Do 401(k)s and Retirement Accounts Go Through Probate in Texas?

Probate, the court process for paying a deceased person’s debts and distributing their assets, can be time-consuming. However, not all assets must go through probate.

One of the most common questions we get is, Do 401(k)s and retirement accounts go through probate? The answer depends on whether you have valid named beneficiaries on your accounts. Those accounts with valid beneficiaries can pass without needing probate. But if you fail to name a beneficiary or keep the designation current, your accounts may have to go through the process.

At Lewis Law Firm, PLLC, we guide Texans through the complexities of estate and legacy planning. Our firm helps individuals and families protect their assets, minimize taxes, and ensure their wishes are honored through thoughtful estate planning. We simplify what other lawyers often overcomplicate and believe planning is for everyone, not just the wealthy.

Probate vs. Non-Probate Assets

Not all assets go through probate. Property can be considered either as a probate or a non-probate asset. Non-probate assets typically transfer without requiring the probate process.

Probate assets include:

• Property owned solely by the deceased person,
• Solo bank accounts,
• Real estate, and
• Personal property (e.g., jewelry or vehicles).

These assets typically must go through the probate court process to transfer ownership. This usually involves a will or intestate succession, the legal regime for determining who inherits from someone who died without a valid will.

Non-probate assets, on the other hand, include terms for their transfer within the document or account arrangement itself. Such assets include:

• Life insurance with a current beneficiary on file,
• Joint bank accounts with survivorship rights,
• Payable-on-death (POD) or transfer-on-death (TOD) accounts, and
• Retirement accounts like 401(k)s and individual retirement accounts (IRAs) with named beneficiaries.

Although retirement accounts are typically non-probate assets, whether a 401(k) or IRA will avoid probate depends on whether you named valid beneficiaries and kept that designation up to date.

How Do 401(k) and Retirement Beneficiary Designations Work?

Common non-probate retirement accounts include:

• Traditional 401(k) and Roth 401(k);
• Traditional and Roth IRAs;
• SEP IRAs and SIMPLE IRAs; and
• 403(b), 457(b), and other employer-sponsored plans.

When you open one of these accounts, the financial institution usually requires you to name at least one primary and contingent beneficiary. The primary beneficiary receives the funds unless they die before the account holder. In that case, the contingent beneficiary receives the funds. The financial institution can transfer the account without involving the court if you have current beneficiary designations.

If you do not name a beneficiary, your listed beneficiaries are no longer living, or a beneficiary refuses or cannot accept a transfer, the institution will send the account to your estate so it can go through probate. The estate distributes those funds according to the deceased account holder’s will, or according to Texas law in the absence of a valid will or instructions in the current will on how to handle the account.

How 401(k)s and Retirement Accounts Typically Transfer

When the account holder dies, retirement accounts usually transfer through the following process:

• The family or person managing the estate provides a certified copy of the death certificate to the financial institution,
• The institution reviews the account and confirms whether it includes a valid and current beneficiary designation,
• The institution transfers the funds directly to the named beneficiary, and
• The beneficiary then chooses how to access or move the funds.

Usually, beneficiaries must complete one or more forms and submit identification to verify their claim.