Probate in Texas
PROBATE
The legal process in which the validity and authenticity of a will are determined, the orderly process of winding up the business affairs of a person who has passed away. The Court determines whether a testamentary document is the true last and valid Will of a Decedent through the completion of certain requirements. Probate also refers to the general administration of a deceased person’s will or the estate of a deceased person without a will.
Probate of Wills
Whether you have a handwritten or typewritten will, its validity must be proved in court. This procedure is known as probate, and it generally must take place within four years after death.
To probate a will, it must be established in court that the will meets the requirements of execution (see earlier dis- cussion) and that the will was not canceled or revoked. Additionally, unless the will is “self-proved,” proof of a hand- written will requires the testimony of two witnesses to the testator’s handwriting and proof of a typewritten will requires the testimony of one of the attesting witnesses.
A self-proved will is one that has attached or incorporated a specific form of affidavit containing certain required statements which is executed before a notary public at the time the will is signed or anytime thereafter but before the testator dies. A standard notary acknowledgment alone is insufficient to make the will “self-proved.” A self-proved will is admitted to probate based on the self-proving affidavit and there is no need to call witnesses.
A will that is not proved in court is denied probate. In this event, the decedent’s property passes to his or her heirs as if he or she died without a will. Again, this further emphasizes how important it is to execute a will which meets all legal requirements so that property will pass as the testator wishes. After proving the validity of a will, the next step in the probate process is the administration of the estate.
Executing A Will To Achieve Desired Property Distribution
What A Will Can Do
A testator is a person who leaves a will in force at his or her death. A will is a legal instrument which states how the testator’s property is to be distributed at death. A valid will avoids many of the problems that may arise from dying without a will and allows a person to leave property to the persons he or she desires. In addition to naming the recipients of the testator’s property, the will also designates the individual(s) who will manage the property and care for minor children. In larger estates, the will often contains provisions that minimize estate taxes.
A will can also set up a trust, a method by which property is held by one party (the trustee) for the benefit of another (the beneficiary). To establish a trust, the testator transfers property, with the specific intent to create a trust, to the trustee who manages and administers the property for the benefit of named beneficiaries. A testamentary trust arises under a will and becomes effective when the testator dies. A trust is an effective way of managing property for the benefit of minor or incapacitated persons or persons who are incapable of managing their own financial affairs. A trust also is useful to prevent a spendthrift child from immediately spending his or her inheritance by preserving the funds for the child’s education or other important needs. Further, a trust may be used to protect the child’s inheritance from the claims of his or her creditors because property placed in a trust generally may not be reached by a beneficiary’s creditors until it is distributed to the beneficiary. There also are many other legitimate reasons to create a trust in a will.
Requirements for Execution
For a will to accomplish any or all of these results, it must have been properly signed. Texas recognizes handwritten wills (holographic wills) and typewritten wills (formal wills).
To execute a will, the testator must meet the following requirements:
1. is at least 18 years of age, is or has been lawfully married, or is serving in the armed forces;
2. be of sound mind at the time of execution;
3. not be unduly or fraudulently induced (forced or deceived) to make the will; and
4. have testamentary intent (present intent to bequeath property at death).
Additional requirements as noted below must be met for each type of will.
Handwritten (Holographic) Will
Under the Texas Estates Code, a valid handwritten will must be wholly in the handwriting of the testator and signed by him or her. It does not need to be witnessed and can be written on anything, including stationery. Typewritten words may not be incorporated into the will. The wording must reflect a present intent to dispose of property at death. The words, “This is my last will and testament,” generally are sufficient to show testamentary intent.
While executing a handwritten will sounds easy enough, problems can arise from its interpretation, especially when written by a lay person. If the instrument does not dispose of all of the decedent’s property, the undisposed property will pass according to the statutes regarding intestate distribution. If the handwritten will disposes of more property than the testator owns, complications may arise.
Remember, a spouse has only one-half of the community property to give to anyone because the other spouse owns the remaining half. If a will attempts to give all the community property to one or more persons, the surviving spouse is placed in the awkward position of having either to accept whatever bequests are made to him or her in the will or to renounce the entire will and instead claim his or her one-half community share.
