When a person dies and leaves property that has not been transferred to another person by way of a Trust, joint ownership with a right of survivorship, or direct payments to Beneficiaries (such as from insurance policies or retirement accounts), property in Texas will be distributed through probate.
Probate is the process in which a court legally recognizes a person’s death and oversees the payment of a deceased person’s debts and the distribution of his or her assets. The court’s role is to facilitate this process and protect, when necessary, the interests of all creditors and Beneficiaries of the estate. The role of the Texas probate court and all persons hired by the court to facilitate this process is known as probate administration.
If the deceased, known as the decedent, dies with a drafted will, the executor or the personal representative in the will typically must file for probate. In Texas, state and local court rules govern the various time periods that the executor must follow in probating a will.
The general rule in Texas is that the executor has four years from the date of death of the testator (person who drafted the will) to file for probate. Generally, if the executor does not file the will within that prescribed time period, the laws of intestacy (when there is no will) will govern how the estate’s assets are distributed.
For a simple estate, the entire probate process can be completed within six months. However, expect probate to go on for a year or more if the original will cannot be located or the will is contested. This makes procedures more complicated and will take more time due to the increased involvement and supervision by the court.
It should be noted that although it takes several months to probate an estate, Beneficiaries don’t have to be left without funds while an estate is being probated. Certain assets are not distributed during probate but are transferred in some other way. These assets are called the non-probate estate. These can include insurance policies, IRAs, KEOGHs, pensions, profit sharing, and 401(k) plans. These assets are transferred directly from the company or bank holding them to the beneficiary who is named in the policy or account documents.
Without a probate attorney to guide you, the Texas probate process can be a daunting experience. To begin with, certain Courts will not allow non-lawyers to file applications to probate a will or an estate nor will they allow non-lawyers to represent an estate in Court. Also, it can be particularly difficult if there are multiple beneficiaries, or a decision must be made regarding the type of probate that should be filed.
As you go through the process of probating wills in Texas, there are many legal terms that might be unfamiliar or unclear to you. Two of the most important are “dependent administration” and “independent administration.”
The easier probate process falls under independent administration procedures. In this situation, the court appoints an Administrator who submits an inventory of all assets and a list of people who owe money to the estate. After the inventory is filed, the administration of the estate continues without the probate judge’s approval. More than 80 percent of the estates probated in Texas are independently administered. Texas law allows the person writing a will to include a provision in the will for independent administration of the estate upon his or her death. The language for this provision is found in the Texas Estates Code. This law also tells how to ask for an independent administration in different kinds of cases.
A dependent administration procedure refers to the court being much more involved and appointing a dependent administrator who must get the probate judge’s approval in every step of the probate process. This usually happens when beneficiaries fight over the will or the estate assets of the person who died. The purpose of dependent administration is to protect the rights of the beneficiaries, the people who will receive the assets. However, the necessity of a dependent administrator writing reports and seeking constant judicial approval drives the costs of probate administration up – a lot. Depending on the size of the estate, it can cost thousands of dollars more to go through dependent administration, money that would have gone to the beneficiaries under independent administration procedures.
Probate Terms to Know
Decedent: When probating a will in Texas, you will likely encounter the term “decedent” often. This is the legal term for the person who has died and whose estate is in the probate process.
Will: This is the legal document in which a decedent has outlined how he or she would like assets distributed among their loved ones.
Estate: In the state of Texas, an estate consists of all the decedent’s assets. These include, but aren’t limited to, cash, real estate holdings (homes, land, etc.), stocks and bonds, life insurance policies, retirement accounts, vehicles and personal belongings.
Beneficiaries: These are the loved ones named in a will, or determined by the court if there is no will, who will receive assets from the decedent’s estate.
Executor: When a person dies with a valid will in place, the document typically names a person to serve as executor of the estate. The chief duties of the executor will be to inventory and catalogue the decedent’s assets; pay debts of the estate; pay taxes of the estate; file lawsuits for claims owed to the estate; and distribute assets from the estate to the beneficiaries as named in the decedent’s Last Will and Testament.
