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How To Distribute Estate To Beneficiaries

You can look at a will and testament as a tool for distributing assets to heirs after your death. After a person dies, a probate process is conducted in a probate court to prove the will and to distribute the decedent’s property. However, not all assets in a person’s estate are subject to probate.  You need an experienced estate planning lawyer to explain to you in detail how to prepare a will and answer your questions about the probate process.

Understanding Probate

Probate assets are assets that are distributed to heirs by the court while non-probate assets are assets that are passed directly to heirs and beneficiaries. For assets to go through the probate process, heirs need to file a will and appoint an executor to manage those assets as the probate proceedings take place. Other probate procedures include filing taxes, paying bills, filing a final account and sitting through court hearings. All these procedures make the process expensive and time consuming, which is why some people try to avoid probate when they are passing property to heirs.

How To Avoid Probate

Wills DistributionAssets that have a title that is in the name of the decedent are the ones that go through the probate process. They are assets without a designated beneficiary or joint owners with rights of survivorship. Some examples of probate assets are bank accounts, homes or other real estate, stocks, and life insurance policies. On the other hand, non-probate assets are assets that pass directly to heirs without going through probate. Non probate assets are assets such as retirement plans, payable on death bank accounts, and joint tenancy with rights of survivorship accounts.

You can turn probate assets into non-probate assets with proper planning. For example, you can name payable on death beneficiaries for your bank accounts and own a property with your spouse jointly through rights of survivorship. What this means is that upon your death, designated beneficiaries will directly inherit the money in your bank account without having to go through probate, and the property you own jointly with your spouse will automatically become your spouse’s property after you die.

Is Avoiding Probate The Better Choice?

You should only use non-probate distribution after making sure that the right person will benefit from those assets. There have been cases where non-probate assets have ended up in the hands of people that the decedent did not intend to benefit from those assets.  Normally for the purpose of paying estate taxes, a decedent includes a clause in the will that states that all taxes for both probate and non-probate assets should be paid by the estate. 

So if there is no will or tax clause in the will, beneficiaries of non-probate assets such as retirement plan benefits, life insurance, payable on death accounts and the like will have to pay inheritance tax for those assets. This is one reason why you need to talk to an experienced Texas estate planning lawyer when you are creating a will or designating non-probate assets. Your lawyer can help you protect your heirs or beneficiaries from having to pay taxes or going through long cumbersome hearings for their inheritance.

 

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