Wills & Probate FAQ

COMMON QUESTIONS ABOUT WILLS

Question: What is a will?
Answer: A will is a legal document that allows you to decide how and to whom your progeny will be distributed after your death. To be effective, the will must he properly drafted, executed and notarized.

Question: Who can make a will?
Answer: Anyone who is at least eighteen (18) years old and of sound mind can make a valid will. A married couple under the age of eighteen (18) can also make a valid will.

Question: Who needs a will?
Answer: Almost everyone needs a valid will. The only exceptions would be people who are not married and have no children and who do not leave a large estate. Even for those people, there are advantages in making a will to simplify the disposition of the property you leave.

Question: Can I write my own will?
Answer: Yes, but it can he very dangerous to do this without a lawyer. The laws of the state of Texas are quite strict regarding what is and is not a valid will. If your "homemade" will is declared to be an invalid will, your property may go to people you did not want to have it. Remember, you will not be around to explain to the judge what you really intended.

Question: Is it expensive to have a lawyer prepare a will?
Answer: A proper will can be surprisingly inexpensive, especially if a husband and wife prepare one at the same time.

The real expense usually is in dying without a valid will. That can possibly create a financial nightmare for the surviving family members. Almost everything the family will have to do after a death is more expensive to do without a valid will. By spending a small amount of money now, you may save your family thousands of dollars and hours of frustration and aggravation later.

Question: What information do I need to give my lawyer if I want a will?
Answer: Your lawyer will need your family details, such as your current marital status, the names and ages of children and other such information.

You then must choose a guardian. This is the person who will take care of your children in case you and your spouse die before your children become adults. The guardian will raise your children and manage their money.

You also decide who your beneficiaries will be. These are the persons or organizations who will inherit your estate. Your estate consists of all the property you own, both real estate and personal property, such as jewelry and automobiles. If you plan to leave property to your children, you will need to decide at what ages the children will actually receive the property they inherit (called a "testamentary trust"). You may have specific property you want to bequeath to specific beneficiaries (called a "specific bequest"), as well as a beneficiary to take any property you may have an interest in not specifically identified (called a "residing beneficiary").


Next, you must choose an executor/executrix. This is the person or institution that collects your property, pays your debts and taxes and makes sure your property is properly given to your beneficiaries.

Question: What is a living will?
Answer: A living will (also known as a Directive to Physicians, Surrogates and Next of Kin) is a legal document that allows you to tell doctors and hospitals in advance that you do not want to be kept alive on support systems if there is no hope of a recovery to a normal life, but that you do want to be as comfortable as possible.

A Durable Power of Attorney for Health Care Decisions is a legal document that allows you to designate an agent (usually a relative or a close friend) to make health care decisions for you if you should become either physically or mentally unable to make such decisions for yourself.

A Statutory Durable Power of Attorney is a legal document that allows you to choose a person to make any nonmedical decisions for you and to sign your name to other legal documents. This is normally used when a person becomes mentally or physically incompetent, but it must be prepared and signed before that person becomes incompetent. This document provides that your Power of Attorney does not become effective until and unless you become incompetent or incapacitated.

These three legal documents, together with a valid will, will make life much easier for your spouse, children, other relatives and close friends should you become incompetent or die. Without these important documents, the loved ones you leave behind will not only have to deal with their grief but also with unnecessarily complicated legal matters.

COMMON QUESTIONS ABOUT TRUSTS

Question: What is a trust?
Answer: Generally, a trust is a document which creates a legal relationship between the person creating the trust, the trustee (who controls or manages the trust payments) and the beneficiary (the person(s) for whose benefit the trust was created).

A trust is another method to legally control the distribution of a person's estate etither during life or after death. There are numerous types of trusts created for a variety of purposes, such as a family trust or a special-needs trust.

trusts are substantially more expensive than wills and require period reviews by an attorney to ensure assets have been properly transferred to or removed from the trust and to consider any change in the trust or tax laws.

Question: Should I have both a will and a trust?
Answer: A trust, no; a will, yes. A trust consists of only those assets that have been specifically transferred to the trust. In the event a senior should die without a will and not all of his/her property was transferred to the trust, a will is necessary to provide for the distribution of any of your estate assets that have not been transferred to the trust.

