Texas Probate & Estate Administration
Probate and estate administration are the processes through which estate assets are transferred after death. When probate avoidance planning has not been implemented prior to death, the state will require a probate court proceeding if the deceased was a resident or owned assets in the state. Probate can be supervised or unsupervised. In unsupervised probate, the appointed estate administrator manages assets, pays any debts, files required tax returns and various court documents, and distributes the estate assets. However, the court may at any time require the process to be supervised (usually when someone expresses concern about the estate administration). In a supervised probate, the probate judge must approve every detail of the estate administration.
- What Assistance Do You Provide To Clients Going Through The Probate Process?
- We prepare the paperwork and get everything ready for you. Our firm files it with the court, communicates with the clerks, and pays all the court fees.
- What Factors Set The Stage For A Probate To Occur?
- The most common factor for probate to occur is that someone passes away and the family wants to divide the assets. Usually, the trigger is someone wants to change a deed to a home or take out a loan against it.
- Is Probate Necessary If There Are No Assets?
- If there are no assets, there is no reason to go through a probate. Sometimes, probate is expensive. Why spend thousands of dollars to get nothing? If there are no assets, there is nothing to do.
- Who Are The Main Players In A Probate Case?
- If there is a will the beneficiaries will be notified. If there is no will, there is a kind of hierarchy to the heirs identified by the court. The spouse has the first right to be appointed as administrator. If they don’t want to do it, the judge must decide which of the children to appoint as the administrator. Then creditors come in. Creditors oftentimes have a big debt that they are trying to recover.
- How Long Do We Have To Probate A Will?
- You only have four years to probate a will. After that, you might fall into an exception, but usually, the judge won’t allow you to probate that will anymore
- What Happens If A Will Is Not Probated?
- If you don’t probate a will within four years after someone passes away, that will usually become invalid. You lose your opportunity to have the will probated, which can lead to harsh consequences.
- What Are Some High-Risk Factors For Probate Litigation To Occur?
- The number one high-risk factor for probate litigation is when heirs don’t get along or stop communicating. If anyone is unhappy or got an unequal share, it’s a very high-risk situation for probate litigation because it’s so easy to begin a dispute.
- How Can I Avoid Probate Litigation?
- The best way to avoid probate litigation is to avoid probate and the best way to do that is with a revocable living trust.
Five Types of Probate in Texas:
There are five main categories of probate for an estate in Texas. Consult with an attorney before making your final decision on which avenue to take.
The five types of probate include:
1. Small Estate Affidavit:
A small estate affidavit should be the first thing a family tries when considering how to go through probate because it will always be faster and less expensive than any of the traditional routes. It is a relatively straightforward form that must be filled out and filed with the local probate court. Whether or not a family can use a small estate affidavit can be complicated to figure out, however. Generally, if there is no real estate involved, the decedent didn’t have a will, and the only known financial assets total up to less than $75,000, then there is a good chance that a probate judge will allow for the use of a small estate affidavit.
If any of those factors are not true, then traditional probate is the only route. Even if possible, every member of the decedent’s immediate family has to sign off on the use of the small estate affidavit, including the surviving spouse and all of the decedent’s children. If even one of those family members refuses to sign, the only alternative is traditional probate.
Another factor that could prevent its use is if there are large outstanding debts, such as credit card bills, medical expenses, or unsecured loans. The probate judge has the discretion to reject a small estate affidavit in order to protect the outstanding creditor’s interests.
2. Muniment of Title:
A muniment of title should be the next thing to consider when determining which type of probate to use, because it does not require an inventory to be prepared and filed with the probate court, and no formal probate administration has to be opened up, so there will not be an executor of the estate.
It’s faster, easier, and less expensive than traditional probate. A muniment of title is only possible if the decedent left a last will and testament if there are no outstanding debts and if the only assets needing to be transferred are vehicles or real estate.
The only exception to outstanding debt is a mortgage on real estate, if there is a secured creditor for a vehicle then a muniment of title is not a viable option for going through probate. If there are any financial assets, such as bank account, brokerage accounts holding stock or bonds, or CD’s, then a muniment of title is not a wise route because third party institutions routinely will not agree to turn over assets when there is no formal executor or administrator appointed over the probate estate to receive them.
3. Probate of an Original Will:
Probate of an original will is the traditional route for most probates that take place. Anytime someone passes away and leaves a will, the will does not have any legal authority until the named executor in the will has hired a probate attorney and taken the will in front of a probate judge to have the will admitted to probate, or as many probate attorneys say “probated.”