If the bequests in a handwritten will are not written in clear language, then it may be necessary for the court to con- strue the meaning of ambiguous terms. As a general rule, the less clear the language and the more property and heirs involved, the more likely the will may be contested in court. Contesting a will is usually a very lengthy and costly process and may result in defeating the testator’s intent.
Further, if the handwritten will does not contain the proper language allowing the executor to serve without court supervision and waiving bond, the executor may be required to obtain court approval of many actions and to post an executor’s bond. This causes unnecessary delays and expenses in administering the estate.
For these reasons the best approach is to have an attorney prepare a typewritten (or formal) will.
Typewritten (Formal) Will
A typewritten will sometimes is referred to as a formal will. A well-drafted typewritten will is more apt to carry out the decedent’s intent. Although a typewritten will may be prepared by a lay person, an experienced attorney should draft the will.
For a typewritten will to be valid, it must meet these requirements:
1. be signed by the testator or another person at his or her direction and in his or her presence;
2. be attested by two credible witnesses above the age of 14; and
3. be signed by the witnesses in the presence of the testator.
A beneficiary under a typewritten will should not serve as a witness to the execution of the will because this may preclude the beneficiary from receiving any property under the will.
Nuncupative Will (Oral Will)
After September 1, 2007, oral wills, also called nuncupative wills, are no longer recognized under Texas law. Oral wills are not valid, the oral will could be made in the testator’s last sickness, meaning they must be on their deathbed.
Will Revisions – Codicil (amendment to a will – from Latin, literally “block of wood”, later denoting a block split into leaves or tablets for writing on, hence a book.)
Executing a will that stands up in court is only one aspect of “getting your affairs in order.” After execution, the original document should be safeguarded so that it is not lost, destroyed, or mutilated, which might result in compli- cations in probate court as to the proof of its contents. Further, a will should be updated when there are changes in the testator’s heirs, property, or marital status. This can be accomplished by executing a proper amendment (a codicil) to modify the existing will or by canceling (revoking) the existing will and then executing a new one. It is not advisable to update a will by writing or making changes on it because such revisions may be totally ineffective.
Be aware that a will can also be canceled to some extent if the testator is divorced after making the will. In such a case, gifts to the ex-spouse in the will, as well as appointments of the ex-spouse as executor or trustee, are void and will not be recognized. Similarly, an ex-spouse who was designated during marriage as a beneficiary under the decedent’s life insurance policies generally is not entitled to the life insurance proceeds upon the decedent’s death. A temporary order issued by a divorce court prohibiting a party to a pending divorce case from changing his or her will until the divorce is final is unenforceable.
The subsequent marriage of a single testator will not cancel his or her will. If a person who signs a will before marriage wishes to give all or any portion of his or her property to the new spouse, he or she should sign a new will. Otherwise, the property will pass according to the provisions contained in the will that was signed before marriage, and the new spouse will receive no portion of the deceased spouse’s property.
Tax Considerations
Depending upon the value of the decedent’s property, a will may be necessary to avoid, minimize, or defer federal estate and state inheritance taxes. These taxes generally are imposed if the value of the decedent’s property exceeds the limitation imposed by the law at the time of the decedent’s death, reduced by the amount of any lifetime taxable gifts. The limits imposed by law vary, so it is important that you check with an attorney to determine if an estate is taxable. When determining if an estate is taxable, it is important to look at the value of the decedent’s property. For these pur- poses, the decedent’s property includes his or her separate property and one-half of all community property. Life insurance and other non-probate assets are considered in determining the value of the decedent’s property unless certain steps were taken during life to prevent such assets from being subject to estate tax at death (e.g., placing life insurance in a trust).
Without proper planning, a significant portion of the decedent’s property may go toward the payment of death taxes rather than to the decedent’s intended recipients. Estate planning techniques are available to minimize death taxes and, in the case of a married individual, to defer payment of any taxes until after the death of his or her spouse. The ability to take full advantage of such techniques is not possible without a will.