Question: What are the two (2) primary types of trusts?
Answer: There are two basic trusts established for the purpose of distributing a settler's estate: a discretionary trust and a support trust. A discretionary trust authorizes the trustee to pay only so much of the trust principals, corpus or interest accruing on the trust assets to the beneficiary as the trustee sees fit. The beneficiary has no control over these types of trusts.

A support trust directs the trustee to pay the beneficiary a stated amount, or as much as necessary for the health, education or welfare of the beneficiary.

Question: What is a family trust/living trust?
Answer: The terms "family trust" and "living trust" are interchangeable. Both refer to a revocable trust, which simply means the senior retains control of the trust property even though legal title is transferred to the trust. A family trust typically limits beneficiaries to members of a family or group.

Question: What is a special-needs trust?
Answer: Special-needs trusts are created for physically or mentally incapacitated beneficiaries. Such trusts may also be utilized to avoid such beneficiaries losing government-assistance benefits (i.e., Medicaid). Special-needs trusts are frequently used to administer benefits received from inheritance or personal injury settlements.

Question: What are the benefits or advantages of a trust?
Answer: To avoid probate (usually, but only concerning property transferred to the trust);
To provide protection front creditors for the beneficiary (if property drafted);
To provide continued control by the settler of the trust property (applicable to revocations trusts only);
To provide for a handicapped person's recurring government-based aid;
To avoid appointment of a court-appointed guardianship in the event of your incapacitation or incompetence. (However, a Durable Power of Attorney may accomplish the same goal and is substantially more economical to create);
To hold estate assets, which are to be distributed to minor beneficiaries, under general or specific distribution instructions until the minor attains a certain age. (however, a testamentary trust provision in a valid Will may accomplish the same goal and is substantially more economical to create);
To avoid the cost and complexity of probate proceedings in multiple states if the settler has real estate in more than one state (this is probably the most credible reason for creation of a trust);

Trusts are generally more difficult to contest than wills. However, a trust can also be attacked for various reasons as to its creation and tinterpretation of its provisions.

Question: What effect does a trust have on the beneficiary's creditors?
Answer: Most trusts are created with a spendthrift provision, which means the trust assets cannot be reached by a beneficiary's creditors. This is one of a trust's primary attributes.

Question: Do I really need a trust?
Answer: I am not an advocate of family trusts or living trusts. The vast majority seeking these types of trusts actually do not need them. Trusts are generally more expensive than wills and require additional efforts to transfer property into the trusts and to maintain them as property is removed from and transferred into them. The primary reason people seek trusts is to avoid probate, but that is generally not of great concern in Texas.

Texas has one of the most simple and straigh forward probate administration processes in the country. If you have a valid will which provides for the appointment of an executor who is to serve without bond, the administration process maybe as simple as filing a petition with the Probate Court and after a brief court hearing, filing an inventory of estate assets with the court. All other matters are handled by the executor appointed in the decedent's will without the need for court intervention. The legal cost of this process is typically less expensive than the cost of a trust.

Trusts are only effective as to property which has been correctly transferred to it, that is, property in which the trust has legal title or deed. In the event there are assets in a decedent's estate which were not transferred to the trust, the decedent's estate may still require probate to administer such property.

Moreover, it is a fallacy that trusts avoid or save taxes. Wills have the same bypass provisions as are present in most family trusts. Additionally, the tax code provides for unlimited marital deductions. Nor does a single person save taxes by utilizing a trust because all assets held by a trust will be subject to being included in the settler's estate.

It is also a fallacy that trusts can protect the settler's assets from creditors. If the trust is revocable (meaning the settler can modify it or dissolve it), then the settler's creditors can reach the trust assets, as well.

What about all those advertisements and articles you may have read regarding the benefits of family or living trusts? Regrettably, they are an effort to sell you something you do not need or are geared to states which do not have probate laws similar to those in Texas (California, Florida, New York). Therefore a trust may be a perfectly legitimate estate planning choice if you have real estate in those states and other similar states with more difficult probate laws.

