The 5 Smartest Ways to Avoid Probate in Texas (Lawyer-Approved)

If you’re a Texan looking to protect your assets and ensure a smooth transfer of your estate to your loved ones, you might be worried about the potential headaches and expenses of the probate process.

While Texas offers various probate options, including independent administration, dependent administration, and muniment of title, these processes can still be time-consuming, costly, and emotionally draining for your family.

The good news is that there are several ways you can avoid probate altogether. In this post, our experienced estate planning attorneys share five smart, lawyer-approved strategies to help you streamline your estate plan and protect your legacy.

1. Revocable Living Trusts Are The Easiest Way to Avoid Probate in Texas

Living trusts are popular and effective estate planning tools for avoiding Texas probate. This legal document allows you to transfer ownership of your assets into a separate trust entity during your lifetime.

You can serve as the trustee and beneficiary of the trust while you’re alive, maintaining complete control over your assets.

Here’s an overview of how this legal instrument works:

• Create the trust document and name a successor trustee to manage the trust after your passing.
• Transfer ownership of your assets (such as real estate, bank accounts, and investments) into the trust.
• You continue to manage and use your assets as you normally would during your lifetime.
• Upon your passing, the successor trustee distributes the trust assets to your beneficiaries according to your instructions without probate.

The benefits of using a revocable living trust to avoid probate are also numerous:

• Privacy: Your successor trustee distributes your assets privately without the need for probate court oversight.
• Speed: Your beneficiaries can receive their inheritances quickly, often within weeks of your passing.
• Cost savings: By avoiding probate, your estate can save on court, attorney, and executor fees.
• Flexibility: You can amend or revoke the trust anytime during your lifetime, allowing you to adapt to changing circumstances.

At Marx Law Firm, our experienced Texas estate planning attorneys can help you establish a revocable living trust tailored to your needs. We’ll guide you through every step of the process, from drafting a trust document that complies with Texas law to transferring your assets into the trust.

Our team understands the nuances of Texas estate planning and can help you avoid common pitfalls while ensuring your trust protects your assets and provides for your loved ones.

2. Joint Ownership Provides a Streamlined Transfer of Assets

Another method to avoid probate is through joint ownership of assets. When you co-own property with another person and one of you passes away, the surviving owner automatically inherits the deceased owner’s asset share without probate.

There are two main types of joint ownership in Texas:

• Joint tenancy with right of survivorship (JTWROS): This type of ownership can be used by any two or more individuals, including married couples. When one owner dies, their share automatically passes to the surviving owner(s) without going through probate. In Texas, JTWROS must be clearly stated in writing; it’s not assumed.
• Community property with right of survivorship: This form is only available to married couples in Texas. It combines the concept of community property (where assets acquired during marriage are owned equally by both spouses) with the right of survivorship. When one spouse dies, their share of the community property passes directly to the surviving spouse without probate.

While joint ownership can be a simple way to avoid probate, it’s important to consider its potential drawbacks:

• Lack of control: Once you add a joint owner to an asset, you give up some control over that asset. The joint owner has equal rights to use and manage the asset.
• Creditor risk: If a joint owner has debts or legal issues, the jointly owned asset may be at risk.
• Unintended consequences: If you add a joint owner other than your spouse, you may inadvertently disinherit other beneficiaries or trigger gift tax consequences.

3. Beneficiary Designations Allow Property to Bypass Probate

Many types of assets allow you to name a beneficiary who will inherit the asset upon your death without needing probate.

These assets include:

• Bank or investment accounts
• Retirement accounts (e.g., 401(k)s, IRAs)
• Life insurance policies
• Transfer-on-death (TOD) or payable-on-death (POD) accounts

Your financial institution or insurance company can use completed beneficiary designation forms to set up these legal instruments. However, having a qualified probate attorney review and update your beneficiary designations regularly is best, especially after significant life events like marriages, divorces, or child birth.

4. Small Estate Affidavits Keep Probate Simple and Affordable

Texas offers a simplified probate process for small estates called the Small Estate Affidavit. This procedure is faster and less expensive than formal probate.

To qualify, the deceased person’s estate must meet the following criteria:

• Total value of the estate assets, excluding homestead and exempt property, must be $75,000 or less.
• The deceased must have been a Texas resident or owned property in Texas at the time of death.
• The deceased must have died without a will.
• There must be no pending application for appointment of a personal representative.
• The assets of the estate, excluding homestead and exempt property, must exceed the known liabilities.

After qualification, heirs can file a small estate affidavit with the court. If approved, this allows them to collect and distribute the assets without going through full probate proceedings. However, it’s important to note that this process has limitations and may not be suitable for all situations, even if the estate qualifies based on value.

5. Gifting Assets Can Reduce The Size of The Estate

Another strategy to avoid probate is to give away property during your lifetime, thereby reducing the size of your assets.

In 2024, you can give up to $18,000 per recipient per year without triggering federal gift tax consequences. If you’re married, you and your spouse can give up to $36,000 per recipient per year.

When gifting assets, you must keep proper documentation and should consult with an estate planning lawyer to ensure compliance with all applicable laws and regulations.

Take Control of Your Legacy and Avoid Probate in Texas

Whether you’re thinking about creating a revocable living trust, using joint ownership, designating beneficiaries, or taking advantage of a small estate affidavit, the key is to start your estate planning journey now.

Don’t let probate deter you from protecting your loved ones’ future assets. Contact an experienced estate planning attorney at Marx Law Firm today to learn more about avoiding probate.