate.
Texas offers a wide range of effective estate planning devices, and an experienced Round Rock estate planning attorney can help you implement strategies that minimize the need for probate when the time comes to settle your estate.
The Matter of a Will
If you die without a will, it is referred to as dying intestate. This means that any assets you own that are not addressed in other estate planning documents will be distributed to your heirs according to Texas's laws of inheritance—which may not align with your wishes. It also makes an already complicated probate process more difficult.
If you have a will, it must go through probate, but the instructions you include are far more likely to be upheld. However, the more complicated and larger your estate, the more likely your will is to be contested—which can increase complexity and delay.
Whether or not you have a will, your estate will generally pass through probate. If you do have a will, your wishes are more likely to be honored. Without one, your estate will be subject to the state's inheritance rules.
While you can address all of your assets through non-will-based estate planning tools, there is no guarantee that every instrument will be updated or effective at the time of your death. Unexpected issues can arise, putting your estate at risk of being distributed contrary to your wishes.
In short, your loved ones' inheritance rights are much better protected when you have a valid will in place. To ensure that your estate plan is sound, speak with a Round Rock probate attorney for guidance.
Tools for Keeping the Majority of Your Estate out of Probate
The key to keeping most of your estate out of probate is implementing tools that are effective, legally sound, and tailored to your needs.
Joint Ownership of Property
Joint ownership of property allows the asset to pass directly to the other owner upon your passing, as long as a right of survivorship is in place. This arrangement is particularly beneficial for couples. Texas recognizes two main types:
Joint Tenancy
Ideal for unmarried couples who co-own assets such as real estate, bank accounts, or vehicles. A joint tenancy agreement allows the asset to bypass probate and pass to the surviving owner.
Survivorship Community Property
For married couples, all property acquired during the marriage is considered community property. With a survivorship agreement, the deceased spouse's share transfers directly to the surviving spouse, bypassing probate.
Payable-on-Death Designations for Bank Accounts
You can also protect your bank accounts from heading to probate by creating payable-on-death (POD) designations. This allows you to control the funds during your lifetime and to ensure that the assets don’t go through the probate process when you pass.
POD designations are a means of assigning beneficiaries, and as a result, the funds in each specific account will pass directly to the person or people you’ve designated.
Points to keep in mind include all the following:
You can name more than one beneficiary for any given account and can designate how the funds in each account will be divided between your named beneficiaries.
You maintain control over the funds in your accounts and can review and update your POD designations according to your wishes.
POD designations can be used for a wide range of bank accounts, including checking accounts, savings accounts, and certificates of deposit.
POD designations can be effective estate planning tools when used in tandem with other powerful estate planning instruments that you’ve carefully created.
It’s important to keep in mind that POD designations do not shield your beneficiaries from creditors’ claims or legal judgments and could potentially jeopardize any means-tested public benefits any of your beneficiaries receive.
Real Estate Transfer-on-Death Deeds
A transfer-on-death deed (TODD), also known as a beneficiary deed, allows you to transfer real estate to one or more beneficiaries. This transfer doesn’t take effect until you’ve passed, which means that you retain all rights to the property itself during your lifetime, including the right to sell it or to revoke the transfer-on-death deed (TODD) you have in place.
To execute a TODD:
Sign and notarize the deed.
File it with the county clerk where the property is located.
Any co-owners must also sign.
Living Trusts
Living trusts allow you to transfer assets to a trust, which you manage during your lifetime. Upon death, your successor trustee distributes the assets without court involvement.
Revocable Living Trusts
A revocable living trust gives you the flexibility to include any assets you choose, maintain full control of them during your lifetime, and revoke or amend the trust at any time. While revocable trusts are highly adaptable, they do not offer protection from creditors or legal judgments—the way irrevocable trusts do.
To create a revocable living trust, you must formally establish the trust and transfer assets into it. You can name yourself as trustee, allowing you to manage the assets as you see fit. However, it is essential to name a successor trustee, who will take over upon your death and distribute the assets according to the terms of the trust.
Irrevocable Living Trusts
Irrevocable living trusts offer much less flexibility than revocable trusts, but in exchange, they afford considerable benefits. Once you set up an irrevocable trust, it can’t be altered – unless all the beneficiaries included agree to the change or unless you obtain a court order to do so.
With an irrevocable living trust, you can provide for a dependent with special needs into the future without jeopardizing their right to much-needed governmental benefits.
Irrevocable trusts can also effectively shield the assets they hold from the long reach of creditors’ claims and legal judgments, which few other estate planning tools offer. Finally, an irrevocable trust can shield your assets from federal estate taxes for larger estates that exceed the federal tax exemption.
Credit Shelter Trusts
Credit shelter trusts are irrevocable and primarily used by high-net-worth married couples to minimize estate taxes. When one spouse dies, the maximum tax-exempt amount is transferred into the trust. The rest is credited to the surviving spouse’s estate.
Keep in mind that the federal estate tax exemption is subject to change. For example, the current exemption of $13.99 million per individual is projected to fall to $7 million in 2026.
Failing to Probate a Will in Texas
Failing to probate a will in Texas can create serious legal complications. If your will is not submitted for probate within four years of your death, your estate may be treated as if you died intestate—without a will. In that case, your wishes may be disregarded, and the court will distribute your assets according to Texas’s intestacy laws.
Any assets not covered by other estate planning tools must still go through probate. However, a valid will can direct how those remaining assets are distributed, helping ensure that your intentions are honored.
Although probate can be time-consuming and complex, it is often necessary. Fortunately, strategic estate planning can significantly reduce how much of your estate is subject to the probate process.
Self-Proving Affidavits
A self-proving affidavit affirms the authenticity of your will in advance, streamlining the probate process. You and two witnesses must sign in the presence of a notary. This reduces the need to call witnesses during probate and can save valuable time.
The Drawbacks of Probate
The downside of probate is that it tends to be time consuming and costly. Further, discord can arise, and when it does, it can lead to probate litigation, which not only requires even more time but can also take a considerable bite out of your estate’s overall value.
Finally, the probate process is a matter of public information, which motivates many people to minimize their estate’s involvement. Putting in the effort to limit your estate’s need for probate now can work to you and your loved ones’ advantage in the long run.
Our Experienced Round Rock Estate Planning Lawyers Are Here to Help
Brett Pritchard at the Law Office of Brett H. Pritchard is a seasoned Round Rock estate planning lawyer who understands your goal of limiting your estate’s exposure to probate. We are here to help you create a comprehensive estate plan tailored to your needs. Call us at 254-781-4222 or contact us online to schedule your free consultation today.