The Difference between Probate and Non-Probate Assets
While a Will is important for directing the disposition of a Decedent’s assets, it does not control the disposition of all assets held by the deceased. Assets that pass by a Will are probate assets. But there are non-probate assets too. Non-probate assets are assets that disposition is not controlled by the Decedent’s Will or estate. A will cannot dispose of “non-probate assets” assets which pass at death other than by will or intestacy. The principal types of non-probate assets include property passing by contract, property passing by survivorship, and property held in trust.
Non-probate assets include, but are not limited to:
1) Joint accounts with rights of survivorship;
2) Assets with designated beneficiaries, including retirement accounts, IRAs, and life insurance policies;
3) Assets owned with a pay-on-death (P.O.D.) designation;
4) Assets owned with a transfer-on-death (T.O.D.) designation;
5) Real property owned as Tenants by the Entirety; and
6) Assets owned by the Trustee of a Decedent’s Revocable Trust.
Property passing by contract includes life insurance proceeds, IRAs, and employee benefit plan proceeds, such as the proceeds payable under a pension, profit-sharing, or employee retirement plan. These assets pass outside the will to the persons named by the decedent in the appropriate beneficiary designations. Thus, it is important to periodically review the beneficiary designations with respect to these types of assets and to update them as necessary.
Property held by the decedent and another person as joint tenants with right of survivorship or in a pay on death account passes outside the will directly to the survivor. Survivorship assets typically include certain types of bank accounts, certificates of deposit, stocks and bonds, and certain savings bonds issued by the United States Government, such as Series EE savings bonds.
Another category of property that passes outside of probate is property held in a trust for the benefit of the decedent. The trust may have been created by the decedent during his or her lifetime for property management purposes or by someone else, such as a parent of the decedent. Trust assets pass under the terms of the trust rather than under the terms of the decedent’s will.
It is important to determine the extent of one’s non- probate assets when planning the disposition of one’s property at death. If a substantial portion of the assets are non-probate assets that do not pass under the will, even a well-drafted will may be insufficient to carry out the testator’s intent in disposing of his or her property.
Many times, a surviving spouse opts not to probate the estate of the deceased spouse when all or most of the Decedent’s assets pass to the surviving spouse outside of the probate process. However, community property residences are generally owned as tenants-in-common; thus, if the surviving spouse later attempts to sell the home, some form of probate or estate administration must be initiated to transfer full title on the house into the surviving spouse’s name. In order to ensure that all estate property is fully and efficiently distributed, it is recommended that the surviving spouse probate the Will at the death of the first spouse. The Texas Estates Code only provides four (4) years to probate a Will. After four (4) years, all heirs must be notified of any attempt to probate a Will, which often leads to complications.
The Probate Process
What is Probate?
Probate is the orderly process of winding up the business affairs of a person who has passed away.The Court determines whether a testamentary document is the true last and valid Will of a Decedent through the completion of certain requirements. Probate assets are assets controlled by the Decedent’s Will and/or estate, including assets titled in the Decedent’s name without a designated beneficiary. The successful completion of probate distributes probate assets amongst beneficiaries, creditors, and any others with a valid interest in a Decedent’s estate.
When Do You Apply for Probate?
The probate of a Will is available when a Decedent dies testate, i.e. with a valid Last Will and Testament. Usually, it is necessary to probate a Will if creditors need to be paid, property needs to be collected, or if assets need to be distributed to beneficiaries. The most common form of probate occurs when a Will nominates an Executor to administer the estate in accordance with the provisions of the Will.
How Do You Apply for Probate?
The judicial probate process begins with the filing of an Application to Probate Will and for Issuance of Letters Testamentary (Application). This application is filed with the county clerk. Typically, an Executor named in a Will applies to the Court requesting the admission of the Will to probate. However, Texas Estates Code (TEC) allows any “interested person” also to apply. The TEC definition of “interested persons” includes heirs, spouses, devisees, creditors and any others having a claim against the estate being administered.
Section 256.052 of the Texas Estates Code lists the requirements for the Application. These requirements include the name and domicile of each applicant, name and age of the Decedent, facts establishing venue, a description of the Decedent’s property, and information about the Executor. The original Will and any codicils should also be attached to the Application.