In the vast majority of cases, Texas residents may avoid the cost and complexity of trusts by having a valid will along with a Durable General Power of Attorney and a Durable Medical Power of Attorney.

COMMON QUESTIONS ABOUT PROBATE

Question: What is probate?
Answer: Probate is the process of having a court review the decedent's will, establish that the will is valid and appoint executor/executrix, as named in the decedent's will, approve the final distribution of the decedent's property and resolve any issues related to the decedent's minor children.

Of course, if a person dies without a valid will, the court will make all decisions regarding property and minor children based upon the laws of the state of Texas and on the Judge's opinion regarding the best interests of the children.

Question: Is probate difficult?
Answer: Not if the decedent leaves a properly drafted and executed will. Texas probate is typicallysimple and inexpensive.

Question: Why should the will be probated?
Answer: It is not possible, in most cases, to transfer property comprising the decedent's estate without probating the will. By probating the will, the executor/executrix is given authority to act in place of the decedent to sell the decedent's property and distribute the property in accordance withthe decedent's will.

Even if all the beneficiaries agree on how to distribute and/or sell the decedent's assets, they usually will not be allowed to close mutual funds, sell real estate or gain access to bank accounts without someone being appointed executor/executrix of the decedent's estate.

Question: When should the will be probated?
Answer: As soon as possible. The sooner you begin the probate, the sooner the executor/executrix will be given the authority to access bank accounts, distribute property and wrap up the decedent's estate.

A will must be submitted to the court for probate within four (4) years of the date of the decedent's death.

Question: What if the original will cannot be found?
Answer: If you cannot find the decedent's original will, you may be able to probate a copy of the will. You will, of course, be required to provide the court with a reasonable explanation as to the whereabouts of the original will, as well as proof that the copy is accurate. It is important that you diligently search for the decedent's will prior to initiating the probate. You should contact the lawyer who drafted the decedent's will and check all safe deposit boxes.

Question: What will happen to my property if I die without a will?
Answer: If you die without a valid will, the laws of the state of Texas will determine who should inherit your property, and how much each person will inherit. These laws (referred tons the Laws of Descent and Distribution) can be complicated, depending on your family situation at the time of death.

Question: What will happen to any children if I die without a will?
Answer: If the child(ren)'s other parent is alive, the children will be placed in his or her control. If the other person is also deceased and you have not made a guardianship designation in your will for your children, the judge of the court in which your estate is resolved will decide who should be appointed as the guardian of your minor children. Normally, the guardian would be the surviving parent of the children, but it could be another relative, or even a friend. Again, it will depend on your family situation at the time of your death, and you won't be there to give your opinion to the judge.

Question: Are there any assets that can be handled outside of probate? (Non-probate Assets)
Answer: There are a number of different kinds of properties that may pass outside the provisions of your will.

The list includes life insurance, retirement plans, individual retirement accounts, and annuities. When you purchased or set up these types of assets and accounts, you were probably asked to fill out a form listing the beneficiaries who will receive payments upon your death. These investments will pass to the named beneficiaries regardless of whether you have a will. However, if you don't have a beneficiary named, if the beneficiary named is your "estate" or if all the beneficiaries are dead, then those investments will be paid to your estate and pass under your will.

Certain bank and brokerage accounts will also pass outside your will. For instance, payable-on-death accounts (sometimes called 'POD" accounts) will be distributed to the named beneficiary. Additionally, accounts set up by one or more persons as joint tenants with rights of survivorship will pass to the surviving account holder or holders.

Some banks allow you to set up what they call "trust accounts" even though there is no written trust agreement. These types of accounts will pass to a named beneficiary without going through probate, as well.

Not all joint accounts pass to the survivor. When joint amounts are set up as tenants in common, the portion of the account that was owned by the decedent passes under his or her will.

Many people have decided to create revocable or irrevocable trusts as part of their estate plan. Virtually all such trusts are designed to pass directly to persons or other trusts named in the document rather than under a Last Will and Testament.

You may find that most of your estate consists of non-probate property. Therefore, it is extremely important to coordinate the beneficiaries of all these properties to make certain your assets will be distributed as you want when you pass away.

