Administering An Estate
Austin, Texas Attorney R. Brian Daniel
What is “Probate”?
Probate is the legal process pursuant to which a person’s assets may be gathered, inventoried, liquidated and/or distributed after his or her death. Many people hear the word “Probate” and immediately think of a complicated process that to be avoided if at all possible. This can be true in some, but not all, cases. In Texas, an independent administration process can often be used that may help reduce the expense and length of time required to complete the Probate of an Estate; however, there are still many requirements, deadlines and pitfalls that can arise and that can create both frustration and delay. Thus, even when undertaking the more informal Probate process, an Austin, Texas Probate Attorney can provide much needed assistance to the Executor in getting the estate settled.
In addition to the informal process, some estates must still go through the more formal probate process called a dependent administration. This process can be much more complicated, time consuming and will generally always requires legal assistance. If you are in a situation pursuant to which you may need to deal with a Texas Probate Court, it is very important that you speak with, and hire, an Austin, Texas Probate Attorney who has a thorough understanding of the Texas Probate Cade.
How does probate work?
In most cases, when a person dies with a Will, a Probate Court reviews the Will to determine whether it is valid. Then, any and all of the decedent’s debts are paid, including payments to the tax collecting authorities and to creditors. The remaining assets in the estate are then distributed pursuant to the terms and conditions of the Will. If a person dies without a will (this is known as having died “intestate”), the court may be called upon to make decisions regarding distribution of the person’s assets, as well as guardianship of any minor children, based upon the Intestate Laws set forth in the Texas Probate Code. Since most people would rather not leave the Texas legislature in charge of making the final determination regarding where their assets will be placed after their death, individuals should also consider having an Austin, Texas Probate and Estate Planning Attorney assist with the preparation of a Last Will and Testament.
In Texas, many estates are able to go through the informal independent administration probate process. These Probate cases are not supervised by the court and are more administrative in nature. The administrator of the estate, known as the Executor, handles the process of gathering the decedent’s assets, paying the decedent’s bills and taxes and then distributing any remaining assets from the estate to the heirs in accordance with the terms and conditions set forth in the Will. This is generally a more cost effective form of Probate, although an Austin, Texas Probate Attorney is generally still needed to help with issues such as preparing and filing the legal documents necessary to open the estate, obtain the necessary grant of authority for the Executor to act on behalf of the decedent and to assist with making actual payments and distributions pursuant to terms and conditions of the Will.
In situations where there is a complex estate or a dispute about the terms and conditions of the Will (or if other issues regarding the estate create discord in the family or in the pool of heirs), the estate would need to go through the more formal dependent administration probate process in order that all disputes could then be resolved by the Probate Court. This type of administration is generally more expensive and time consuming than an independent administration. Lawyers are almost certainly needed, and thus heavily involved, in dependent administration probate cases.
What goes through probate?
Some assets of an estate are referred to as non-probate assets and, therefore, do not go through the probate process. Examples of non-probate assets include:
- Life Insurance proceeds – A life insurance policy is simply a contract between a person and an insurance company that requires payment of money to a third party upon the occurrence of that person’s death. Since the payment of life insurance proceeds to the third party (the beneficiary) is required under the contract, there is no need for the life insurance policy to go through probate. They never belong to the decedent.
- Tax-Deferred Retirement Plan proceeds – Proceeds from IRAs, 401(k), and other tax-deferred retirement plans may also pass directly to a beneficiary designated in the account documents. Similar in nature to life insurance proceeds, the payment of the proceeds of a tax-deferred retirement plan to the named third party (the beneficiary) is designated in advance and, just as with life insurance proceeds, there is no need for the proceeds to go through probate.
- Assets with specifically designated beneficiaries that are individuals or entities other than the decedent – If the decedent does not take anything from an asset, and the value of that asset is contractually designated to go to a third party (a beneficiary), then it is not a part of the decedent’s estate and does not go through probate;
- Property or assets registered as joint tenants with rights of survivorship – To have an asset that is held in “joint tenancy with rights of survivorship” simply means that two or more owners hold title to an asset jointly. As a result, when one of the owners dies, that deceased owner’s interest in the asset is automatically transferred to the remaining owner(s). It is not uncommon for married couples to register and hold assets such as real estate, an automobile, or a bank account in this manner;
- Property or assets held in a living or revocable trust – If you have placed assets into a revocable living trust (a legal entity that can hold title to property) you no longer own that asset. Since the trustee for the trust has title to the trust, the property within the trust is not considered the property of the individual, but of the trust and it will pass to successor beneficiaries outside of the probate process. Because livings trusts are revocable, the individual putting assets into the trust continues to enjoy access to the assets during his or her lifetime seemingly as if he or she owned the asset. At the time of the individual’s death who placed assets into the revocable living trust, the Trust Agreement, a document similar in many ways to a Last Will and Testament, then directs a successor Trustee with regard to the administration of the trust or the distribution of the trust property to the appropriate beneficiaries;
- Payment on Death (POD) Bank Accounts – This specific type of account specifically names a beneficiary that will assume ownership of the account upon the death of the person who initially opened and owned the account. The designation is generally made when the account is opened. Normally, the named beneficiary will possess no ownership interest in the account until the original account owner dies, but then receives full ownership interest of all funds held in the account after the original owner’s death.
- Transfer on Death (TOD) Securities – Transfer on Death stocks, bonds and brokerage accounts are similar in nature to POD bank accounts. An original asset/account holder retains exclusive ownership rights to the asset or account while he or she is alive, but a specifically named beneficiary then assumes ownership upon the death of the original owner.
Any remaining assets that do not pass to someone else by any of the above-referenced means are called Probate Assets and must be distributed to the various heirs of the decedent via the probate process. These assets include items such as the decedent’s personal property as well as property or accounts that were owned and/or held solely in the decedent’s name.
An Austin, Texas Probate and Estate Planning Attorney can help you whether you are an Executor attempting to administer and settle an estate or someone interested in performing some proactive estate planning in order to minimize the number of assets that will have to pass through the probate process (the creation of a Last Will and Testament or Revocable Living Trust).
If you are anywhere in the Greater Austin area or its surrounding cities, and need assistance with any Probate issue or with the administration of a probate estate as the Executor of a Will, please reach out to The Daniel Law Firm. We take great pride in serving clients all over Central Texas. Let us discuss the best strategy for moving your Probate case forward in both a positive direction and timely manner. Contact an Austin, Texas Probate Attorney at The Daniel Law Firm today at (512) 615-3569.