I have written before that Texas has one of the most simplified probate processes in the country.
If a testator instructs in his will that there should be no action in the probate court in the settlement of the his estate other than the probating and recording the will and the return of an inventory, appraisement, and the list of claims of his estate (or an affidavit in lieu of the inventory), then there will be an independent administration free from court supervision and control.
Independent administrations usually involve only one court hearing and allow an executor to settle a deceased person’s estate without court supervision. They account for more than 80 percent of Texas probates.
Reasons to Avoid Probate
As simple as probate can be, probate does take time and typically requires engaging a lawyer. Most courts in Texas require an executor to be represented by an attorney in a probate matter because an executor not only represents himself, but also the interests of beneficiaries and creditors.
Since only a licensed attorney can represent the interests of others, preparing and filing pleadings in a probate matter without the assistance of counsel would constitute the unauthorized practice of law.
Revocable Trusts Can Avoid Probate
To avoid the necessity of probate, many people create revocable trusts. Assets transferred to the revocable trust can pass privately to the intended beneficiaries after the death of the trustmaker without the need for probate.
Revocable trusts are a wonderful planning tool, but for many Texans of modest means, creating a revocable trust and related documents can be cost-prohibitive.
I often get asked by these clients if there is a way to avoid probate without a revocable trust. There is.
When is Probate Necessary?
Probate is necessary when there are assets in the estate are in the deceased person’s name. Probate records become a link in the chain of title to show that the deceased person’s property has passed to the intended beneficiary.
How to Minimize the Need for Probate?
Probate is not necessary for many items of personal property. For example:
- Assets such as life insurance proceeds, IRAs, retirement accounts pass outside of probate to the listed beneficiaries.
- Assets owned by the deceased person and others as “joint tenants with rights of survivorship” pass to the survivor outside of probate. Not all joint accounts are held with rights of survivorship so it is important to confirm.
- Bank accounts with a POD or TOD beneficiary listed pass to the beneficiary outside of probate. Most banks permit account holders to list a beneficiary on a bank account. The beneficiary has no claim to the account during an account holder’s lifetime, so the beneficiary can easily be changed. After the account holder dies, the beneficiary can claim the funds in the account by identifying himself or herself and providing a death certificate.
- Real property conveyed by a Texas transfer on death deed or lady bird deed pass to the intended beneficiary outside of probate.
Will Assets Passed Outside of Probate Avoid Creditors’ Claims?
Life insurance and retirement plans that do not become part of the probate estate are exempt from creditors’ claims. However, creditors may try to collect from the beneficiary of POD or TOD designation if debts exist and probate assets are insufficient.
Also, transfer on death deed statute states that to the estate is not sufficient to pay the debts, related taxes, or allowances to the property owner’s family, the personal representative of the estate can enforce debt against the real property that was transferred by a transfer on death Deed as if it were part of the probate estate.
An attorney can evaluate situation and advise you on the best way to accomplish your goals and objectives and minimize administrative costs.