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Beneficiary issues could put retirement accounts through probate

On Behalf of | Aug 6, 2019 | Probate & Estate Administration |

Having a retirement account can be a useful safeguard for those golden years. Of course, some individuals will pass away with money still in those accounts, and as a result, those remaining funds will need to be distributed to the appropriate parties. Does that mean retirement accounts go through probate?

Retirement accounts can avoid probate if the account holders name beneficiaries to those accounts. However, in Texas, a spouse is entitled to half of a decedent’s retirement assets. As a result, if the decedent named a person other than his or her spouse as the beneficiary of a retirement account, the surviving spouse could have reason to make a claim to half of those funds. If this happens, the account will need to go through probate to address the issue.

Additionally, retirement accounts could go through probate if the beneficiary designation is outdated or if the beneficiary is the person’s estate. An outdated designation could mean that a person who has already passed is still named on the account and that the court will have to determine who receives the assets. If the estate is named, the assets will pass to the estate, and estate assets typically need to go through probate.

Keeping assets out of probate is possible in some cases, but surviving loved ones may find themselves facing difficulties due to planning errors or other issues. It is important to know when an account could pass directly to a person and when it may need to go through a different legal distribution process. Because settling someone else’s final affairs is complicated, Texas executors may want to ensure that they have help from knowledgeable attorneys.