Most Texas estates need to go through probate after a person dies. Probate is the legal process by which a deceased person’s estate is settled, including collecting (“marshalling”) assets, settling claims and debts, and distributing the net estate as provided in the Will. If there is no valid Will, the assets will be distributed to relatives as provided in the Texas Estates Code.
Probate may be necessary for possessions with a title or deed, such as cars and real estate. In 2015, our legislature codified a long standing practice, previously known as a “Lady Bird Deed,” now in the statues as “Revocable Transfer on Death Deed.” If such a deed is in place, the property will transfer automatically to the named persons, without probate. Many other types of assets can have “Pay On Death” (P.O.D.) or “Transfer on Death” (T.O.D.) provisions, such as bank accounts and brokerage accounts. These provisions do what they say they do, and supersede contrary provisions of a Will.
What about community property of a married couple?
If neither spouse has children by other partners (previous marriage, etc.) all the community property will be inherited by the surviving spouse. All property is community property unless it is agreed or proven to be “separate property.” In general, separate property is that which a spouse had before marriage, that which came by gift or inheritance, some personal injury settlements, and property or money which is traceable to the separate property. It can be more difficult than you think to “prove” separate property, especially financial accounts which are commingled and have years of transactions.
Are there other non-probate assets?
Yes, there are more assets that do not need to go through the probate process if they have named beneficiaries, including:
• life insurance policies
• Pension plans
• Retirement accounts, such as IRAs or 401Ks
What about bequests to minors?
All gifts to minors, and for that matter young adults, should be left to a Trustee. If not, a Guardian of the Estate will have to be appointed, at considerable expense. And, the beneficiary will be entitled to all his or her money on their 18th birthday. Not good for most people. Remember – this applies to the P.O.D. or T.O.D. designations. Consult a lawyer! (Note, this is very different from a “Living Trust,” mentioned below.)
How quickly do I need to file probate papers?
In Texas, you have up to four years after the deceased’s death to file probate papers. Don’t wait until the four years is almost up. Theoretically, you could probate a Will without a lawyer but it is not practical for most people. In most cases, probate proceedings are completed within a matter of months.
What happens in the probate process if there is no will?
Texas law has a provision for the estates of deceased that did not leave a Will. The term “intestate” is used in this state for an estate without a Will. The probate process may be more time-consuming and definitely more expensive in these cases. The court will divide property and assets according to blood and marriage relations, as provided in the Texas Estates Code
What about “death taxes?”
The new tax law doubled the previous amount which is excluded from gift and estate tax, to $11.2 million per individual. You should consult an estate tax specialist who can do sophisticated planning to minimize the tax. In 2025, the amount will revert to $5.6 million.
What should I do?
Consult a qualified lawyer. Get a professional drafted Will and other documents. Consider getting a Revocable Transfer on Death Deed. When a loved one passes, consult a good probate lawyer. If there is no immediate issue, this can wait a few weeks or months, but don’t wait until 3 years and 11 months.
Do I need a “Living Trust?”
Probably not. Many fine lawyers draft these Trusts for people who want them. These Trusts don’t save taxes. They may (or may not) avoid probate, but most people will pay more for the Living Trust than they would have paid for a Will and then probate of the Will.