Many people wish to have their affairs remain private during their lifetimes and after they pass away. However, in Texas, as well as in many U.S. states, if your estate is probated, it will become public record. This means that your estate’s probate records will be accessible to anyone interested in them. Fortunately, in Texas you can protect your privacy with estate planning techniques that avoid probate, keeping your financial affairs private. If protecting your financial privacy is a concern for you, this article discusses estate planning strategies that can be utilized to keep your estate out of the public realm.
Probate vs. Non-Probate Assets
Probate is a specialized court-proceeding that deals with the property and debts of a person after they die. Essentially anyone can access the probate record, as it is a public court proceeding. This public record can include a description of your assets and a list of beneficiaries or heirs who will receive them. When you specify the details of your estate plan using a Last Will and Testament, the document must be filed in probate court. This begins the process of distributing your assets, and the court records are made public. While a Last Will and Testament can simplify probate, it does not avoid probate and the public record.
Not all of your assets have to be included in the probate process when you die. With forethought and careful preparation, you can protect your privacy with estate planning strategies that avoid probate. The next sections discuss such strategies.
Beneficiary Designation
If a named beneficiary is part of your account type or asset, it will not be subject to probate. These are known as ‘non-probate assets’. Common examples are life insurance policies, annuities, retirement accounts such as IRAs, and assets held in trust. Upon your death, your non-probate assets will be distributed directly to your named beneficiaries, thereby bypassing the probate process.
Right Of Survivorship
When you own property jointly, with the designation “right of survivorship,” the surviving owner automatically owns it upon your death. Probate is not required to transfer the property, although some paperwork will need to be filed. This is required to prove the surviving owner is now legally the sole owner of the property. Right Of Survivorship can be effective in maintaining privacy when passing assets to your joint owner, such as your spouse. However, this doesn’t apply to all asset types and only designates what happens to that particular asset or account, such as a bank account or real estate property. Furthermore, it doesn’t account for other heirs that you wish to leave inheritances to.
While non-probate assets privately pass to your named beneficiaries or survivors, they are limited to certain asset types, account types and number of beneficiaries.
Transfer On Death Deed
A transfer on death deed is a deed option that transfers property in a manner similar to payable-on-death or beneficiary designations. Transfer on death deeds are accepted for property located in Texas. This deed allows you to name contingent and alternate beneficiaries. Upon your death the property transfers to your beneficiary privately, without having to go through probate.
Lady Bird Deed
A ladybird deed in Texas, also called an enhanced life estate deed, is another type of deed that helps you preserve privacy by avoiding probate. When the original property owner, or grantor, passes away, the property is automatically transferred to the designated beneficiary. Therefore, the property which is often a significant asset in an estate, isn’t subject to the probate process. A ladybird deed is also beneficial because the property is not subject to creditors’ claims as it would be if part of a probated estate.
Bypass Probate With A Trust
Revocable Trust
Using a trust is a more comprehensive way to protect your privacy with estate planning in Texas. A revocable trust in your estate planning can bypass probate and the public court record. Fortunately, assets held in trust do not require a probate proceeding. Your heirs can access their inheritance right away and avoid the uncertainty and emotional challenges of months of court proceedings. Additionally, the trust assets are privately managed, as they are not subject to probate proceedings and are therefore not public record.
Irrevocable Trust
If protection from taxes, creditors, and lawsuits is a main priority for you, an irrevocable living trust can be an important part of your estate plan. Like revocable trusts, an irrevocable trust protects your wishes, bypasses probate, and is administered privately.
Not only can trusts preserve privacy by avoiding probate, they can benefit your estate plan in other ways. Depending on your unique situation and needs, trusts can help preserve your estate assets and simplify the inheritance process. To find out if a trust is right in your Texas estate planning, consult with a qualified estate planning attorney to determine which documents are best for carrying out your wishes and desires for your estate.
Proper Estate Planning
Thoughtful estate planning can help keep your estate plan private, but is important for many other reasons. Creating an estate plan helps ensure that your wishes will be carried out, rather than a court deciding how your estate will be distributed. It can also reduce your taxes while you’re alive, and can limit your beneficiaries’ tax liability. Estate plans can reduce the costs of administration, and can prevent delays in the transfer of important items and gifts to your loved ones.
We take an integrated approach to estate planning at Holman Law. Listening to your concerns, needs, and goals is critical, but we are also open to asking follow-up questions, putting hypothetical scenarios on the table, and weighing the pros and cons of each option.
Get Help From An Experienced Dallas Estate Planning Attorney
If you reside in the Dallas/Fort Worth area and would like to discuss your estate planning needs, don’t hesitate to reach out to Holman Law LLP. We are located at 12222 Merit Drive, Suite 1200 in Dallas, Texas. Our estate planning attorneys are experts in wills, trusts, and probate law. If you or your family need assistance, we can provide a quick response and excellent customer service for estate planning tailored to meet your needs. We can be reached by phone at (972) 474-7828 or you can contact us by visiting our website. We look forward to assisting you.
