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Wills, Trusts, & Probate

What is a will? What does it do, and why do you need one? Let us try to decipher this bit by bit. First, you need to think of a will as a document in which you are leaving a set of special instructions. In effect, you are instructing that at the time of your death, you want certain people to receive a particular asset in a given way and delegating as to who will be the guardian of any of your minor children.

A vital part of a will is the naming of the executor or the person charged with carrying out your instructions. Oftentimes if a person leaving a will is married, it is the spouse, and if not, it is a family member with whom you have great trust and confidence. In some cases, a trusted friend will do. While a will is prepared during the lifetime of the person preparing it, the same takes effect only at the time of death. Unless and until the person preparing it passes away, a will remains to be a mere paper kept in a drawer or a safe, and it remains to be inoperative. As such, your will has to be updated at least every five years or sooner upon the happening of major life events such as but not limited to: marriage, divorce, a new child, a new significant investment, or a new home.

Some people choose a trust over a will because a trust does not need to go through a probate proceeding. In Texas jurisdiction, however, this consideration is not much of an issue as its Probate court is not as difficult to maneuver in comparison to that of other states. If a decedent left a will, and there is no contest about its contents, the probate of such will in Texas is comparable to being as easy as renewing your driver's license. Costs wise, a will is less expensive upfront however, there are costs upon the death of the person preparing it, such as lawyer's fees for probate proceedings which are usually paid out of the estate's coffers.

Someone who has minor children may create a trust within a will in which an adult is appointed to manage their inheritance until they are old and mature enough to look after their affairs and finances.

Finally, a will can: distribute your assets at the time of your death, declare as to who will be the executor or the person in charge of distributing your assets, and declare a guardian for any minor children. It does not, however, allow you to avoid a probate proceeding, although a good will is tantamount to a relatively simple probate. It also does not cover medical or legal powers of attorney, which decides as to who would make decisions should you become incapacitated, and it does not keep your affairs private since a will is a public document.

What is a trust? A trust, otherwise known by its formal nomenclature as a revocable living trust, is a legal entity set up to control one's assets. In creating a trust, the first step is to take all the assets, such as your house, car, property, and various accounts, among others, and re-title them in the name of the trust. A trust is comparable to something which is empty, and it has to be filled up to be worth something.

As mentioned earlier, a will comes into motion after your death; a trust is set up while you are alive, and you can maintain control of all its assets until you depart. In the creation of a trust, you must appoint or name the trustees or the persons who are in charge of the assets in the trust as well as beneficiaries or those entitled to receive the assets of the trust. There are situations in which the trustee and the beneficiary are one and the same person. It is also an option to have the trust managed for your beneficiaries by a separate trustee.

Another distinction between a will and a trust is its costs and when said expenses are incurred. A living trust is generally more expensive in comparison to a will or at least initially.

Putting together a trust is a more expensive upfront; hence many lawyers promote them to unwary clients. Rather than paying for probate proceeding in case of a will, you pay for the initial setup costs for a trust to enable the transfer of all assets to be included in the trust's name.

An apparent benefit of a trust is that it generally includes your legal power of attorney as most trusts are set up in a way that the power transfers upon death or when a person executing the trust becomes incapacitated, as a result, a power of attorney is not necessary. If you, however, forget to put an asset into the trust, the trustee can never acquire power over that asset. It can be a good choice if you want to ensure that your assets pass a certain way, as when you want to make sure that your children get the assets and not your parents.

In creating trust, a client must clearly anticipate how circumstances may change. A trust is revocable, and as such, it can be changed at any time during your lifetime. Its legal effect, however, comes into motion at the time of your death, it thereafter becomes a contact and can therefore no longer be changed, modified or altered. As a consequence, your beneficiaries cannot exercise any form of flexibility as to the tenor of the trust. A trust has to be maintained and you must remember to update your trust and re-title those assets you want to be included in the name of the trust. Failure to do so will not transfer your properties to the trust, and the unavoidable consequence of it is for your family to go through probate. Given the inherent complexity and unanticipated circumstances, it is avoidable to refrain from executing a trust instead of a will as the former requires a lot of maintenance and upkeep.

In summary, a trust can: exactly ensure how your assets transfer and who has control over them; avoid probate proceedings; includes legal power of attorney; pay your legal expenses upfront thus avoiding later costs; and keep your affairs private as trusts are not publicly filed. A trust on the other hand will not: appoint or specify a legal guardian for your minor children; have any form of flexibility after you pass away; include any assets that you accidentally leave out or forget to have re-titled, and cover a legal power of attorney should you become incapacitated.

In deciding as to whether a will or a trust is appropriate for you, one must consider that each person's circumstances are unique. Having said that, the best person to assist you in deciding as to the kind of estate planning document to utilize is your qualified estate planning attorney.

Whether you are contemplating creating either a will or a trust, you need to sort out your affairs and be at peace that the future is taken care of, no matter what happens. Remember a well-planned life is better than one left to fate alone.

