Retirement accounts and the probate process

On Behalf of | Apr 29, 2022 | Probate Litigation |

Losing a family member or loved one is difficult and having to deal with complicated legal issues at the same time can be overwhelming. The assets of Texas residents who die without a will or estate plan set up may have go to through the probate process, which involves distribution of assets according to probate laws.

Retirement accounts are often one of people’s biggest and most important assets, and you may not want them being subject to probate. Fortunately, naming primary and alternate beneficiaries may keep your retirement accounts from getting tangled up in the probate process. After your death, even if other assets go through probate, the financial institutions responsible for maintaining your retirement accounts must distribute the accounts according to your beneficiary designations, allowing them to avoid probate.

Naming primary and alternate beneficiaries

If you are married, you are required to name your spouse as a beneficiary. A spouse is typically named as a primary beneficiary, but an alternate beneficiary should be named, as well. If your spouse or primary beneficiary dies first, or somehow becomes unable to serve as a beneficiary, your estate could still end up in probate if no alternate beneficiary is designated.

An alternate beneficiary can be anyone you choose; however, remember if you choose someone who is still a minor after your death, they may not be able to receive the funds yet. Selecting someone as an alternate beneficiary who can manage the money for them until they are an adult is a better option.

Keep your beneficiary designations up to date

Once your beneficiaries are named, do not forget about them. Review your beneficiary choices periodically, ideally at least once a year. One of your beneficiaries may no longer be available to receive the money, or you may simply want to choose someone else for personal reasons.

Another advantage to keeping current primary and alternate beneficiaries on your retirement accounts is if the accounts are distributed to beneficiaries upon death, they are not available for creditors to attempt to garnish.

Experienced estate planning attorneys can provide guidance and strategies on how to help your retirement accounts avoid probate. This can save your heirs and beneficiaries significant time and money and give you the peace of mind knowing your retirement funds will be distributed according to your wishes.