You will likely be directly involved in the probate of an estate at some point in your life. For instance, you might find that the decedent appointed you to be the Executor of the estate. You might even volunteer to administer the estate if the decedent died intestate (without leaving behind a valid Last Will and Testament.) You could also find yourself involved in the probate process because you were named as a beneficiary, legal heir, or creditor of the estate.
As such, some minimal working knowledge of the Texas probate process can be invaluable. Let’s say you manage to avoid direct involvement in the probate of someone else’s estate. What about your own estate? You will still need to understand the Texas probate process when you sit down to create your own estate plan. All things considered, its worth your time to learn about the process. So, what is probate?
What Is Probate?
When you die, you will likely leave behind assets and/or debts. The assets you leave behind make up your estate. Probate is the legal process used to ensure that your estate assets are identified, located, and valued before being passed on to the next owner. Probate also serves as a method by which creditors of the estate can file claims as well. This helps ensure that taxes owed by you, or your estate, are paid before assets are transferred to the beneficiaries (the new owners).
Are All Assets Part of the Texas Probate Process?
No. Not all assets go through probate. Some of the most common non-probate assets include:
- Trust assets – assets held in a trust agreement pass to the intended beneficiaries outside of the probate process. For this reason alone, people often include at least one trust agreement in their estate plan.
- Life insurance – the proceeds of a life insurance policy are usually not considered to be part of the decedent’s estate. Therefore, they will pass directly to the intended beneficiary outside of the probate process. If there is no beneficiary, then the policy will probably go through probate.
- POD and TOD designations – “payable on death” and “transfer on death” are designations that can be used on financial accounts, securities, and sometimes other types of assets. Assets held in a POD or TOD account automatically become the property of the designated beneficiary upon the death of the account holder; however, the beneficiary has no ownership interest in the assets while the owner of the assets is alive. In other words, the account owner can always change the POD or TOD beneficiary.
- Joint title – when the right type of joint title is used, assets can pass directly to a co-owner without going through probate. The “right type” is usually Joint Tenants with right of survivorship.
What Are the Steps in the Texas Probate Process?
No two estates follow the exact same path through the entire probate process; however, there are some common steps in the Texas probate process. Read on to learn about these steps:
- Opening probate — in a testate estate the Executor usually petitions the court to open probate. In an intestate estate, almost anyone can petition the court to open probate and be appointed the Personal Representative (PR) of the estate.
- Identifying heirs — if the decedent died intestate, the legal heirs of the estate must be identified and located.
- Identifying assets — the Executor/PR is required to identify all assets owned by the decedent at the time of death. Those assets are then located and a date of death value obtained for each asset.
- Notifying creditors — known creditors of the estate may be personally notified; however, unknown creditors are notified by publishing the notice of probate in a local newspaper.
- Paying claims — the Executor/PR reviews all claims filed with the court and pays approved claims out of estate assets.
- Litigating challenges — if a challenge is filed, such as a Will contest, the Executor PR must defend the Will submitted for probate.
- Paying taxes — The Executor/PR is responsible for making sure all personal and estate taxes are paid before assets are transferred out of the estate.
- Transferring assets — after taxes and lawful creditor claims are paid, the remaining assets are transferred to the intended beneficiaries in a testate estate and to the legal heirs according to the Texas laws of intestate succession in an intestate estate.
If you have additional questions or concerns about the Texas probate process, please contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.