By the Estate Planning Attorneys at Garg & Associates, PC, serving The Woodlands, Spring, Houston, Conroe, Humble, Kingwood, Tomball, Cypress, Huntsville, Westchase, Southwest, Sugar Land, West Oaks, Alief, Memorial, River Oaks, Stafford, Katy, and Missouri City.

PROBATE ASSETS & NON-PROBATE ASSETS

It is a common assumption that a Last Will and Testament will comprehensively provide for the passing of your entire estate upon your death. While a Will is an essential element of your estate plan, it is important to remember that not all property you own will pass to the persons you choose by means of a Will. Only “probate assets” are distributed through a Will (or through the Texas intestacy laws if you die without a Will); “non-probate assets” are left to your beneficiaries entirely independently from you Will, instead passing via contract. Thus it is of utmost importance to recognize the difference between probate and non-probate property.

Probate assets generally consist of titled property (such as real estate, mineral rights and vehicles), personal property (such as clothes, jewelry, heirlooms, memorabilia, collections and other household items), and stocks or other financial holdings for which no payable-on-death designations have been made. Thus if your entire estate consists of home and its contents, a car, and a non-POD bank account, a Will should wholly provide for the distribution of your property, as these are all “probate assets.”  Frequently, however, a person’s estate will also include assets such as a financial account with right of survivorship, a retirement account, or life insurance. Therefore it is most likely that an estate will be comprised of a mixture of both probate and non-probate property.

In fact, non-probate assets very often constitute the major portion of a person’s estate. Non-probate assets generally consist of financial assets, including but not limited to insurance policies; retirement accounts; payable-on-death bank accounts, pension accounts; employee benefit plans; and joint holdings with a right of survivorship. With these types of assets, the owner will complete a beneficiary designation card or other contract that instructs the bank or holder to distribute the asset to a pre-determined person or entity upon the owner’s death. For instance, you may choose to put your spouse down on your IRA beneficiary designation form, indicating that you want your IRA to pass to your spouse at your death. Or, for example, you may select your children on your life insurance beneficiary designation form, which denotes via contract that the insurance company will pay the life insurance benefit to your children when you pass away.

Although probate and non-probate assets pass through different means, it should not be assumed that beneficiary designations relating your non-probate property have no bearing on your Will or overall estate plan. Particularly for those with taxable estates or otherwise for whom sophisticated planning is necessary, it is of vital importance that you coordinate your non-probate assets and beneficiary designations with the provisions of your Will. Regardless of the size or complexity of your estate, the Estate Planning attorneys at Garg & Associates will guide you in aligning the distribution of your probate and non-probate property so that your estate is comprehensively managed and coordinated with your ultimate personal and financial goals.

Call Garg and Associates today at 281.475.4640 or complete our Contact Form and let us assist you with your wills and trusts.