ESTATE ADMINISTRATION · Texas Probate Passport ... decedent did not owe any debts at the time of...

PRESENTED BY: EVELYN L. GORDON, ATTORNEY AT LAW

ESTATE ADMINISTRATION: A Bare Bones Guide to Texas Probate

Discussion Points ◦ What is Probate?

What to do after someone dies? Do I have to go through probate?

◦ What are my options? Probate of Will Judicial Determination of Heirship Small Estate Administration Will as Muniment of Title Affidavit of Heirship Informal Family Settlement

◦ Alternatives to Probate Non-Probate Assets Avoiding a Full Estate Administration

Helpful Resources ◦ Lone Star Legal Aid – www.lonestarlegal.org

◦ State Bar of Texas - www.texasbar.com

◦ Texas Young Lawyers Association Texas Probate Passport

www.tyla.org/tyla/assets/File/38668TexasProbatePassportWebReady.pdf

◦ Today’s PowerPoint Presentation www.egordonlaw.com

How the probate process works.

What is probate?

◦ wrapping up deceased person’s financial affairs

court-supervised process to transfer property

gives notice to all potential beneficiaries and creditors

◦ determination of validity of a will

if no will, determination of legal heirs

◦ distribution of decedent’s assets to beneficiaries and creditors

When to probate?

◦ 4 years to probate a will, but

should probate as soon as possible to avoid

accumulating additional debts

unfairly saddling one family member with expenses of the estate

delays in transferring title to property

Starting the Probate Process

◦ Do I need an attorney?

typically, yes

◦ Process begins with attorney filing an

Application to Probate Will and for Issuance of Letters Testamentary

any interested individual can initiate probate

What happens next?

◦ clerk issues citation and posts notice at courthouse

◦ court hearing held not less than 2 weeks later

executor provides proof of will and decedent’s death

determination of whether will is admitted to probate

order issued validating will and appointing executor

executor takes oath

court issues letters testamentary

What are Letters Testamentary?

◦ formal instrument of authority to act on behalf of the decedent’s estate

issued by the court

◦ Letters of Administration

issued to court-appointed administrator when

decedent died without a will

decedent did not appoint executor of will

executor appointed by will declines to serve

Who can serve as estate administrator?

◦ if no executor named in the Will

surviving spouse

principal beneficiary of the estate

any beneficiary of the estate

next of kin of decedent (nearest in order of descent)

creditor of the deceased

any person of good character residing in county

incapacitated persons, convicted felons, and non-residents of Texas cannot serve

Responsibilities of Executor/Administrator? ◦ gathering assets of person who died

◦ taking possession of all property –

cash assets must be kept in separate account

◦ preparing formal inventory or

affidavit in lieu of inventory if no debts except secured debts

◦ notice to creditors –

paying debts of the estate

claims presented while estate is still open

◦ tax returns (see form 706)

◦ closing the estate

distributing remaining assets to those entitled to them

Priority of Claims Against the Estate

funeral and last illness expenses, up to $15,000

family allowance for surviving spouse and minor children

amount fixed by probate court

expenses of probate administration

secured claims if mortgaged property is sold and the proceeds are not required to pay the above items

Judicial Determination of Heirship

◦ decedent died without a will court determines the legal heirs

all heirs must be notified and located

◦ typically most expensive and time-consuming form of

probate

◦ may be necessary even if there’s a will if no provision for residual estate

no provision for lapsed or void gifts

ambiguity in language of will

Small Estate Affidavit

◦ no will, and less than $50,000 in assets

(do not include value of real property)

real property requirements

must have been decedent’s homestead

applicant must have lived on homestead with decedent

affidavit must be signed by all heirs

◦ affidavit filed with probate court

◦ court issues order approving the affidavit

Will as Muniment of Title court order establishing validity of decedent’s last Will

certified copy of Will and Court’s Order used to

transfer title in any property to

people listed in the certified Will

Will and Order serve as new deed to any real estate

no administrator required

no outstanding debts

best when mostly real estate [banks may not accept]

only way to probate will more than 4 years after death of decedent

Affidavit of Heirship ◦ decedent died without a will and left only real

property

affidavit filed in deed records of county where property located

signed by 2 disinterested witnesses stating that:

they knew the decedent

decedent died on a certain date in a certain county

identity of decedent’s family members and heirs

decedent did not owe any debts at the time of his death

witnesses do not stand to gain financially from the estate

Informal Family Settlement

decedent only had personal items

personal effects,

furniture, etc.

