When someone passes away, their assets typically go through a distribution process that follows their wishes or state law. This court-supervised procedure called probate ensures a fair distribution of the deceased’s assets, whether they left a will or not.
However, not all property is subject to probate, and identifying which goes through this process is crucial to ensuring a smooth transfer. Understanding the difference between probate and non-probate property can help you manage your assets better and make things easier for your loved ones after you are gone.
What is probate property?
Assets that you own solely in your name fall under this category. These typically include your residence, bank accounts, vehicles and personal belongings such as jewelry, furniture and collectibles.
If you pass away with a will, your named executor will be responsible for gathering these assets, settling your debts and taxes and distributing the remaining property to your beneficiaries during the probate process. However, if you die without a will, Texas’s intestate laws will step in to ensure a fair distribution. Sometimes, there may be little to no probate property left after accounting for non-probate assets.
What is non-probate property?
Non-probate property includes assets that usually have named beneficiaries or are owned jointly with rights of survivorship. Some examples of these properties are:
- Bank accounts with payable-on-death designations
- Life insurance benefits
- Retirement funds, including IRAs and employer-sponsored accounts such as 401(k)s
- Property held in living trusts
- Real estate co-owned with a spouse or another family member
When you pass away, these assets typically transfer directly to your beneficiaries or co-owners. This does not need court oversight, allowing assets to reach their intended recipients quickly and efficiently without the need for probate.
Why knowing the difference matters
Understanding the distinction between probate and non-probate property is crucial in protecting your loved ones even when you are no longer here. By knowing how the law will handle your assets in the future, you can take steps to simplify the process and save time and money for those you leave behind.