Administrator: When the decedent has passed on without leaving a valid will and no executor has been named, Texas law requires that an administrator be named to carry out the duties of an executor. The court will often appoint one of the primary heirs to act in this capacity.
How To Start The Probate Process in Texas
There are 18 probate courts in 10 counties in Texas. You can find them here. They all have websites.
It’s extremely important to start the probate process in the correct jurisdiction. Probates filed in the incorrect court will likely be thrown out even after going through all the steps. This is further complicated by each court in Texas having its own set of probate proceedings and qualifications. Before filing, it’s best to check with the county clerk in the county or counties where you feel your probate should be handled.
The 8 Steps of Texas Probate
Step 1: Filing
An application for probate must be filed with the proper Texas probate court in the county where the decedent resided.
Step 2: Posting
After the probate application is filed, there will be approximately a two week waiting period before a hearing is held for the application. During this time, the county clerk will post a notice at the courthouse stating that a probate application was filed to serve as notice to anyone who may contest the will or administration of the estate. If no contests are received, the probate court proceeds in opening the administration.
Step 3: Will Validation
After the waiting period, a Texas probate judge will preside over a hearing and will legally recognize the decedent’s death. You can also expect the probate judge to verify that the decedent had a valid will or that there was no will, and finally appoint an administrator or verify the person named as executor.
Step 4: Cataloging Assets
After an executor or administrator is named to the estate, that person must catalog and report to the county clerk all the assets held by the estate within 90 days after appointment. The executor must prepare an Inventory, Appraisement, and List of Claims, sworn to be accurate to the best of their knowledge.
The Inventory is essentially a catalog of estate properties which must be carefully prepared. It must include proper and complete descriptions of the various estate assets together with reasonably accurate valuations of such assets as of the date of death. How detailed this must be depends on the:
- Complexities of the estate
- Whether there is likely to be any question of assets owned or values by beneficiaries or creditors
- And other variables.
There is an exception to the filing rule for independent executors. If there are no unpaid debts owed by the estate, except for secured debts, taxes, and administration expenses, and if the decedent’s will does not require the Inventory to be filed, then the executor may file an Affidavit In Lieu Of Inventory with the county clerk before the deadline, swearing that there are no unpaid debts (except secured debt, etc.) and that all estate beneficiaries have received a copy of the Inventory. The purpose of this exception is to protect the decedent’s privacy and to keep his/her assets from appearing in a public record.
Step 5: Beneficiaries Identified
If the decedent had a valid will, the executor will notify beneficiaries of the estate. If no was filed, the probate court in Texas must determine heirship. This can be a challenging predicament. With the legal representation of a Texas probate attorney, parties interested in the estate of the decedent may file a proceeding to determine heirship before the court in the county where the real property is situated.
All heirs must sign the application or must be personally served with the application. If there are potentially unknown heirs of the deceased, the court requires that notices be posted in newspapers as well as at the courthouse.
All applicants must be able to prove the truth of the details in the application. Written as well as oral testimony may be necessary.
Besides the heirs themselves, a secured creditor or a qualified representative of the deceased can also initiate these proceedings as parties interested in the estate.
Step 6 Notifying Creditors
Decedents usually leave behind debts. These must be resolved out of their estate. Typical debts include medical bills, mortgages and household expenses. Creditors are notified of the decedent’s death by the estate’s executor and given the opportunity to file claims against the estate. This notice to creditors can be legally accomplished in Texas with a notice published in the local newspaper.
Step 7: Resolving Disputes
The estate cannot be finalized if family members or other potential beneficiaries are contesting a will in Texas or if they file related grievances. These disputes must be heard by a probate court judge.
Probating a Last Will and Testament is often an emotional situation that has the potential to cause problems in the family. In the state of Texas, contesting a will must be done within two years after the original probate. A legal representative is necessary to direct and guide you through the dispute process whether or not you are the complaintant.
The person contesting a will must prove that the will is invalid or that there is something wrong with it. There are several ways that a will can be determined to be invalid, including:
- Proving the will was a forgery
- The will was forced due to excessive influence by a third party
- The will was improperly executed
- They was more than one will executed
Many people contesting a will in Texas never get to court because mediation is the suggested course of action for resolving conflict with Texas probate. Sometimes the dispute never even makes it to a mediator because the problems are settled out of court between family and their attorneys.