Following filing of the Application, the Clerk will post citation to all parties having an interest in the estate to appear in the case if the party wishes to do so. The Clerk also sets a return date for the Application. The return date is the date that the Application is returned to the Clerk’s office following the posting period. No hearing to probate the Will can be held until after the return date. At the hearing to actually “probate” the Will, the Executor presents proof to the Court regarding the Decedent’s death and the Will. Following a determination that the Will should be admitted to probate, the judge issues an order probating the Will and appointing the Executor. The Executor then takes an oath to well and truly perform his or her duties as Executor. Finally, the Court issues Letters Testamentary to the Executor, certifying the Executor’s authority to settle the assets of the estate.
What are Letters Testamentary?
Letters Testamentary are official documents issued by the Court authorizing the Executor to act for the estate. They are proof to others that the Executor has been qualified by the Court.
Who Can Apply for Probate – Is Anyone Qualified?
The Executor named in the Will or any interested party may make application for probate to the Court. A person can file a Will for probate if he or she is an interested party. Simply filing the application for probate does not make a person the Executor or Administrator of the estate. The Court will decide who is legally entitled to be in charge of the estate.
The Court will grant Letters Testamentary or Letters of Administration to the persons qualified to act in the following order:
1. To the person named as Executor in the Will of the deceased;
2. To the surviving spouse;
3. To the principal beneficiary of the estate;
4. To any beneficiary of the estate;
5. To the next of kin of the deceased, the nearest in order of descent first, and so on. (Note the next of kin includes those who have been legally adopted by the deceased.)
6. To a creditor of the deceased;
7. To any person of good character residing in the county who applies; and
8. To any other person not disqualified to serve as the personal representative of the Estate.
If there are multiple applicants who are all equally entitled to be appointed, then the judge will appoint co-Executors or co-Administrators, or will determine who is to receive the Letters Testamentary or Letters of Administration.
The Texas Estates Code specifically excludes the following persons from qualifying to serve as an Executor or Administrator:
1. An incapacitated person;
2. A convicted felon, unless such person has been duly pardoned, or his or her civil rights restored;
3. A non-resident of the State of Texas who has not appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate;
4. A corporation not authorized to act as a fiduciary in the State of Texas; or
5. A person the Court finds to be unsuitable.
The person named as Executor in a Will can decline the position by signing a Waiver and Renunciation of Right to Letters. Once such Waiver has been executed and filed, the Court will look to the successor Executor named in the Will. If there is none, the Will can still be probated, but the Court or all the distributes of the Estate selects the Administrator.
Additional discussion on persons qualified to serve can be found in The Estates Code Sections 256.051, 301.051, and 304.001 through 304.003.
Cost of Probate
One of the biggest concerns for people contemplating the probate process is the expense required in fully probating an estate. Luckily, Texas has simplified the probate process through its system of independent administration. While many other states have probate procedures that are both cumbersome and costly, independent administration in Texas allows Executors and Administrators to serve largely independent of Court supervision. As a result, the probate process in Texas is streamlined and efficient, thus reducing the cost of probate administration.
In a dependent administration, the Administrator is required to post bond and obtain Court approval for all actions he or she takes as the estate Administrator. The bond operates like an insurance policy, and requires that a premium be paid to an insurance company to guard against mismanagement, theft, or misappropriation of estate assets by the Executor. When the Court must approve and supervise all Administrator actions in probating an estate, the Administrator must rely on an attorney to spend significant time requesting Court approval to sell assets and pay claims. Administrators must also provide accounting reports and other information to the Court about the Administrator’s actions. On the other hand, an independent administration relieves the Executor having to post bond in most cases, and it also relieves the Executor from the duty to obtain prior approval from the Court when the Executor is performing his or her probate administration duties. The simple act of designating that the Executor shall perform his or her duties under an independent administration can make the probate process significantly less expensive than it might be for a dependent administration.
There are still some important requirements for independent administration. In order for an Executor to probate an estate through an independent administration, the Will must either specifically state that the Decedent intends for his Executor to serve independently. In the event the Decedent died without a Will, or with a Will that did not specifically allow for an independent Executor, all of the estate heirs or beneficiaries named in the Will can agree to allow the Executor to serve independently and free of court control. And while an independent Executor is allowed to perform his or her duties largely outside of the Court’s supervision, he or she still has the same responsibilities of all estate per- sonal representatives. Thus, the Court’s requirements for probate administration must be satisfied and the Executor must responsibly perform his or her duties to creditors and the beneficiaries of the estate, including collecting estate assets, paying off estate debts, and distributing the assets per the instructions contained in the Will, or under intestacy laws if the Decedent did not leave a valid Will. At the very least, independent administration requires the Executor to publish notice to potential creditors in a newspaper, in some cases file an inventory with the Court that identifies the assets of the estate, and file an Affidavit regarding notice.
While independent administration is clearly a great way to probate an estate without incurring significant costs, there may be times that it may be better for the Executor to use dependent administration. For example, estates with numerous creditors may find dependent administration advantageous. The presentment and acceptance of claims in dependent administration are more treacherous for creditors. If it is not done properly, some creditors may not be able to collect money from the estate. Also, if there are conflicts between heirs of the estate, the Executor may prefer dependent administration to ensure that the Court resolves disputes regarding the disposition of property throughout the administration process rather than through subsequent litigation involving the Executor.
Timeline for Probating a Simple Estate in Texas
1. Find the original Will.
2. File the original Will with an Application for Probate of Will and Issuance of Letters Testamentary.
3. The County Clerk issues citation and also posts notice at the courthouse that an Application for Probate of Will has been filed.
4. After notice has been posted for the requisite time, a hearing is scheduled to ask the Court to admit the Will to probate and to issue Letters Testamentary.
5. At the hearing, the named Executor provides the Court with facts of death and proves up the validity of the Will. If the Will is self-proven, the Executor will be the only one to give testimony. In Texas, a Will is self-proven when an affidavit containing specific language is attached to or incorporated into the Will, which enables the Will to be proven valid without the necessity of witness testimony. However, if the Will is not self-proven, witnesses will be called to testify at the hearing as required by law. Written testimony of the Executor’s oral testimony (and any witnesses) is prepared before the hearing, and that written version is signed in the presence of the judge or clerk immediately after the oral testimony.
6. After the judge signs the order admitting the Will to probate, the Executor takes the Oath to perform his or her duties front of the judge (or the county clerk) and receives Letters Testamentary.
7. A Notice of Creditors is prepared and sent to a newspaper for publication within one month after receiving Letters Testamentary. The newspaper will send a copy of the notice that was published and will execute a Publisher’s Affidavit verifying that the notice was properly published by law.
8. The Executor provides and sends notice that Letters Testamentary have been issued to creditors with liens against real or personal property of the estate within two months after receiving Letters Testamentary.
9. The Executor sends certified letters to each beneficiary named in the Will to provide a copy of the Court order admitting the Will along with a copy of the Will not later than 60 days from the date the judge signed the order admitting the Will to probate.
10. The Executor prepares and files a sworn affidavit with the Court stating that the notice to beneficiaries was completed. This affidavit is filed no later than 90 days from the date the judge signed the order admitting the Will to probate.
11. The Executor prepares an Inventory, Appraisement, and List of Claims that shows the assets of and claims against the estate and the value of each asset, as of the Decedent’s date of death. This inventory will be filed
12. With the Court no later than 90 days from the date the judge signed the order admitting the Will to probate, or if the inventory has been delivered to all estate beneficiaries an affidavit stating that fact in lieu of filing the inventory in the public records.
13. A final federal income tax return (form 1040) for the year the Decedent died is due by April 15th of the following year.
14. Federal estate taxes may be due for larger estates.
15. If any creditor makes a claim on the estate, the Administrator must, within 30 days, either accept or reject the claim or any part of it.
16. Creditors are lined up in the classes set out by the Texas Estates Code and paid in order of their class.
17. The estate is disbursed as provided for in the Will.
18. New titles are issued for cars, boats, and other titled property.
Alternatives to Probate
The probate process is a necessary process in many cases, but there are occasions when probate is not the best option. Below are some alternatives that might better fit your situation:
Collection of Final Paycheck
The Estates Code provides for a relatively quick and inexpensive procedure for a surviving spouse to collect the final paycheck of the deceased spouse by the execution of an affidavit when there is no administration pending of the deceased spouse’s estate. This procedure is useful where the only asset of the estate is a final paycheck.