Question: Must a will be probated if the estate is less than $1,000,000.00? Are insurance proceeds included in that total?
Answer: There is no requirement that you probate a will no matter how much the estate is worth. Wills need to be probated only if property is not transferred by some other means.

The probate process is primarily a method of changing title from the deceased to the person or persons who inherit the property. Some assets require probate, such as real estate and bank accounts held only in the name of the deceased, while others do not, such as life insurance policies or retirement plans payable directly to named beneficiaries.

If an estate is valued at $3,500,000.00 or more, then a federal estate tax return must be filed. Life insurance owned by the decedent must be included when computing the $3,500.000.00.

Question: I am named as the executor/executrix of a will. What do I do?
Answer: There are some steps you must take and other steps you may need to take. Exactly what you must do depends on the types of assets owned by the decedent and the size of the decedent's estate.

Find the Will. Locating an original will can sometimes be difficult. Many people keep their wills in a safe deposit box, while others keep them at home or other safe place. It may be a good idea to talk to the individual and find out where their will is kept. If they keep it at the bank, be sure you are authorized to enter the box, otherwise it may be harder to get the will out.

Hire a Lawyer. Most of the time, it's necessary to hire a lawyer. There 'imitate corms in smaller counties that allow people to represent themselves, but you still may have trouble preparing all the necessary forms that are required. It's safe to say, therefore, that lawyers must be hired in the vast majority of cases.

Application for Probate. The first document your lawyer will prepare is an application for probate. The original will, application and a filing fee are filed in the probate court. The application is usually several pages long and describes certain facts about the decedent, the will and the property.

The Probate Hearing. After a 10-day mandatory waiting period, a probate hearing will be held. Your lawyer will schedule this hearing for you. It often takes three weeks or longer to schedule a hearing because of the backlog in the courts and other scheduling conflicts.

Testimony and Order. At the hearing, your lawyer will ask you a number of routine questions. Most of the time, judges will sign an order admitting the will to probate. The order is a document which your lawyer will have prepared and brought to the hearing. You will also be asked to sign the written document containing your testimony.

The Oath. After the hearing, you will need to sign an oath stating that you will fulfill your duties as executor/executrix of the decedent's estate. The word 'independent' means you will not need to ask the court for permission to sell estate assets or to conduct any other duties as executor/executrix.

Letters Testamentary. After your oath is filed, you will be able to order "letters testamentary" from the county clerk. The letters will authorize you to close bank accounts and collect and claim other estate assets. You can order as many letters as you think you will need.

Notices. Within thirty (30) days of receiving letters testamentary, you must publish a "notice to creditors" in a local newspaper. This notice informs the creditors of the decedent's estate and where the creditors may file claims to recover many they are owed. It must be published even if there as no creditors. Certified letters must also be sent to all of the charities named in the will. You must then file proof with the court that you performed these tasks.

File the Inventory. Within ninety (90) days of qualifying as executor/executrix, you must file an inventory with the court. The inventory lists all the assets which pass under the will. Importantly, the inventory doesn't always list everything a person owns, since you don't have to list assets that pass directly to named beneficiaries. For instance, life insurance, retirement plans, some joint accounts and many other properties are designed to pass directly to a named beneficiary. After the inventory is filed, the judge will sign an order approving the inventory.

Tax Returns. Estates valued at more than $3,500,000 must file a federal estate tax return and a Texas inheritance tax return within nine (9) months of death. Taxes will be owed if the net estate exceeds that amount. The tax rates on assets over $3,500,000 start at 41 percent and go as high as 50 percent. You may also be required to file income tax returns for the estate. Often, the lawyer handling the estate will also prepare the estate and inheritance tax returns. However, few lawyers prepare income tax returns.

In answering this question, I have assumed the will was executed, witnessed and notarized properly, and that it contains all the right language. Not all probate proceedings are as easy as this answer indicates. For instance, you may find yourself in the middle of a will contest, or the will may have been written in another state, thus complicating the probate.