Step 8: Distributing Assets
After the debts are resolved and disputes cleared up, remaining assets are then distributed to the beneficiaries.
Texas Probate Infographic
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A Closer Look – The Initial Hearing
The proceedings begin just like in any other court – you are sworn in and you will be giving testimony, under oath, to the court.
This venue takes place in the county where decedents lived for the last bit of their life, or where they had property.
In some counties, (like Dallas, Fannin, Tarrant, and Hunt, to name a few), the hearings are held in a crowded courtroom, and dozens of cases are heard one after another. In other counties (Grayson, Collin, mostly the smaller counties but it really depends on the judge and if there is a statutory probate court), the hearing is often less formal, with the proceedings taking place in the probate judge’s office.
After the hearing, you go to the clerk’s office and get Letters Testamentary or Letters of Administration which will allow you to go to banks, financial institutions, and other places in order to handle the business of the estate. You will also sign a required notice to creditors that must be published so that anyone who thinks the deceased person owes them money can make a claim.
According to Texas law, an applicant must prove to the court’s satisfaction that:
- The testator is dead.
- Four years have not elapsed since the date of the testator’s death and before the application.
- The court has jurisdiction and venue over the estate.
- Citation has been served and returned in the manner and for the period required by this title.
- The person for whom letters testamentary or of administration are sought is entitled by law to the letters and is not disqualified.
If the county probate judge accepts your testimony and evidence, the court will order that the will be admitted to probate.
Basically, there are four possible scenarios awaiting you at the initial hearing:
Scenario #1 – Everyone gets along and there is a valid will. After being sworn in you will answer easy questions about the decedent: Did this person live in the county of the proceedings? Did they have children? Is the signature on the will their handwriting? Assuming the judge signs the order admitting the will to probate, you will then sign several pieces of paper including an oath saying you will ethically and legally carry out the responsibilities of the executor or administrator.
Scenario #2 – Everyone gets along but there is no will. Everything is the same as in the first scenario except that a court-appointed attorney (Attorney Ad Litem) will have been assigned to do background research and determine the heirs. They will be at the hearing, and the estate has to pay them. The Probate Code also requires that you have witnesses if there is no will – people like close friends who knew the family but are not inheriting anything. Sometimes you can have this done by an affidavit, so check with the specific court.
The first two scenarios are known as independent administrations and usually involve only one court hearing and the filing of an inventory. They account for more than 80 percent of Texas probates.
Scenario #3 – There is a valid will but no one gets along. You will have a fight on your hands unless the will names an independent executor and this is not challenged. Getting your family to agree on who gets aunt Emma’s gold earrings or Uncle Buck’s favorite couch can be a frustrating task A good attorney with years of probate experience can be worth every penny of his fees here.
Scenario #4 – The ugly situation where there is no will and no one gets along. Same venue as the other scenarios but there’s a lot more court involvement, known as dependent administration, where the court oversees every aspect of an estate’s administration. This means that a dependent administrator (depends on the court’s approval of everything) must post bond, hire appraisers, submit an annual inventory, petition the court for permission to sell property or distribute assets, and file a final report with the court.
This will normally be a much more expensive process with the involvement and extra fees of a dependent administrator.
A Closer Look – After the Initial Hearing
Within 90 days of qualifying as executor or administrator, you must file an inventory with the court. If you need extra time, the court will usually let you have it. The inventory lists all the assets which pass under the decedent’s will or estate. After the inventory is filed, the judge will sign an order approving the inventory. Then you’re pretty much done with the formal work, all that is left is paying the bills, filing a final income tax return (and an estate tax return if necessary), and distributing the estate. Keep in mind that creditors have one year to come back and request you pay them debts, so it is usually a good practice to leave some funds in an account for that.
In the event there is no will and there’s animosity among the potential beneficiaries, dependent administrations (to determine which estate assets should be sold to pay the mounting legal costs) will normally be involved. There is also more paperwork to deal with, as well as dealing with creditors’ claims.
