What Assets Don’t Go Through Probate in Texas?

When a loved one passes away, their estate often goes through a legal process known as probate, which ensures that debts are paid and assets are distributed according to the decedent’s will or state law. However, not all assets must go through probate. In Texas, several types of property can bypass this process entirely, allowing beneficiaries to receive their inheritance more quickly and with less expense. Understanding which assets avoid probate can help with estate planning and minimize complications for heirs.

A. Jointly Owned Property with Right of Survivorship

Property owned jointly with a right of survivorship automatically transfers to the surviving owner(s) without probate. Common examples include:

• Joint bank accounts with right of survivorship – These accounts automatically transfer to the co-owner upon the account holder’s death.

• Jointly owned real estate with a survivorship agreement – Real estate owned as “joint tenants with right of survivorship” passes directly to the surviving co-owner.

B. Community Property with Right of Survivorship

Texas is a community property state, meaning that assets acquired during marriage are generally considered jointly owned. If spouses establish a “right of survivorship” agreement, the property transfers directly to the surviving spouse without probate.

C. Beneficiary Designations on Financial Accounts

Certain financial accounts allow the owner to name a beneficiary, ensuring the funds go directly to the designated person without court intervention. These include:

• Payable-on-Death (POD) Bank Accounts – The named beneficiary receives the remaining balance upon the owner’s passing.

• Transfer-on-Death (TOD) Investment Accounts – Stocks, bonds, and brokerage accounts can be transferred directly to a named beneficiary.

D. Life Insurance Proceeds

Life insurance policies pass directly to the named beneficiary outside of probate. The funds are not part of the estate unless no beneficiary is named, in which case the proceeds may be subject to probate.

E. Retirement Accounts and Pensions

Assets held in retirement accounts, such as 401(k)s, IRAs, and pension plans, pass directly to the beneficiary designated on the account. It’s important to keep these designations up to date to ensure the intended recipient receives the funds.

F. Living Trusts

Property placed in a revocable living trust avoids probate because ownership is transferred to the trust during the owner’s lifetime. Upon death, the successor trustee distributes the assets according to the terms of the trust without court involvement. This can be a valuable tool for estate planning.

G. Homestead Property with a Valid Texas Affidavit of Heirship

In Texas, a homestead (primary residence) occupied by a surviving spouse or minor child may avoid probate through an affidavit of heirship or other simplified procedures. If properly documented, title transfer can occur without the need for a full probate process.

H. Small Estate Affidavit (For Estates Under $75,000)

If the total estate value, excluding the homestead, is under $75,000 and there is no will, heirs may be able to file a Small Estate Affidavit with the court to transfer assets without a formal probate process.

By planning ahead and utilizing strategies such as beneficiary designations, joint ownership, and living trusts, many assets can bypass probate in Texas. This can save time, reduce legal fees, and provide faster access to inheritance for loved ones. Consulting an estate planning attorney can help ensure your assets are structured properly to avoid unnecessary delays and expenses.