We often have clients that want to avoid Texas Probate. They can often do so by utilizing a Revocable Living Trust and re-titling their assets in the name of the Revocable Trust. But what a lot of people don’t know is that some assets, like IRA's, annuities and life insurance, by their nature, don’t need to go into a trust to avoid probate. These types of assets and a few others are established as payable to pre-determined beneficiaries. In other words, the beneficiary is designated at the time the account is established. Provided that the beneficiaries have been properly designated, it isn’t necessary that a Trust hold their titles.
There are other types of assets that do not have to be transferred to a Revocable Living Trust so that probate can be avoided.
1. Personal Items and Effects. Since your personal belongings are not titled (i.e. there is no deed like you would have with real estate assets, or certificate of title like a motor vehicle would have), family members usually divide personal effects amongst themselves after the death of a loved one without the involvement lawyers, judges or the court.
2. Checking and Savings Accounts. By giving an adult child signing authority upon your checking account, after the last spouse passes away, that child can have immediate access to the account so that he or she can pay for funeral expenses, close the account, and divide the funds between your heirs. All of this can be done without the involvement of lawyers, judges or the court.
3. Vehicles. If the person you want to ultimately receive ownership of your car provides the Will or a photocopy of the Will to the Texas Office of Motor Vehicles, they will transfer the title after death without court intervention.
If your goal is to make things easy on your spouse and your children, and/or to set things up so your family doesn't have to deal with lawyers or judges or participate in the lengthy and costly court probate process, then the assets that would typically require court involvement must be in a trust. These types of assets include real estate, mineral interests, stocks, Certificates of Deposit, ownership in limited liability companies or corporations, other business interests, and non-IRA investments.
Since many people have a large portion of their estate in retirement accounts, it's fairly easy to avoid probate by retitling the family home and other probate assets to your trust.