How to Minimize the Need for Probate in Texas

Think of the word “probate” as meaning “transfer of title.”  There are several ways that property can be owned so that property automatically goes to the family or to a co-owner when a person dies without having to file a court application for probate.

There are two basic kinds of property. A person can have personal property or real property.

Personal property includes “things” such as a car, furniture, jewelry, clothes, or even a bank account.

Real property means land and includes land that has buildings on it, like a person’s house. Real property also includes mineral interests.

Property is either separate property or community property. Separate property is owned by an unmarried person or owned by a person before marriage. A gift or inheritance to a married person is separate property. Community property is acquired by a married person during the marriage. 

The total amount of property a person owns is called the estate. The community estate of a married couple is owned by both persons. In other words, each spouse owns one half of the community estate. When a married person dies, only one half of the community estate can be given away because the other half is still owned by the living spouse. The spouse that has died (called the decedent) could own a separate estate in addition to one-half of the community estate.

The following is a list of how property can be owned:

• Separate property
• Joint ownership (sometimes called joint tenancy)
• Joint ownership with right of survivorship
• Payable on death 
• Life estate
• Community property
• Community property with right of survivorship

Yes. Property owned before a marriage is separate property. Property that is given as a gift to or that is inherited by a married person is also separate property. 

If a person dies without a will, the law decides how property is divided. The person who has died is called the decedent.  When a married person dies, the person’s living spouse is called the surviving spouse.

For example, if a married person dies without a will, the law says the decedent’s community property goes to the surviving spouse if:

• The decedent had no children or other descendants;
• All the decedent’s children are also the children of the surviving spouse;
• If the decedent had children with more than one person, the surviving spouse keeps his or her one half of the community property, and the children get the decedent’s one half of the community property. 

A valid will controls how a person’s estate is handled after the person dies. However, the will must be admitted to probate to change the title to some property. This means that an application to admit the will for probate must be filed with the probate court where the person lived or died or in the county where the property is located, and the probate judge must find that the will is valid. The cost to apply to the probate court varies depending on the county. Most probate courts will not allow pro se litigants, meaning you must hire an attorney. This adds to the cost. To save money for their family, many people attempt to own property in a way that makes it unnecessary to probate the will. For example, if a married person dies, and the couple’s property is owned with the right of survivorship, the property automatically goes to the surviving spouse. 

Absolutely. As of September 1, 2015, Texas law says that an owner can prepare a Transfer on Death Deed (TODD). A TODD allows the owner, the transferor, to name a beneficiary who will receive the property described in the deed after the transferor has died. The TODD must be recorded in the deed records of the county where the property is located before the transferor’s death.

Yes. Nothing changes as long as you, the transferor, are living. You are still the full owner, meaning you must continue maintaining the property and paying the taxes unless you have deferred them. You can even sell the property if you need to do so. The beneficiary would receive nothing at your death if the property has been sold. 

A TODD will rule; it governs over the will. If your will states Property A goes to “my daughter” and the TODD names “my son” as the beneficiary of Property A, your son will be the new owner regardless of which of the two documents was executed first. Property A’s title can transfer without the need for probate.

Real estate, with or without a mortgage, can be transferred at death when the owner properly drafts and records a TODD. It is not limited to one’s homestead.

People planning to marry can prepare a written premarital agreement that says that certain property will remain separate property even after the marriage. Unless there is a will that states who will get the property, the property mentioned in the premarital agreement will not go to the surviving spouse.

A joint tenancy means more than one person owns a certain item of property. Both real property (land) and personal property (things) can be owned jointly. 

There are two kinds of joint tenancy. People can own property as joint tenants or as joint tenants with right of survivorship. In a joint tenancy, when one owner dies, their share of the property passes to the decedent’s heirs or the persons named in the decedent’s will. In a joint tenancy with right of survivorship, when an owner dies, their share of the property goes to the other owners.

A joint tenancy with right of survivorship has to be created by a written agreement.

When a married person has children who are not the surviving spouse's children, half of the community property does not automatically go to the surviving spouse when the person dies. In Texas, a married couple can agree in writing that all or part of their community property will go to the surviving spouse when one person dies. This is called a right of survivorship agreement. The right of survivorship agreement must be filed with the county court records where the couple lives. This can be a way that married couples can see to it that all community property stated in the agreement automatically belongs to the surviving spouse without having to go to probate court.

Generally, there are two types of joint bank accounts. If all parties to a joint account are living and it is set up under the names of Owner A or Owner B, then either Owner A or Owner B can take money out of the account without getting permission from the other owner. If the account is set up under the names of Owner A and Owner B, then both owners must sign to take money out of the account.

Another way of owning financial accounts so that they will pass automatically without probate is called payable on death (POD). Payable-on-death accounts are not joint accounts because you have total ownership of the account during your life. After your death, the person you chose becomes the account owner. An example of this type of account is an individual retirement account. Contact your bank or financial institution to set up a payable-on-death account.

A life estate gives a person the right to live on or use property during the life estate owner’s lifetime or until he or someone else is the full owner of the property. The person only has an ownership interest in the property as long as they are alive. Some people will use a life estate to avoid probate.

This works because the property owner (grantor) has a deed prepared that gives the property to someone else (grantee) when the owner dies. The grantor has the right to live on and use the real property until death. The real property automatically goes to the grantee at the death grantor’s death the life estate is created; the grantor generally cannot sell the property without the other person’s consent. Only a lawyer should prepare this kind of deed.

Term insurance does not have any cash value until the insured person dies. The policy benefit is paid to your beneficiary when you die. Whole life insurance has some cash value during the insured’s lifetime and will pay benefits when the insured dies. You should review the terms of any insurance policy to see if the benefits are worth the higher premiums of a whole-life policy. 

When you fill out the forms for a life insurance policy, you are asked to name a beneficiary; that is, to name the person who gets the benefits when you die. Make sure to fill in the name of a specific person to be your beneficiary. If you fill in the blank with something like “my estate” or “all my heirs,” your family will have to go to the probate court to get the insurance policy benefits. Naming a specific beneficiary keeps an insurance policy out of your probate estate. 

During the owner’s life he or she can designate a co-owner as joint with right of survivorship.  This is done by using Texas Department of Motor Vehicles (DMV) Form #VTR-122.  If that hasn’t been done prior to the owner’s death, there is a DMV form called Affidavit of Heirship that can be used to transfer the title.  This is done by using Form #VTR-262.  

As noted, this article is general in nature and should not be relied on as advice for your particular circumstances. For specific advice about your individual situation, it is always best to talk to an attorney. 

Legal Hotline for Texans: (800) 622-2520. Call our lawyer-staffed legal hotline. Advice is free for Texans 60 and over or anyone eligible for Medicare.

This article was made possible through grants from the State Bar of Texas Real Estate, Probate, & Trust Law Section and the Litigation Section.