Probate can tie up a family's money for many months. California's courts say formal probate "typically takes 9 to 18 months and can sometimes take even longer." The good news is that many assets can pass straight to loved ones without a probate court, if the paperwork is set up ahead of time. Veterans have some special tools for this, such as VA life insurance and the Thrift Savings Plan. This guide explains the main ways families keep assets out of probate, with official examples, so you can talk it through with an estate attorney.
Key Takeaways
- Assets with a named beneficiary, such as VGLI life insurance, a TSP account, or a payable-on-death bank account, generally pass outside probate.
- The TSP says a will "will not override" a TSP beneficiary designation. The form on file at death is what counts.
- Joint ownership with right of survivorship lets the surviving owner receive the asset "by operation of law," but it has real risks.
- Property held in a living trust passes to beneficiaries without probate, according to California's courts.
- Small estates may qualify for a simpler process. California's personal property limit is $208,850 for deaths on or after April 1, 2025; Texas allows a small estate affidavit when estate assets, not counting the homestead and exempt property, do not exceed $75,000.
- All of these tools are governed by state law or by the rules of each program, so details should be confirmed.
Table of Contents
- Probate Assets vs. Non-Probate Assets
- Beneficiary Designations: VGLI, TSP, and Bank Accounts
- Joint Ownership With Right of Survivorship
- Living Trusts
- Small-Estate Procedures
- Ask the Navigator
- Frequently Asked Questions
- Sources
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From the AVOY Book Library Guide To Living Trusts covers this in more depth, with step-by-step guidance. Get the Book → |
Probate Assets vs. Non-Probate Assets
Not everything a person owns goes through probate. The Superior Court of California in Orange County explains that "Assets distributed outside the probate process are part of a person's 'non-probate estate.'" It lists examples such as life insurance, retirement benefits with named beneficiaries, and pay-on-death bank accounts.
Why this matters for veterans
Many veterans hold several assets that can name a beneficiary: VA life insurance, a TSP account from federal or military service, and bank or credit union accounts. When these are set up correctly and kept current, the family can often collect them without waiting for a court.
A word of caution
The same Orange County court page reminds families to talk with a probate lawyer before choosing alternatives, because "there may be debts or tax claims that make probate a better option." Avoiding probate is a goal for many families, but not always the right choice.
Beneficiary Designations: VGLI, TSP, and Bank Accounts
A beneficiary designation is a form that tells a program or bank who gets the money when you die. It is a common way to keep an asset out of probate.
VGLI and other VA life insurance
VA's life insurance page says your beneficiary "is the person you have designated to receive your insurance proceeds in the event of your death." For Veterans' Group Life Insurance (VGLI), VA says the quickest way to update a beneficiary is to access your policy online. You can also complete Form SGLV 8721 and fax or mail it. VALife beneficiaries can be updated through VA's online policy access. For a walk-through, see How to Change a VA Beneficiary Designation and VA Life Insurance Options: VGLI and SGLI.
Thrift Savings Plan (TSP)
The TSP is very clear on this point. Its official site says "a will, prenuptial agreement, separation agreement, property settlement agreement, or court order will not override either a beneficiary designation or the order of precedence." It adds: "for us to honor it, your beneficiary designation must be on file with us at the time of your death."
If no valid designation is on file, the TSP pays in this order:
- The participant's spouse
- The participant's child or children, equally
- The participant's parents, equally, or the surviving parent
- The executor or administrator of the participant's estate
- The next of kin entitled under state law
Notice step 4. If there is no spouse, child, or parent, the money can end up going to the estate, which may mean probate. The TSP also says life changes such as marriage, divorce, or remarriage do not automatically update a designation.
Payable-on-death (POD) bank accounts
The FDIC describes payable-on-death accounts as accounts where "a deposit passes directly to one or more beneficiaries upon the depositor's death without a written trust agreement." They may also be called "in trust for," "transfer on death," or "Totten trust" accounts. The FDIC insures these accounts at "$250,000 per eligible beneficiary, up to a maximum of $1,250,000 if five or more eligible beneficiaries are named," per owner, per bank. Banks and credit unions can explain how to add a POD beneficiary to an account.
Joint Ownership With Right of Survivorship
When two people own an asset as joint tenants with right of survivorship, the survivor becomes the owner when the other dies. The Colorado Bar Association explains that this "allows the surviving owner(s) to receive the asset outside of any probate estate process because the title to the asset is transferred by operation of law."