And, of course, if there are substantial assets involved and plenty of rancor to go around, there’s always the possibility of the matter going to court and involving a jury trial.
A Closer Look – The Matter of Probate Bonds
Most attorney-drafted wills waive the requirement of a bond. If the will states that there is no bond required, and the named executor is the one submitting the will to probate, there will be no bond required. But what if there is no will or the named executor is not the one probating the will or the will does not waive bond then whether or not you will be required to post a bond depends on three things:
- The agreement of all of the heirs,
- The existence of debts,
- The judge you are in front of.
If all of the heirs agree to waive the bond, and there are no unsecured debts of the estate, the court will agree to waive the bond.
But administrator and executor bonds (also called probate bonds) are required by county courts in Texas when the court appoints someone to handle a deceased’s estate. These bonds generally guarantee that all the estate debts will be satisfied and that the remaining assets will be properly distributed to the appropriate heirs. Because of the complexities involved, the surety usually requires that the applicant obtain the assistance of an attorney. Bond amounts are determined by the court. Bond premiums must be paid annually until the estate is properly settled.
There are three types of probate bonds:
Executor Bond – Required when the deceased left a will and named someone in the will to serve as executor. The surety will usually want to see a copy of the will to determine to the complexity of handling the estate in Texas.
Administrator Bond – Required when the deceased died intestate (without a will). The court will usually appoint one of the primary heirs to serve in this capacity. Assets should be dispersed in accordance with the state’s laws in Texas.
Trustee Bond – Usually required when a deceased leaves a will and designates to leave some assets “in trust” to a beneficiary. In all cases, the surety must review a copy of the Trust.
In addition to the applicant’s credit report, there are many other factors that are taken into consideration when pricing administrator bonds in Texas. But in Texas, expect to pay for bonds at a rate something like this:
- $10,000 bond amount for $100
- $25,000 bond amount for $135
- $50,000 bond amount for $260
- $100,000 bond amount for $460
- $200,000 bond amount for $860
- $500,000 bond amount for $1,610
A Closer Look – The Matter of Texas Probate Taxes
The executor or administrator is required to, among other things, prepare and file all of the tax returns due both for the decedent and for the estate.
The good news is that Texas does not have an inheritance tax, meaning no death-related taxes are ever owed to the state of Texas. There is a 40 percent federal tax, however, on estates over $5.34 million in value.
Also good news, over 90 percent of all Texas estates are exempt from federal estate taxes. Under current federal tax law, estates with a value of less than $5.4 million are exempt from estate taxes.
That leaves personal state and federal income tax. These tax returns cover the period from Jan. 1 through the date of death of the year that the person died. If the decedent was married at the time of his death and he and his spouse filed joint tax returns, then the executor and the surviving spouse will jointly file the tax return, and both will sign it. Any income generated by the decedent after the date of death should be reported on the estate’s income tax return rather than on the decedent’s personal income tax returns. Also note, the estate’s income tax return is different from the estate tax.
Regarding the beneficiaries, in general, an inheritance in and of itself is not considered income, so you won’t have to report your inheritance on your state or federal income tax return.
However, the property that you inherit may have built-in income tax consequences. For example, if you inherit a traditional IRA or 401(k), then you will have to include all distributions you take out of the IRA or 401(k) in your ordinary federal income, and possibly your state income, during the year in which you take the distributions.
Aside from retirement accounts, if you inherit real estate or any stocks that are held outside of an IRA or 401(k), then in the year when you sell the real estate or stock you may incur capital gains taxes based on the difference between the inherited value of the property (which receives a “stepped up basis” as of the date of death) versus the sales price that you receive.
Tax matters involving Texas probate can get complicated. It’s paramount that your attorney understand the coordination of the estate income tax rules with the personal income tax issues of the beneficiaries and heirs of the estate. Because the estate is subject to higher tax rates than individuals, it is possible to coordinate the distribution of the estate’s income to the beneficiaries so that the beneficiaries pay the tax, rather than the estate. The executor must understand, at a minimum, that they are required to ensure that the estate income tax return is filed before the conclusion of the probate administration.
