What Does a Will Do and What Does It NOT Do?
Contact an Austin Estate Planning Attorney Today
When a family member passes away in Texas, there is usually a will that dictates what assets you will receive. A will is a valuable legal document that allows the testator to designate who will receive his or her property. You may assume that a will answers all of your legal questions about assets, but that is not always the case. For example, a will does not control certain assets, known as non-probate assets. Additionally, a will has no power at all unless it has gone through the probate process. There is often a lot of confusion about probate and non-probate assets once a family member is deceased. At Sheehan Law, PLLC, we understand your need for clarification and can help explain the importance of probate and non-probate assets.
With over fifteen years of experience, Farren Sheehan has spent her legal career focusing on estate planning, real estate and prWhen a family member passes away in Texas, thereobate law. She has also served as both a planning committee member and course director for Intermediate Estate Planning. Her knowledge of probate law makes her able to advise anyone looking to create or contest a will. As a lifelong resident of Texas, she is committed to helping Texans achieve their legal goals in the most efficient way possible. If you need help understanding the importance of a will, then consulting with an Austin estate planning attorney is a good start. Our attorneys are here to give you solid legal advice and help you fulfill your estate planning goals.
What Is the Difference Between Probate and Non-Probate Assets?
After death, your assets can pass to heirs or beneficiaries through probate or non-probate. Probate assets are any assets solely owned by the decedent. In this case, you can leave a will that determines how the assets are dispersed. If you do not leave a will, then your assets will pass by intestacy, to heirs designated by the law. A will cannot dispose of non-probate assets, which are not passed at death through a will or by intestacy. Non-probate assets are assets where the title has already been transferred within a decedent’s lifetime or assets where the transfer of title is controlled by a legacy mechanism. There are several common types of non-probate assets. They include:
- Passes by contract. Life insurance proceeds, annuities, IRA’s, employee benefits, pensions and retirement plan proceeds are examples of property that pass by contract. You can name a person in an appropriate beneficiary designation, and these assets pass outside the will to that specific person.
- Passes by survivorship. Certain bank accounts, certificates of deposit, stocks, and savings bonds issued by the federal government are examples of property that pass by survivorship. Property held by yourself and another person as a Payable on Death (POD) account or a Joint Tenancy with Right of Survivorship (JTWROS) account pass outside of the will and go directly to the survivor.
- Property held in a trust. You may have assets held in a trust for your benefit. The trust could be created by you during your lifetime or by someone else, usually a parent or guardian. Trust assets pass under the legal terms of the trust. They do not pass under the terms of the decedent’s will.
Common Misconceptions About Probate and Non-Probate Assets
Along with questions about estate planning, you may have some preconceived notions that an estate lawyer can address. For example, it is important to understand that your probate estate and your taxable estate are not the same thing. Whether your property passes as a probate or non-probate asset is no indication that it will be excluded from your taxable estate. Also, there are certain non-probate assets that might be included as part of your taxable estate.
You may own life insurance and have a named beneficiary. Your beneficiary will receive the money from the life insurance policy, but the overall death benefit could potentially be counted when determining the amount of your taxable estate. Our local lawyers for wills and estate planning would recommend that you set up an Irrevocable Life Insurance Trust to avoid estate tax upon your death.
Besides estate taxes, you may have misconceptions about the safety of your trust. Having non-probate assets means that your beneficiary can claim them without the involvement of a probate court. However, there are instances where you can wind up with probate assets after a trust is created. If your trust is not properly funded or your beneficiary lists are not accurately updated, then there is a possibility that your beneficiaries will wind up in probate court. While setting up a trust is a smart legal decision, you must adequately maintain it in order to preserve its status. These are things that an Austin estate planning attorney can highlight to help you protect your assets from falling into the wrong hands.
Is Writing a Will on Your To-Do-List? An Austin Estate Planning Attorney Can Help
The goal of estate planning is to have a concrete plan for asset division once you have passed away. While this goal is simple, there are always complications that arise, making it difficult to accomplish. A solid will and trust attorney can help you get your affairs in order and make sure that you understand the importance of your decisions.
If you are looking to plan your estate, then you should contact Sheehan Law, PLLC today at (512) 640-0588 and schedule a consultation. You can also contact us online and send us a brief description of your case. We can answer all of your questions and take care of your estate planning needs.