The risks families should know
The Oklahoma Bar Association calls joint tenancies "very deceptive" and lists several risks:
- Joint tenancies "can be severed by bankruptcy proceedings, actions of creditors and other means."
- Adding a non-spouse can trigger federal gift tax issues when one person paid for the whole asset.
- Co-owners who disagree can face "many difficulties and even expensive litigation."
- When the last joint owner dies, the asset may need probate then.
Because the rules for joint ownership are state law, an estate attorney can explain how they work where you live.
Living Trusts
A revocable living trust is a legal document that holds property for the benefit of the people you choose. The Orange County court says, "When a living trust holds title to some of the decedent's property, that property also passes to the beneficiaries without probate."
The successor trustee's role
When the person who made the trust dies or cannot manage, a successor trustee takes over. The Consumer Financial Protection Bureau's guide for trustees lists four basic duties: act in the beneficiaries' best interest, manage the property carefully, keep trust property separate ("Never deposit the trust's money into your own or someone else's bank account"), and keep good records.
Funding the trust
The key phrase in the court's sentence is "holds title." Property that was never placed in the trust's name may not pass this way. Many families work with an estate attorney to retitle accounts and real estate after signing the trust.
Small-Estate Procedures
Even when some property is left outside these tools, many states offer a simpler path for small estates. Each state sets its own dollar limits and waiting periods. Two official examples follow.
California example
The California Courts Self Help Guide says personal property can often be collected with a simple affidavit when the estate is at or below the limit and 40 days have passed since the death. For deaths on or after April 1, 2025, the limit is $208,850. The same guide lists $750,000 for a main home in California for deaths on or after April 1, 2025, using a court petition. Trust property, joint tenancy property, pay-on-death accounts, and life insurance with a named beneficiary do not count toward the limit.
Texas example
Texas Estates Code section 205.001 allows a small estate affidavit when the estate's assets, not counting the homestead and exempt property, do not exceed $75,000, at least 30 days have passed since the death, and no petition for a personal representative is pending or granted. Section 205.006 allows the homestead to pass by affidavit if it is the only real property in the estate.
Ask the Navigator
Not sure which of your assets would go through probate? Ask AVOY Veteran Navigator AI™ at avoyvet.com, and take the free Veteran Legacy Checklist to review your beneficiary forms, titles, and trust in one place.
Frequently Asked Questions
Does my will control who gets my TSP?
No. The TSP says a will "will not override" a TSP beneficiary designation or its order of precedence. Only the designation on file at death counts.
How do I update my VGLI beneficiary?
VA says the quickest way is to access your VGLI policy online. You can also use Form SGLV 8721 by fax or mail.
Is a payable-on-death account FDIC insured?
Yes, at FDIC-insured banks. The FDIC covers $250,000 per eligible beneficiary, up to $1,250,000 per owner per bank when five or more eligible beneficiaries are named.
Is putting my child on my bank account a good way to avoid probate?
It can pass the account outside probate, but bar associations warn of risks, including the co-owner's creditors and possible gift tax issues. An estate attorney can explain options such as a POD designation instead.
Do California's and Texas's small-estate limits apply in my state?
Each state sets its own limits and steps. California and Texas are examples only, and their dollar limits do not apply anywhere else. Check your state's court website or ask an estate attorney.
Sources
- Update Your Insurance Beneficiary — VA Life Insurance
- Designating Beneficiaries — The Thrift Savings Plan (TSP)
- Deposit Insurance Coverage for Deposits in Trust Accounts — FDIC
- Wills & Trusts — Superior Court of California, County of Orange
- Overview of formal probate — California Courts Self Help Guide
- When formal probate may not be needed — California Courts Self Help Guide
- Texas Estates Code Chapter 205, Small Estate Affidavit — Texas Legislature
- Joint Tenancy — Colorado Bar Association
- Joint Tenancy: The Pros & Cons — Oklahoma Bar Association
- Help for trustees under a revocable living trust — Consumer Financial Protection Bureau
Educational information only — not legal, tax, financial, or medical advice, and not affiliated with the U.S. Department of Veterans Affairs. Estate and probate rules vary by state; an estate attorney in your state can confirm what applies. For VA benefits help, contact a VA-accredited VSO (often free), claims agent, or attorney.
