probate (noun): the process of winding up the affairs of a person who has passed away.
The concept of probate can be confusing to clients (and even attorneys). In simple terms, probate is a lawsuit filed against yourself after you die – paid for with your own money – for the benefit of your creditors.
PROBATE CAN BE MESSY AND EXPENSIVE.
However, probate in Texas is easier to navigate than in most other states. Texas law is often referred to as being “probate friendly” because it allows for independent administration.
What does that mean? The Texas Young Lawyers Association explains it this way:
[A]fter an independent executor or administrator is approved and an inventory of estate assets or an affidavit in lieu of an inventory, is filed with the court, the executor or administrator can simply take care of the administration of the estate without any further court involvement or supervision. The independent executor or administrator is free to settle with creditors, set aside the homestead and other exempt property, manage the property of the estate, sell assets for payment of debts or taxes, and distribute the remaining estate to those entitled to it.Texas Young Lawyers Association, Texas Probate Passport (2014).
However, to qualify for independent administration the will must either specifically allow it, or all of the estate heirs or beneficiaries named in the will must agree to allow it.
And while the independent administration process is typically easier and less expensive than the alternative, the executor must still publish notice to potential creditors in a newspaper, and in certain instances file an inventory of assets and/or affidavits with the court.
Probate can also be time-consuming. In Texas, the probate process commonly lasts between four and eight months. During this time, the decedent’s assets may not be fully accessible, which can be extremely inconvenient to family members desiring access.
Throughout probate, the estate remains open so that claims can be made against the estate by creditors. Only after probate is completed can the estate be closed and assets be distributed.
Another issue that frequently arises in probate proceedings is that some of the decedent’s assets cannot be located.
IN TEXAS, APPROXIMATELY TWO BILLION DOLLARS IN UNCLAIMED PROPERTY IS HELD BY THE STATE
How did that money get there? When a person dies, their family is often unaware that they owned an insurance policy, real estate parcel, or bank account, and when it’s not claimed after a certain period of time it escheats (reverts) to the state.
If you’re feeling lucky, you can search for unclaimed property that might belong to you by visiting the Texas Comptroller’s website.
Another clear downside to probate is that the process is public. Although most people draft their wills in secret and opt against broadcasting their decisions, few seem to realize that once probate begins, the will becomes a public record.
Those wishing to keep the winding up of their affairs private should consider creating a living trust, which allows you to avoid probate altogether.
Helpful Probate Tip
Certain kinds of assets are not subject to probate, such as life insurance and retirement accounts that transfer from one person to another via beneficiary designations. Unfortunately, even these assets can be subject to probate under certain circumstances.
For example, if you name a minor child as a primary or secondary beneficiary on your life insurance policy and then pass away, the assets may be probated because life insurance companies won’t directly pay insurance proceeds to minors. To make matters worse, the court often appoints a professional fiduciary (who charges by the hour) to manage the asset(s).
The proceeds are held in a fund for the benefit of the minor until he/she turns eighteen, at which point he/she receives everything left outright, with no oversight and no direction. For most people, this scenario is less than ideal.
While probate in Texas is substantially easier and less costly than in other states, it remains a complicated process with many pitfalls. We typically explain to clients that in most states probate is like a grizzly bear.
In Texas, it is like a trained, circus grizzly bear that seems far less threatening – but under the right circumstances it can still bite your arm off, and those who ignore that fact do so at their own peril.
CONTACT MASSINGILL ATTORNEYS & COUNSELORS AT LAW TODAY
To learn more about probate, visit the estate planning section of our website. If you have questions about your particular situation the experienced legal team at Massingill Attorneys & Counselors at Law is here to help.
Contact us today to schedule a free consultation