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THE BASICS:
PROBATE



What happens to my property when I die?
What is intestacy?
What is community property?
What is separate property?
What is probate?
How bad is probate in Texas?
What is an independent executor?
Is an independent executor appropriate in all circumstances?
Cost Questionnaire
Can I avoid probate?
If I cannot avoid probate are there any alternatives?


What happens to my property when I die?

When we die, our property passes by one or more of three ways: Intestacy, Wills and Third Party Arrangements. Intestacy means we died without a will and the laws of the State of Texas will control. If we have a will, once probated, our probate property passes according to that will.

Most of us have at least one piece of non-probate property. That is property that does not pass under our will and is not subject to probate. Today this is most commonly associated with living or loving trusts. Traditionally, it was life insurance. Life insurance is a non-probate asset because it passes according to the beneficiary designation made with the life insurance company, not pursuant to the will. Other examples are: IRAs, retirement benefits, Keoghs, annuities and multi-party bank accounts (joint accounts with right of survivorship, trust accounts and PODs).

What is intestacy?

If a person dies without a will they have died intestate. If you die intestate, Sections 38 and 45 of the Texas Probate Code control the disposition of your probate estate.

What is community property?

Community property is the property you and your spouse accumulate during marriage, except for anything that is given to you or you inherit.

Your community property passes to your surviving spouse, unless you have children that are not the children of your spouse. If you and your spouse have 2 children and no others, your community half passes to your spouse. If you and your spouse have 2 children but you have a child by a prior marriage, then your community half goes to your 3 children and not your spouse.

Remember you can change this with a will.

What is separate property?

Anything you bring into the marriage, or you inherit or is given to you during the marriage, is separate property.

The rules concerning the succession of your separate property is more complicated. If you have a spouse and descendants, the spouse gets 1/3 of the personal property and a life estate 1/3 of the real property. If you have no spouse your descendants get it all. There are further rules if you have no descendants or spouse that are not worth pursuing here, but are spelled out in Section 38.

If you die intestate you probably have not avoided probate. Generally, it will be necessary to establish your heirs by a court action referred to as an application to declare heirship. If you have a valid will you avoid this process. An administrator may also be necessary.

What is probate?

Probate in Texas is not a terrible ordeal if you have an up-to-date will, there is no dispute among the family and your beneficiaries, you do not have creditor problems and you do not have tax problems. In fact, if you meet all of those criteria and all of your property passes to your surviving spouse, the costs may be as low as $1,000 to $1,500.

How bad is probate in Texas?

The public fears and loathes probate to mythical proportions. When asked to explain what probate is, an otherwise knowledgeable businessman said, "It's a dragon: it is ugly, breathes fire and thinks of you only as its next meal." While this description is not accurate or fair, most people would agree wholeheartedly.

Unfortunately, there are businesses that prey on this ignorance and fear. People all over the United States are selling plans to avoid probate. Quite often these salespersons do not know any more about the realities of probate than the general public.

Texas has a very streamlined and efficient probate system. For the simplest of estates, the total probate cost can be $1,000 to $1,500. Years ago Texas did not have such a good system. It was cumbersome and inefficient. In addition the courts abused their authority to supervise everything concerning the probate proceeding. Judges appointed their cronies to act as appraisers and administrators. Further, attorneys charged a percentage of the estate as their fees (today, no responsible attorney charges a percentage).

Texas' probate system was reformed in 1954. Nevertheless, the legacy from that period continues to this day. The fear of probate is validated by the problems and expense of probate in other states.

Today a person can go through Texas probate without any great fear or expense, if there has been property planning and they have a knowledgeable attorney.

What is an independent executor?

In most instances, the goal is an independent executor serving without a bond. This means that after the will is admitted to probate and an inventory is filed, the executor is free of court supervision and control. All of this results in substantial savings to the estate.

Is an independent executor appropriate in all circumstances?

Sometimes an independent executor is not desired. If the estate is insolvent or nearly so, it is generally prudent to have a dependent administration. This protects the personal representative by having all actions validated before they are taken. Occasionally, the testator does not have anyone they trust completely. In those cases, the beneficiaries might be better off to have the executor watched closely by the court. The beneficiaries would also be protected by a bond.

Cost Questionnaire

The more of the following questions you can answer with yes, the less your probate procedure will cost you:

  1. Has the estate been planned?
  2. Is the will up-to-date?
  3. Is the will self-proving?
  4. Does it name an independent executor?
  5. Does it waive the requirement of bond?
  6. Is the fair market value of the estate less than $625,000?
  7. Is there only one beneficiary of the will?
  8. Are all of the surviving children also the children of the surviving spouse?
  9. Are the bequests to the family made in the predictable and natural manner?
  10. Have you eliminated or reduced all possible areas of controversy: family, property, bequests?
  11. Did the testator discuss and explain the estate plan with the family?
  12. Can the debts be resolved without delay or controversy?

Can I avoid probate?

Yes. It is not always easy or simple but it is done every day. In Texas, it is not necessary to save money. However, if at the time of your death, all of your assets are in non-probate form, there is no need to probate your will. The most common examples of non-probate assets are:

  1. Trusts, and especially living and loving trusts (revocable intervivos trusts)
  2. Life insurance
  3. Annuities
  4. Deferred compensation (retirement benefits, IRAs, Keoghs and pension plans)
  5. Joint Tenancy with right of survivorship
  6. Multi-party bank accounts (Joint Accounts with right of survivorship, trust accounts and POD accounts)
  7. Community property with right of survivorship

If any asset is in probate form when you die, probate will probably be necessary. For example, suppose you have a certificate of deposit that is held in the name of the trust. Then assume you transfer it to another bank but the new bank makes it out in your name rather than the trust and you don't catch it. Then you die with the CD titled in your name. Your beneficiaries cannot access those funds until your will is probated.

If I cannot avoid probate are there any alternatives?

There are alternative probate procedures to the independent executor. They are appropriate in various circumstances:

  1. Independent administration
  2. Muniment of Title
  3. Dependent administration
  4. Dependent administration with will annexed
  5. Proceeding to Declare Heirship
  6. Administration of community property
  7. Community Survivor (without court authority)
  8. Temporary Administration
  9. Finding of no need for administration
  10. Affidavit of Heirship
  11. Establishing title through foreign wills

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