OVERVIEW OF TYPES OF PROBATE ESTATES IN TEXAS

Probate of Will as a Muniment of Title Only (No Independent Administration)
This type of proceeding is often used when the decedent left a will and the only assets in the estate are the decedent's home or a very small bank account.

Requirements on filing:

  1. The decedent must have left a valid will
  2. There are no debts due and/or owing by the estate; and
  3. There must be no need for formal administration.

The court does not appoint an executor/executrix or administrator. The order admitting a will to probate as Muniment of Title gives the authority to all persons to pay or transfer estate property to the person or persons designated in the particular asset.

Court-Created Independent Administration
There is a necessity for an administration and all of the heirs of the estate to agree to an independent administration and the person to serve as administrator.
Requirements on filing:

  1. The decedent's death must have occurred within the past four (4) years;
  2. Decedent died without a will;
  3. There must be a need for a formal administration;
  4. All of the heirs of estate agree on the advisability of having an administrator; and
  5. A Petition to Determine Heirship must be filed to identify all the unknown heirs.

Independent Administration (Letters Testamentary)
Independent Administration is used by the executor/executrix named in the deceased person's will. The executor/executrix is the deceased person's personal representative and is empowered by the court to take whatever action is necessary to settle the estate without having to ask the court for permission every step of the way. The executor/executrix's job is to gather the assets, pay appropriate debts, and distribute the remaining assets to the beneficiaries named in the will.

Requirements on filing:

  1. Descendant left a valid will;
  2. There must be a need for a formal administration;
  3. The will appointed a executor/executrix:

Affidavit of Heirship (No Administration)
To establish title to estate property where the sole asset is real property.

Requirements in filing:

  1. The decedent must have died without a will;
  2. No petition for the appointment of a personal representative may be pending or have been granted; and
  3. No formal administration is necessary.

Procedure. An affidavit or heirship is prepared that details the decedent's heirship facts and the assets of the estate. The affidavit is then signed by two (2) disinterested witnesses in the presence of a notary public. The affidavit is then filed in the County Clerk's Real Property Records.

Administration? No, The court does not appoint an administrator in this type of proceeding because no formal administration is necessary. Some financial institutions, however, may insist on only releasing estate funds to a court-appointed executor/executrix or administrator. The institutions do this by insisting that they receive "Letters Testamentary" or "Letters of Administration" prior to releasing estate funds. These "letters" are the documents issued by the court to the court-appointed executor/executrix or administrator. If your loved one had securities or significant bank accounts, you may be forced to ask the court for an administration. You should check with the decedent's financial institutions before selecting this type of probate proceeding.

Small Estate Affidavit (No Administration with Court Approval)
To collect a small amount of money owed to the estate (such as a small bank account), A Small Estate Affidavit may also be used to transfer title to real property that still qualifies as a homestead upon the death of the decedent.

Requirements for filing:

  1. The decedent must have died without a will;
  2. The assets of the estate, exclusive of homestead and exempt property, must exceed the known liabilities of said estate, exclusive of liabilities secured by homestead and exempt property;
  3. No petition for the appointment of a personal representative may be pending or have been granted;
  4. Thirty (30) days must have elapsed since the death of the decedent; and
  5. The value of the entire assets of the estate, not including homestead and exempt property, must not exceed $50.000.

Procedure. A Small Estate Affidavit is prepared that details the decedent's heirship facts and the assets of the estate. The affidavit is then signed by all the heirs of the estate and two (2) disinterested witnesses in the presence of a notary public. The affidavit is then filed with the court and the court either approves or denies the affidavit. If approved, the court will issue an order approving Small Estate Affidavit. The order constitutes authority for the bank to transfer the money to the distributors named in the affidavit.

Administration? No. The court does not appoint an administrator in this type of proceeding because no format administration is necessary. Some financial institutions, however, may insist on only releasing estate funds to a court-appointed executor/executrix of administrator. The institutions do this by insisting that they receive "Letters Testamentary' or -Letters of Administration" prior to releasing estate funds. 'These Letters" are the documents issued by the court to the court-appointed executor/executrix or administrator. If your loved one had securities or significant bank accounts, you may be forced to ask the court for an administration. You should check with the decedents financial institutions before selecting this type of probate proceeding.