II. How to Probate a Will in Texas

When a person dies leaving properties behind which were not transferred to another by way of a Trust, joint ownership with survivorship rights, or direct payments to Beneficiaries, said properties will be distributed through probate. Probate is the legal process in which a will is reviewed to determine if it is valid and authentic, it also refers to the general administering of a deceased person's will or the estate of the deceased person without a will.

It is in the probate process that the court will recognize a person's death and oversee the payment of debts and distribution of the remaining assets to the heirs. The role of the court is to facilitate this process and likewise protect, whenever it deems necessary, the interests of all creditors and the various beneficiaries of the estate. This role by the Texas probate court as well as by those persons hired by the court to facilitate the process is called probate administration.

If the decedent dies leaving a drafted will, the named executor in the will typically must file for probate. State and local rules govern the various time periods in Texas that the executor must follow in probating a will. The executor has four years as a general rule from the date of the death of the testator to file for probate. Failure to do so within the prescribed person will result for the laws of intestacy to set into motion, and will thereby govern the asset distribution of the estate.

If the will is not contested, the entire probate proceeding can be completed within a period of six months. However, the probate proceeding may last for more than a year if the will of the decedent cannot be located or is contested by the heirs, as the same will require the increased involvement and supervision by the probate court. Although the probate will take about six months at its quickest, the beneficiaries of the will need not be left without funds while the proceeding is ongoing.

There are assets that are not distributed during the probate proceeding but are nevertheless transferred in other ways, these assets are referred to as the non-probate estate which includes insurance policies, pensions, profit sharing, individual retirement account, KEOGH plans, and 401(k) plans among others. These are the assets that can be transferred directly from the financial institution holding them to the beneficiary as named by the decedent in the policy or account documents.

The probate process in Texas can be a very intimidating process without a probate attorney guiding you. For starters, certain Courts will not allow non-lawyers to file applications to probate a will nor will the Court consider to allow non-lawyers to represent an estate in a probate proceeding. Another challenge is when there are various beneficiaries to a will, or when a decision has to be undertaken as to the type of probate that needs to be commenced. There are likewise legal terms that one will encounter during the process that might be unfamiliar to one who has not undertaken a study of law.

The probate process can either be an “independent administration” or a “dependent administration”. Independent administration procedure is the easier probate process and in this situation the court appoints an Administrator who then submits an inventory of all the assets and prepares a list of all the debtors of the estate. Once the inventory is prepared, the administration of the estate continues without the probate judge's approval. Statistics would show that more than 80% of the probated estates in Texas are independently administered. Under Texas law, a person writing a will is allowed to include a provision in the will for an independent administration of the estate upon his/her death. This provision is found under the Texas Estate Code which provides how a testator can ask for an independent administration depending on various cases.

On the other hand, a dependent administration procedure refers to the court being much more involved and dependent administrators must obtain the probate judge's approval in each and every step of the probate process. This is the logical choice when beneficiaries fight over the will or the assets of the estate of the decedent. Its purpose is to protect the rights of the beneficiaries or those named to receive the estate's assets. The disadvantage of this type of process is that it is more expensive as there is a necessity for the dependent administrator in writing reports and seeking judicial approval. It can cost thousands of dollars more to go through dependent administration, depending on the size of the estate.

III. The Texas Process for Probating a Will

1. Filing. An application for probate must be filed with the appropriate Texas probate court in the county where the decedent last resided.

2. Posting. Once the application for probate has been filed, an approximate 2 weeks waiting period prior to the hearing for the application can be expected. It is during this time, in which the county clerk will post a notice at the courthouse advising that a probate application was filed to serve as notice to anyone who may contest the will of the administration of the estate of the decedent. Absent any contests, the probate court will thereafter proceed in opening the administration.

3. Validation of the Will. Once the waiting period is over, a Texas probate judge will then preside over the hearing wherein the decedent's death will be legally recognized. The same judge will verify that indeed the decedent has executed a valid will or whether none was made and thereafter appoint an administrator or verify the executor named in the will.

4. Cataloging of all Assets. After an executor or an administrator is named to the estate, that same person must partake in the task of cataloging and reporting to the county clerk all the assets held within 90 days immediately following the appointment. Said executor must prepare an Inventory, List of Claims, and Appraisement, to be sworn to be accurate to the best of his/her knowledge. The Inventory is basically a catalog of all properties of the estate which must be carefully prepared and must include proper and complete descriptions of the various estate assets including the reasonable accurate valuations as at the time of death. In providing the details of the Inventory, the following must be considered: the complexity of the estate; whether there is a likelihood of any questions raised on the assets owned or values by the beneficiaries or the creditors of the estate; and other variables.

If there are no unpaid debts owed by the estate, except for secured debts, taxes, administration expenses, and if the decedent will does not require an Inventory to be filed, then the executor has the option to file an Affidavit in Lieu of Inventory with the county clerk before the deadline. In the affidavit, the executor must swear that the estate does not have any unpaid debts and that all the beneficiaries of the estate have received a copy of the Inventory. This exception is for the purpose of protecting the decedent's privacy and to keep the assets appearing in public records.

5. Identifying the Beneficiaries. If the decedent has left a will, the executor needs to notify all the named beneficiaries of the estate. If there is no will, the probate court in Texas must determine heirship which can be a very challenging predicament. 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 through the assistance of a Texas probate attorney.

All the heirs to the estate must sign the application or at least be personally served with the application and if there is a possibility of having unknown heirs of the decedent, the court will require that notices be published in the newspaper and posted in the courthouse. Written and oral testimony may be necessary in order to prove the truthfulness of the details in the application which must be proven by all of the applicants. Apart from the heirs, a secured creditor or qualified representative of the decedent may likewise initiate the proceedings as parties interested in the estate.

6. Notifying the Creditors. In the normal course of life, decedents usually leave behind debts, however such debts must be resolved out of their estate. The typical debts may include mortgages, medical bills, household expenses, and funeral expenses. The creditors are notified by the executor of the estate regarding the decedent's death and are given the opportunity to file their respective claims against the estate. This required notice to the creditor can be legally accomplished in Texas through a notice published in the local newspaper.

7. Resolving Disputes. The estate cannot be finalized if the beneficiaries are contesting a will in Texas or if related grievances have been filed. Any dispute arising from a decedent's estate must be heard and resolved by a probate court judge. Probating a will is often an emotional situation which has the potential to cause problems in the family. In Texas, contesting a will must be accomplished within 2 years after the original probate. A probate attorney is necessary to direct and guide you through this dispute process whether or not you are the complainant. A person contesting a will must prove that the same is invalid or that there are defects to the will. The following reasons will render a will to be invalid: a. The will is a forgery; b. The will was forced due to excessive influence by a third party; c. The will was improperly executed; or d. There was more than one will executed by the decedent. Many people contesting a will in the State of Texas never get to the court as oftentimes, mediation is the suggested course of action to resolve disputes arising from the estate of the decedent. There are even times when the dispute does not make it to the mediator as the problem is settled between the beneficiaries and their attorneys.

8. Distribution of the Assets. Once all the debts of the estate are paid up and disputes resolved, the remaining assets can then be distributed to the beneficiaries.

IV. Shortcuts That Help

There are probate shortcuts in Texas for “small estates” which allows easier procedures for survivors to transfer the property of the decedent. You may be able to transfer a large amount of property using simplified probate procedures or without probate court proceedings at all with the use of an affidavit which will save you time, money, and hassle. One can claim property with a simple affidavit designed for a small estate. In Texas, there is a procedure that allows inheritors to skip probate altogether when the value of the combined assets of the estate is less than a certain amount.

An “affidavit” has to be prepared by the inheritor which states that he or she is entitled to a certain asset which must be signed under oath. A person or an institution holding the asset of the decedent will then release the asset upon receipt of the death certificate of the decedent and the affidavit of the inheritor. This out-of-court affidavit procedure is available in Texas if the decedent has left no will and the value of the entire estate excluding homestead and exempt property is $75,000 or less. There is a 30-day waiting period for this out-of-court affidavit which must contain the following information: a. A statement that all of the conditions above are met; b. An inventory of all known assets and debts of the decedent; c. A list of all the assets which the inheritor claims are exempt; and d. The names and addresses of each inheritor, the relationship between the inheritors and the decedent to establish the legal right to inherit the property.

Two witnesses and each inheritor must sign the affidavit and such witnesses must have no legal right to inherit in the property of the decedent and the affidavit must be approved by a probate judge pursuant to Tex. Est. Code § 205. There is a simplified probate process in Texas for small estates and in order to utilize it, the executor must file a written request to the local probate court asking to use the simplified procedure. The court in its discretion may authorize the executor to distribute the assets without jumping through the hoops of regular probate. This simplified small estate process can be used if the value of the property doesn't exceed the homestead, exempt property, and what is needed to pay the family allowance and certain creditors under Tex. Est. Code § 354.001.

The executor must simply file an inventory, an appraisal of the value of the property, and a list of all creditor claims against the estate. The court may require the executor to pay a bond, which is a type of insurance that protects the estate from wrongful conduct by such an executor. The court will likewise order payment of certain claims which must be paid by the executor as provided for by the court. Thereafter the executor will prepare an accounting and submit it for the probate court's approval. If after paying all the claims there are properties left, then the court can order the executor to distribute the remaining property as it instructs.

“Independent administration” is available regardless of the value of the estate provided it is requested in the will of the testator or all inheritors agree to it. The executor will then need to submit the testator's will and an appraisal of the value of the properties together with a list of all creditors having a claim to the estate of the decedent with the probate court. The probate court in its discretion may waive the bond and there will be no need for further proceedings in the probate court under Tex. Est. Code § 401.

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