This usually takes 2 to 3 months to get a case in front of a probate judge, and an additional 3 to 4 months afterward to notify creditors and beneficiaries, as well as prepare an inventory for the probate judge to sign off on. Many people don’t realize that you only have 4 years from the time someone passes away to probate a will, otherwise, it is invalid unless you fall under a few limited exceptions.
4. Independent Administration:
An Independent Administration takes place when there is no will. There are default laws in Texas that will determine who the “heirs” of the estate are, and therefore who will receive the assets belonging to the decedent. This is one of the most complex types of probate because the family has to prove to the probate judge whether or not the decedent was married, and who the descendants are.
The probate court will have to appoint another probate attorney to conduct an independent investigation to make sure that all of the family members have been disclosed to the court, as well as attend a hearing in front of the probate judge and give testimony that the family has disclosed all the members who should legally inherit. In addition, two non-family member witnesses will have to attend the hearing and testify to the probate court that they knew the decedent for many years and that all of the disclosed family histories are accurate.
An independent administration typically takes 9 to 12 months to move through a probate court because there are so many additional requirements to satisfy who the heirs should be!
5. Dependent Administration:
A dependent administration is by far the most complicated type of probate in Texas. This typically only happens when there is no valid will, and the heirs are not getting along to decide who should be appointed as the administrator of the estate, or if there is a minor child who cannot sign legal documents.
Dependent administrations often last 2 to 3 years and cost the estate tens of thousands of dollars to move through probate. This is because in addition to all of the requirements for an independent administration, any time an administrator wants to pay estate expenses or creditors, sell real estate or other assets, or make distributions to the heirs, they have to go in-person to a hearing in front of the probate judge to get permission. The probate court is required to keep a tight watch on all the actions the administrator and the probate attorney take, and almost nothing is allowed without prior approval from a probate judge.
Dependent administrations are expensive, time-consuming, and should be avoided if at all possible. Unfortunately, for many families that don’t prepare in advance with a last will and testament or a revocable living trust, there is often no other alternative.
Since probate can be a lengthy, costly, and public process, many people choose to avoid it. There are a number of legal strategies that will allow you to pass property to another person after death, without going through probate.
- Joint Tenancy & Tenancy by the Entirety. Adding another person to your assets as a joint owner or “joint tenant with rights of survivorship” will allow your property to pass to them upon your death without going through probate. There are pitfalls to this strategy, however, to include subjecting such assets to any claims (such as lawsuits) against the co-owner and making them available to the co-owners creditors — all while you are still alive and planning on using the assets yourself
- Beneficiary Designations. Texas allows Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts. Beneficiary designations like these are preferable to joint tenancy in that they allow you to transfer property only upon your death without giving away current ownership. One of the drawbacks, however, is that it can be difficult to obtain an equitable distribution of property among your heirs by utilizing beneficiary designations. Additionally, understand that if you have beneficiaries listed on your assets, those assets will be distributed upon your death to the listed beneficiaries, even if your last will and testament states otherwise.
- Revocable Living Trust. A Revocable Living Trust is a legal document that allows you to establish a separate entity (the trust) to “hold” legal title to your assets while you are alive, and to name trustees to manage those assets according to the trust terms. Typically, you serve as the trustee while you are alive, managing your assets for your own benefit. Upon your disability or death, the trust terms appoint your successor trustee who then continues to manage — or distributes — the assets held in trust. A properly drafted trust can accomplish many goals, including guardianship and probate avoidance for your estate and bloodline, marital and creditor protection for your children.
Texas Estate and Trust Administration
A properly drafted and funded trust will generally avoid probate. The trust need not be filed with the probate court. Nonetheless, there are still steps necessary to administer the trust: beneficiaries must be contacted; assets must be gathered, valued and managed; potential creditors must be notified; debts, taxes and final expenses must be paid; and, ultimately, any remaining income and assets must be distributed in compliance with the trust terms. Successor trustees often lack the time, resources or knowledge to personally administer the trust, and therefore may call upon legal, accounting and investment professionals for assistance. Oftentimes, a corporate fiduciary (e.g., a trust company) is an excellent alternative to relying solely on busy family members or friends to serve as trustee. We can help your successor trustee(s) deal with the complexities of administering your trust. Please call our office and we will be happy to schedule a consultation, whether or not our office has drafted the original trust.