motor vehicles will require Affidavit of Heirship filed with county tax assessor

Dying Intestate – Who Gets What?

community property is all assets acquired during marriage, including

salary, wages, income generated from community and

separate property

retirement or pension funds based on income earned during marriage

cash dividends and income earned on separate property investments

Dying Intestate

community property

cannot avoid community property system through a will

need written agreement to reclassify community property

premarital property agreement;

marital property agreement; or

community property partition agreement

Dying Intestate

◦ quasi-community property out-of-state married person

acquires property in non-community property state

relocates to Texas

Texas courts may treat as community property

Dying Intestate

separate property is all assets acquired before

marriage and

gifts received during marriage

inheritances received during marriage

assets purchased with separate property

settlement awards for personal injury

separate property by written agreement

Dying Intestate – Community Property

◦ spouse inherits ALL community property if

no surviving children; or

all of decedent's surviving children are also children of the surviving spouse

Dying Intestate – Community Property

◦ children

if all surviving children are not the children of surviving spouse,

surviving children or their descendants receive decedent's 1/2 share of community property;

spouse keeps their 1/2 share of community property and occupies the homestead for remainder of life

Dying Intestate – Separate Property

◦ children

separate personal property divided

2/3 to children or their descendants and

1/3 to the surviving spouse

separate real property passes to children, but

surviving spouse has life estate in 1/3 of real property, including right to live in, use, and enjoy property during surviving spouse's lifetime

Dying Intestate – Separate Property

◦ surviving spouse, no children

separate personal property to surviving spouse

separate real property -

1/2 to surviving spouse; and

1/2 to decedent's parents or collateral relatives

collateral relatives = siblings or their descendants

if no collateral relatives, all separate real property passes to surviving spouse

Dying Intestate – Separate Property

◦ surviving children and no spouse

all separate personal and real property passes to the children or their descendants

Dying Intestate

◦ ALL ASSETS on hand at end of marriage are legally

presumed to be community property

until proven to be separate property by clear and

convincing evidence

a marriage ends at death or by divorce

Disadvantages of Dying Without a Will

◦ you may want spouse to receive everything, but

spouse might only receive 1/2 of the community property and 1/3 of your separate property

with will, can give spouse all or none of your separate property can give spouse portion of your ½ community property can pass unlimited amount to spouse free of estate tax

Disadvantages of Dying Without a Will

◦ if one heir has already received their intended

portion of your estate prior to your death and

you die without a will, that heir could receive an additional portion

Disadvantages of Dying Without a Will

◦ your assets could end up with those you don’t want

to have them

◦ if legal heirs cannot be located, your entire estate would pass to the State of Texas

Planning ahead to minimize the costs of probate.

ESSENTIAL PLANNING ◦ Last Will and Testament or Trust(s)

◦ As many Non-Probate Assets as Possible

◦ Designating Executor in Will to Serve w/o Bond

◦ Declaration of Guardian of Children

◦ Agent to Control Disposition of Remains

◦ Knowing How to Locate All Heirs

Court Procedures No Court Involvement

Application to Probate Will

◦ decedent left a will

◦ assets exceed $50,000

Determination of Heirship

Small Estate Affidavit

Will as Muniment of Title

Affidavit of Heirship

Informal Settlements ◦ mostly personal items

Non-Probate Assets ◦ Right of Survivorship

◦ POD Accounts

◦ TOD Accounts

◦ Retirement Accounts

◦ Insurance Policies

◦ Life Insurance Trusts

◦ Living Trusts

Copyright © 2014 by The Law Office of Evelyn L. Gordon. All rights reserved. No part of this PowerPoint Presentation may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods.