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Probate and Probate Shortcuts

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If you are settling the estate of a loved one who may or may not have a will, then you may have a lot of questions. Ever heard the term "probating a will"? Most people fear the word probate because of its association with long court proceedings and attorney fees, but probating a will in Texas may be simpler and less painful than you may think.

What is Probate?

When someone dies, his or her estate must go through probate, which is the name of the legal process to have someone's will approved by a court. Probate is generally overseen by the probate court. In general, probate is when the court supervises the process of legal transfer of property from someone who is deceased to his or her beneficiaries. When a person dies with a will, the designated personal representative (also known as an executor) seeks to have the will admitted into probate. During the probate process, the personal representative administers the will, which will direct the court how the decedent's estate should be distributed among the beneficiaries. If someone dies intestate (without a will), then the court will appoint a personal representative to distribute the decedent's assets according to the laws of the state of the decedent's residence. If someone dies without a will and there are no known heirs, the decedent's state of residence will claim the individual's estate. Additionally, if the decedent owned real property (or real estate) in multiple states, then the executor is required to probate the decedent's will in each state where property is held.

Probate A Will

A will must be admitted into probate to become legally effective and to allow the court to distribute the decedent's property to his or her heirs according to the terms of the will. For a will to qualify to be admitted into probate, it must be a document of testamentary character and comply with all statutory requirements. A document is testamentary when it does not take effect until after the death of a testator. There are only three legal requirements for a valid will in Texas, and additionally, some formalities. The legal requirements for a valid will in Texas include: Legal Capacity, Testamentary Capacity, and Testamentary Intent.

  • Legal Capacity: to have legal capacity in Texas, you must be at least 18 years of age, are or have been legally married, or are a member of the armed forces of the United States  
  • Testamentary Capacity: this refers to being of "sound mind." In order to make a valid will, a person must have the mental capacity to understand the business in which they are engaging in, the effect of making a will, the nature and extent of their property, the fact that you are disposing of your property, and aware of the persons/charities who are named in the document.  
  • Testamentary Intent: this means that a person who creates a Last Will and Testament has the intent to make a revocable disposition of his or her property at the time of his or her death.  
  • Formalities: there are two types of wills: an attested will and a holographic will. An attested will is a formal written legal document that requires a signature from the testator (the person who writes the will), signatures from two credible witnesses, and is notarized by a notary of the state. A holographic will is a handwritten will that must be in the testator's own handwriting and signed. There is no requirement that a holographic will needs to be signed by witnesses or notarized.

Probate Proceedings

Generally, a will must be probated within 4 years after the testator's death. To begin the probate process, the designated personal representative or executor must file a petition, which is a public record, with the probate court and give notice to all heirs and beneficiaries. Afterwards, the personal representative must give notice to all known creditors of the estate; any creditor that wishes to make a claim on the estate has a limited time period, which varies by state. Once all claims and bills have been paid, the personal representative can file a petition with the probate court for authority to transfer the remaining assets in the estate to the beneficiaries. When a will is admitted into probate, it will be classified into one of four types of probate proceedings: Independent Administration, Dependent Administration, Muniment of Title (only for Texas), or Small Estate Affidavit.

1. Independent Administration of an Estate

An independent administration allows the executor to distribute property from an estate without court oversight for every step in settling the estate. The executor is also not required to post a bond, which is an insurance policy protecting the estate in the event that the executor is careless or dishonest. Generally, most wills direct the designated executor to proceed with an independent administration to reduce time in court and associated fees. If a person dies without a will (intestate), the appointed personal representative may ask the court for an independent administration if all known heirs agree.

Importantly, because someone is designated as the "Independent Executor" and is not supervised by the probate court does not give the executor to act independently of the will. At all times, the executor is bound to comply with the terms of the will and must not act in his or her own self interest. The executor must collect all of the assets from the estate, pay the remaining debts of the estate, and distribute assets to the beneficiaries according to the terms of the will.

2. Dependent Administration of an Estate

Dependent administration requires the executor to be subject to court supervision and authorization to conduct any action in the probate process. For example, the executor in a dependent administration is required to first seek and obtain court approval for selling a house, selling a car, paying debts of the estate, cashing in stocks, etc. Each time the executor wants or needs to transfer property or pay debts from the estate; he or she is required to file a petition with the probate court and schedule another probate court hearing. It is less common, but a dependent administration is necessary in the case that the beneficiaries are hostile towards one another or when one of the beneficiaries is a minor.

3. Muniment of Title

The probate of a will as a muniment of title creates a more streamlined process if the estate consists solely of real estate. This type of probate proceedings does not require an appointment of an administrator or executor, and it allows someone to probate a will more than 4 years after the testator's death. A will can be probated as a muniment of title when:

  • It is a valid will
  • There are no unpaid debts, except for those incurred by real estate
  • Medicaid has no claim against the estate for recovery of benefits obtained by the deceased person.

4. Small Estate Affidavits

Generally, this is used when the decedent had no will and his or her estate is $50,000 or less. The decedent's heirs can prepare an affidavit (sworn statement) to collect the decedent's assets.

Contested Probate Proceedings

A will can be contested or opposed in the event that someone believes that the will is invalid because the testator lacked mental capacity at the time the will was made, the will failed to comply with formalities by state law, or any matter sufficient enough to prove fraud or undue influence. Formal probate proceedings will be required if a will is contested.

To avoid the possibility of a heir contesting the validity of the testator's will, a testator can include a no contest provision in his or her will. A no contest provision discourages a beneficiary from contesting the validity of a will in court because then the beneficiary will forgo everything they were anticipating to inherit if they lose. It will be as if the beneficiary pre-deceased the testator. The main reason to have a no contest clause is to limit or reduce possible costly and time-consuming litigation in the courts.

Assets Transferred Outside of Probate

Depending on the type of asset, it may not be required to pass through probate. Normally, any asset that has a beneficiary designation does not pass through probated. Some examples include:

  • Community property: if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), then all the property you and your spouse have acquired during your marriage is considered community property. Regardless of how the property was titled, in a community property state you and your spouse own the property equally. You are only allowed to leave your share, which is 50%, in your will. For example, if a spouse chooses to leave his or her share to children in his or her will, then 50% of the property will be divided among the number of children. If a spouse passes away without a will, then his or her half will pass to the surviving spouse. In the event that there are children outside of the marriage, then the surviving spouse will retain his or her share, but the other half will go directly to the children outside of the marriage.   
  • Property held in joint tenancy with rights of survivorship: property will automatically be transferred to the surviving spouse.   
  • Life insurance: beneficiaries will automatically receive the policy proceeds after you have passed. Unless you designate an estate to be a beneficiary, then it would either pass through probate or be placed in a trust.   
  • Payable-on-Death or Transfer-on-Death accounts: this includes savings accounts, checking accounts, CD's and brokerage accounts where you have a choice to transfer these assets directly to a beneficiary.   
  • Pension plans, retirement plans and IRA's: all have beneficiary designations and will pass directly to the individuals designated as the beneficicies.   
  • Personal property: these items typically can be transferred without having to put them in your will because most of the time they are of lesser value.

Probate Shortcuts

There is a way for someone to bypass probate all together. Oh really? By having a Living Trust, it allows for an individual's estate to skip over the entire probate process. I'm sure now I have your attention! A living trust is a private agreement between a grantor and a trustee for the benefit of a beneficiary or beneficiaries. Along with the terms of the trust agreement being private, it may provide asset protection from creditors, predators, and lawsuits. A living trust also provides structure for incapacity planning. If you become incapacitated, then your appointed trustee will take over for you the responsibilities and obligations of the terms of the trust. There is no need for extra documents, court hearings, or attorney fees. A living trust can save you time, money, and overall frustration. There are many different types of trusts, so it is best to speak with an attorney to decided which trust is appropriate for your situation.

As I've mentioned before, there are a variety of trusts that come in "different flavors." Often, the variety of trusts can be confusing, so we educate our clients regarding the different types of trusts and which are the best suited for them to achieve their estate planning goals cost effectively. We also work with our clients' to make sure they put the appropriate assets into their trust, and to make sure everything is titled correctly. Click here to read more about revocable or irrevocable trusts.

Contact Kiefaber & Oliva LLP

Here at Kiefaber & Oliva LLP, we understand people may feel overwhelmed with the probate process. Our job and goal is to make the probate process seamless for our clients. If you need help or have questions about probate, or would like to create a living trust to bypass the probate process altogether, then give us a call. (713) 229-0360.

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