When distributing assets from an estate, sometimes beneficiaries go through the process of probate. In regard to probate, there is a difference between non-probate transfers and probate estate. Avoiding probate can help Texas estate owners safeguard their assets for their beneficiaries.
If the deceased still owed balances to creditors, the probate assets are at risk of adverse actions to pay off outstanding debts. In this type of situation, the beneficiaries will be last on the list to receive assets until they have been dispersed to the creditors. The creditors must remit their requests within a four month time frame and it must be done before assets have been dispersed to the beneficiaries.
In regard to non-probate transfers, as long as the total amount valued for the assets is below $150,000, the assets cannot be claimed by creditors. Assets that are also considered non-probate are retirement accounts and trusts as well as life insurance policies. Since trusts are for the benefit of the designated heir, it is not vulnerable to collection and does not need to be announced in a public newspaper as with probate. Also, if the debts are not yet legally enforceable, it’s not mandatory for the beneficiary to seek out the creditors.
Staying away from probate can safeguard a descendant’s assets. A probate estate can leave the door open for creditor claims and may leave Texas beneficiaries with a limited amount remaining from the assets. A thorough amount of understanding of the law can help provide the best possible outcome in estate planning.
Source: lakeconews.com, Estate Planning: Why avoiding probate protects assets, Dennis Fordham, Nov. 29, 2013