In Texas, most estates go through probate. Even with a will, receiving the deceased’s inheritance usually requires processing through the courts. However, Texas does not consider every asset to be a probate asset.
According to Texas Estate Codes, certain agreements, property arrangements and contracting third parties are not subject to the probate process. See below to learn more about these exceptions.
Retirement accounts
Retirement accounts present a unique challenge due to income taxes and intestate law. Although the plan might allow for the inheritor’s non-probate designation, the deceased usually did not pay any taxes on the account. This means the inheritor may owe income tax once they receive their inheritance.
Pay-on-death accounts
Pay-on-death accounts do not have to go through probate. If the deceased arrange with their financial institution to transfer on death, usually the payment does not have to go through the courts. The beneficiary becomes the account owner automatically.
Jointly owned accounts
If multiple people, such as a spouse or child, own an account, you can make a survivorship arrangement. Keep in mind that not all joint ownership accounts have a survivorship agreement. A simple joint tenancy account does not give the surviving owner full access to the account. The decedent may provide for other beneficiary arrangements from the jointly owned account.
Texas probate law allows several exceptions and provisions. Individuals should have an estate plan that accounts for the various intestate and ownership statutes to guarantee their loved ones receive the inheritance they deserve. Beneficiaries, in turn, should expect to go through probate if the deceased has extensive assets.