Small Estate Affidavit
The small estate affidavit is a more economical alternative to probate. If the Decedent dies intestate (without a Will), and the total value of the estate, not counting the value of the Decedent’s homestead and other exempt property, is less than $50,000, then one can file an affidavit in the Probate Court in the county where the Decedent resided, identifying the heirs of the Decedent’s estate under oath, and by having the affidavit witnessed by two disinterested people that swear that the family history information contained in the affidavit is accurate. The affidavit must also be sworn to by all distributees (beneficiaries) that have legal capacity and possibly by the natural guardian of any minor or incapacitated person who is a distributee. To determine the proper heirs, refer to Texas Estates Code Sections § 201.001 and 201.002.
Once the Probate Court approves the Small Estate Affidavit, the distributees of an estate can request that assets of the estate be delivered to them. Anyone who receives assets remains liable to any creditors or anyone else having a prior right to the property.
Utilizing a Small Estate Affidavit is beneficial when the Decedent had very few assets: bank accounts, savings bonds, an automobile and homestead. Note that the use of a Small Estate Affidavit does not transfer the title to any other real property owned by the Decedent that was not the Decedent’s home. If the Decedent also owned real property other than a homestead, then a Determination of Heirship proceeding will be needed. Due to other states’ lack of familiarity with how the Small Estate Affidavit works, be prepared to educate transfer agents regarding how a Small Estate Affidavit functions if the Decedent was the owner of publicly traded stocks or bonds, brokerage accounts, or partnership accounts. Some transfer agents might require a Court order to transfer the stock or bond.
Additional discussion of the Small Estate Affidavit can be found in Texas Estates Code chapter 205. Included on page 28 of this booklet is a form Small Estate Affidavit and Order.
Muniment of Title
If the Decedent had a Will, but did not have any creditors whose loan was not secured by real property belonging to the estate, there is no need for administration of the Decedent’s estate. The Will can be probated as a Muniment of Title.
Like the probate process, the Court must rule on whether the Will is valid, therefore, a hearing is necessary with a Muniment of Title, thus the Applicant, who could be the Executor named in the Will or any interested party, may make application and schedule a hearing with the Court. However, unlike probate, with a Muniment of Title, no Administrator/Executor will be appointed. Instead the Will itself shows who owns estate assets. A Court will approve a Will as a Muniment of Title if the Applicant can show the following:
1. That the estate has no unpaid debts, except for debts secured by liens on real estate; and
2. That there is no necessity for administration, because there are no creditors.
Once the Court enters an order admitting the Will to probate as a Muniment of Title, the estate beneficiaries can move forward to transfer the Decedent’s assets into their names with legal authority. For example, the Court’s order is the legal authority the Applicant provides to:
1. All persons owing any money to the estate of the Decedent;
2. All persons having custody of any property of the Decedent;
3. All persons acting as registrar or transfer agent of any evidence of interest, indebtedness, property, or right belonging to the estate; and
4. All persons purchasing from or otherwise dealing with the estate, for payment or transfer, without liability, to the persons described in such Will as entitled to receive the particular asset without administration.
Other states are not familiar with the Muniment of Title process. You should be prepared to educate transfer agents on how a Muniment of Title functions. Additional discussion of the Muniment of Title can be found in Texas Estates Code chapter 257. Affidavit of Heirship
An Affidavit of Heirship is generally used when someone dies without a Will and the estate consists primarily of real property titled in his or her name. An Affidavit of Heirship transfers title from the Decedent’s name into the names of the heirs without having to go through the probate process. The Affidavit is filed and recorded with deed records in the county where the Decedent’s real property is located. The legal effect of the Affidavit of Heirship is that it creates a clean chain of title transfer to the Decedent’s heirs.