The Final Account
Wrapping up the estate of a deceased person takes time and costs money, which ultimately detracts from the amount the beneficiaries receive through the probate system. Accordingly, beneficiaries may wish to keep track of the administration expenses incurred during this period. Texas law provides beneficiaries with certain rights to receive reports about these expenses, called accountings.
When all the debts and taxes have been paid, the assets left in the probate estate will be distributed under the provisions of the will. When there is no will, the property will be distributed according to provisions of Texas law. Texas law requires estates to be distributed to the closest family members, if there are any. If a person is married or has children, the assets will be distributed to the spouse and children. If unmarried and without children, the assets will be distributed to other close relatives like parents and siblings.
The main disadvantage of dying without a will is that the deceased doesn’t get to decide who will receive his or her property. If the property is intended for close family members that might not be a big problem. Unfortunately, there is another problem as well – as discussed, without a will, estates almost always end up being probated through a dependent administration, and much of the assets of the estate that could have gone to family members will be used to pay for probate costs. It is possible to avoid a dependent administration in an intestate estate, but you will likely need the help of a Texas probate attorney.
Once the assets of the estate have been distributed, the personal representative must issue a final accounting with the court, which must also be sent to each beneficiary. The final accounting must also include an affidavit of the personal representative attesting to the distribution of assets and the expenses paid by the estate. Filing this affidavit concludes the term of the personal representative. Beneficiaries of the estate may request a closing of the estate if the personal representative does not.
Please note that an independent executor may also reimburse himself for any expenses advanced on behalf of the estate, without court approval, but should take care to keep careful records of such expenses. Executors are also entitled to financial compensation for their time, unless prohibited by the decedent’s will. The amount of compensation is determined by the will. If the will is silent on this subject, the executor can be compensated according to a statutory formula upon prior approval by the probate court, which must make a determination that the executor has properly taken care of and managed the estate.
Muniment of Title – A Simpler Type of Probate
When a will is probated as a Muniment of Title, no executor or administrator is appointed to administer the estate.
Generally, a Muniment of Title should be considered when the estate has no unsecured debts and the only assets involved are real property and cash accounts. A muniment is usually not advisable when the estate includes publicly traded securities, bonds, and similar assets, because transfer of these types of assets often requires an executor or administrator with authority pursuant to Letters Testamentary.
Also, a will can only be admitted as a Muniment of Title in probate if it has been more than four years since the death of the decedent.
How Long Do I Have to Probate a Will?
In most cases, you have 4 years from the date of the deceased person (decedent)’s death to file their will for probate. There is a limited exception for a specific type of probate, known as the Muniment of Title, where a person can ask the court to recognize them as the beneficiary of the properties listed in the estate. This is a streamlined process that allows the property titles to be transferred to the petitioner.
If you fail to probate a will within the 4 year time period, then the decedent’s estate will be treated as though they died intestate — without a will. There are specific laws in Texas that govern which heirs are entitled to the estate’s assets when a person dies intestate. To fulfill the decedent’s wishes and make sure that their estate is distributed as they desired.
Does a Will Have to Be Probated?
Probate is generally necessary for possessions that have a title or deed. If the decedent owned any real estate or other assets that did not name beneficiaries, then the will must be probated in order to transfer title to the beneficiaries as spelled out in the will. There are certain types of assets that can be set up so that the property will transfer automatically to the named beneficiaries, without probate.
Certain other assets in an estate do not have to be probated. This includes life insurance policies, pension plans, and retirement accounts that name beneficiaries.
If the decedent did not leave a will or more than 4 years have passed since the death, then the estate may be divided according to the rules of intestate succession – as though the decedent did not have a will. In addition, until the estate is distributed through intestate succession, the decedent’s name will remain on the title or deed of some assets. This makes it impossible to sell or transfer ownership of that property.
Who Is Responsible for the Debts of a Person Who Died?
If a decedent had debts at the time of their death, then creditors are entitled to recover their debt from the estate, which includes the assets that the decedent had at the time of their death). Other family members or heirs are not liable for the decedent’s debts. If the assets are insufficient, then the debts will have to be canceled by the creditor(s). The debts will be paid through the probate process, which may include a notice to the unsecured creditors giving them a specific amount of time to properly make a claim in the estate.