This column first appeared in the San Antonio Express-News on June 1, 2018.
Dear Mr. Premack: I worked with our Certified Elder Law Attorney to get all of the assets into my name after my husband died. We had done advance planning with our attorney to avoid probate on our house, and all of our accounts had right of survivorship. We even had our car set up with survivorship rights. Now I’m updating my planning to try avoiding probate when I eventually die. Since I am single now, what legal documents do you recommend so my estate avoids probate for my three children? – M.R.
When anyone dies owning assets, there must be a legal process to determine who becomes the new owner of those assets. Traditionally, there will be a Will which identifies the property heirs and names an Executor to take charge of the legal process. Depending on the nature of the assets, the Will is submitted to the probate court to 1) determine if it is a valid Will, 2) give others the opportunity to object, and 3) empower the Executor to move forward in fulfilling the Will’s instructions.
When you ask about “avoiding probate” the first technique is to be sure you have a valid, up-to-date Will which takes advantage of Texas’ streamlined Independent Probate statute. In this way you do not avoid probate, but you keep probate fast, efficient, and less costly. If you don’t have a Will, or your Will fails to use the streamlined Independent Probate process, then probate administration of your estate will indeed be slow and expensive.
Many people want to avoid probate entirely. There are two fundamental ways to do so: 1) don’t own anything when you die, and 2) make contractual non-testamentary arrangements to pass your assets outside of probate. The first method is actually the theory behind using a Living Trust, where you assign ownership of your assets to your Trust. When you die, the Trust is considered to be the owner of the assets, which can be distributed without probate.
The second method (non-testamentary arrangements) is what you used to avoid probate upon your husband’s death. This includes using Right of Survivorship on bank accounts, Transfer on Death on brokerage accounts, and beneficiary designations on life insurance and IRAs. Non-testamentary arrangements quickly and conveniently assign ownership of your assets, but you must be careful that you do not contradict your Will and overall estate plan. Your bank/broker will not monitor this for you; it is your responsibility to avoid contradictions.
For instance, you want all of your assets to pass in equal shares to your three children. Your Will says so. But you decided to add your eldest daughter to your checking account so she can write checks. If the bank adds “right of survivorship” to that account, it belongs solely to that eldest daughter when you die. In contradiction of your overall estate plan, that account is not divided equally to all three children. It would be much better to ask the bank to add a “pay on death” designation to the account and list all three children as after-death beneficiaries.
There is also a brand new legal procedure in Texas to avoid probate of an automobile. Senate Bill 869 (which became law on September 1, 2017) has just been implemented by the Texas Dept of Motor Vehicles. They have a new form (VTR-121) on which you can designate a single person to become owner of your car upon your death. After you file the form, you still have the right to change your mind and the right to sell the vehicle. If you make no changes, then when you die the beneficiary has 180 days to submit Form 130-U and pay a small title application fee to transfer title without probate.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.