The Estates Code requires that the Affidavit of Heirship be signed by two disinterested witnesses. Essentially, to qualify as a disinterested witness one must be knowledgeable about the Decedent and his or her family history, but not someone who will benefit financially from the estate. Each disinterested witness must swear under oath to the following:
1. That he or she knew the Decedent and how long he or she knew the Decedent;
2. That the Decedent died and where the Decedent passed away;
3. That he or she knew where Decedent resided;
4. He or she was familiar with the Decedent’s marital history;
5. He or she was familiar with the Decedent’s family history: the names and birthdates of every child of Decedent (born or adopted) or the names and birthdates of Decedent’s parents or siblings;
6. The Decedent died without a Will;
7. A statement whether the Decedent had any unpaid debts or taxes;
8. A description of Decedent’s ownership in real property;
9. The names of the Decedent’s heirs; and
10. A statement that the witnesses are not going to benefit financially from the estate.
An Affidavit of Heirship is also utilized when more than four years have elapsed since the Decedent passed away.
Judicial Declaration of Heirship
When someone dies without leaving a Will, the most commonly used estate settlement proceeding is a judicial declaration identifying the heirs of the Decedent. In a judicial declaration of heirship, the Court makes a formal declaration as to the identity of the Decedent’s heirs, and the percentage each heir owns in the estate. The judgement allows the Decedent’s property to be divided and distributed among the heirs. The Court’s formal declaration is final.
The judicial declaration of heirship can avoid the probate process, but it also is used in conjunction with dependent administration, when someone passes away intestate (without a Will). A judicial declaration of heirship is also utilized when the Decedent died with a Will but failed to dispose of all the estate assets. Thus, the Decedent technically died partially testate and partially intestate, and an heirship proceeding may be required to determine the legal owners of any remaining estate assets.
An heirship proceeding may be utilized when more than four years have elapsed since the Decedent’s death. Even if a Decedent had a Will, if the applicant does not probate the Will within four years from the Decedent’s death, then an heirship proceeding may be required if the Court will not admit the Will to probate as a Muniment of Title.
It is important to note that a judicial declaration of heirship is time-consuming and often costly alternative to probate. The Court is required to appoint attorney ad litem to represent the unknown heirs, and that attorney will report his or her findings to the Court at the determination of heirship hearing. The Court also requires two disinterested witnesses to testify as to the Decedent’s family history at the time of the hearing.
Additional discussion of heirship determinations can be found in Texas Estates Code chapter 202.
Informal Family Settlements
Informal family settlements are common and can be utilized when the estate is small and consists only of personal property, such as personal effects and household furnishings. If a motor vehicle is involved, a new certificate of title may be obtained by filing an affidavit of heirship with the county tax assessor’s office.
Revocable Living Trust
A Revocable Living Trust is an alternative to probate, but this option requires advanced planning prior to death. The Revocable Living Trust is a written Trust agreement between the Trustee (the manager of the Trust property) and the settlor (the person who creates the Trust arrangement). Because the Trust is created during the settlor’s life, the Living Trust is a twofold plan – one plan directs the administration of assets during the settlor’s lifetime and the other directs the disposition of his or her estate at death. Note: A Living Trust must be in effect before the Decedent passes away.
It is possible, but unlikely, that a Living Trust will allow one to avoid the probate process. Probate can be avoided if all a person’s assets are in the Trust. However, people seldom transfer all their assets to the Living Trust. Assets outside the Trust may still be subject to probate. For a Living Trust to be effective, one must transfer all property to the Trust by changing the title of the property to the name of the Trust. Failure to do this will result in the non-transferred property remaining subject to probate and possibly being subject to an estate plan different than the one set out in the Trust. A Living Trust, just like a Will, is subject to a contest by the Decedent’s heirs based on lack of mental capacity, undue influence, and fraud.
A Living Trust will not reduce a person’s taxes. Because a Living Trust is usually revocable and amendable during a person’s lifetime, all the income realized by the Trust is recognized and reported on his or her individual income tax return. Likewise, at the person’s death, the assets of the Trust are subject to the federal estate tax. Note that tax planning can be accomplished with Wills and Living Trusts. However, a Living Trust, compared to a Will, does not provide a tax advantage.
It is also important to note that the assets put in a Living Trust are not protected from creditors. Texas law does not permit one to transfer assets into a Revocable Living Trust and protect the property from known creditor’s claims. These are considered “grantor trusts.”
Conclusion
Depending on each estate’s specific circumstances, probate might not be the best alternative. One should consult with an attorney to discuss the different options available to them.