There are many ways of avoiding probate in Texas. However, this is something that needs to be planned ahead of time. This is why Estate Planning is essential.
- Rights of Survivorship Accounts
This is account ownership commonly offered in most banks and investments accounts. It means that when an owner in a joint account dies, the survivor becomes the sole owner of that account. The most common is the "Joint Tenancy with Right of Survivorship" (JTWROS) account. This type of ownership avoids probate.
- Rights of Survivorship Agreements in Community Property under Sec. 112.051 of the Texas Estate Code
The Texas Estates Code permits spouses to agree in writing that all or a part of their community property belongs to the survivor when the first spouse dies.
- Payable on Death (POD) Bank Accounts
These are accounts in which you maintain full control of the funds. However, once you pass away, the account is transferred to the beneficiary without going through probate.
- Transfer on Death (TOD) Accounts
Like PODs, TODs are accounts where you maintain complete control but transfer to a beneficiary once you pass away. The main difference with PODs is that TODs are used in investments accounts to avoid liquidating publicly traded securities and other investments such as bonds, mutual funds, Exchanged Traded Funds, etc.
- Other be Beneficiary Type Accounts
Other accounts allow you to designate beneficiaries and avoid probate:
- Employer offered Retirement Accounts such as 401(k) and 403(b) plans.
- Certain Individual Retirement Accounts (IRA).
- Life Insurance Policies.
- Government Series EE Savings Bonds.
- Living Trusts
This type of trust allows you to transfer assets to your loved ones after you pass away. The most important aspect of the living trust is that the trust must be "funded" before you pass away. In other words, you must transfer the asset to trust while you are alive. There are 2 types of living trusts; Revocable and Irrevocable. Revocable means that you can create the trust and transfer assets, but you can revoke (cancel) the trust at any time. Irrevocable means that the trust cannot be revoked once created.