13785 Research Boulevard, Suite 125
Austin, Texas 78750

512-655-2141

john@johnlanelaw.com

Simplified Solutions

Probate, Estate and Trust Administration the Austin, TX Area


How does probate work?

There can be extreme grief and pain at the loss of a loved one. Beyond grief and pain, when you add external stresses to the equation you can have a disaster on your hands in very short order.

Part of the responsibilities or duties of an executor or administrator of an estate can be to reduce the level of stress during the probate process.

The fundamental duties of a personal representative (also known as an "executor," if male, or an "executrix," if female) of an estate are the same as those of a trustee–protecting the assets and interests of the beneficiaries. One way to protect those assets and interests and, at the same time, help the probate process go smoothly, is to have all of your ducks in a row and prepare for court as best you can.

Read on for some essential reminders about the probate process and how representatives can assist with the process.

What should I know about the probate process?

A personal representative is required to prepare an inventory and a list of claims after the representative is approved by the court. The timeframe for this important chore is set by statute. This inventory should detail all of the assets subject to probate (i.e., that did not pass outside of probate by operation of law or otherwise). The property must be valued and even appraised as necessary. The claims include debts due and owing to the estate (not debts the estate owes to another party). The inventory provides both potential beneficiaries and creditors of the estate an idea of the estate's assets and claims. [Beneficiaries want to know what they might get and creditors want to know if there is enough money to get paid.] If the inventory is filed late, the representative could be fined and removed, which would slow down the process (and raise tempers).

One thing to realize if you are a beneficiary is that the will may be "read" a few days after the funeral, but the gifts and bequests are not given out at that time. Yes, you may be entitled to the assets, but the inheritance is subject to the estate's administration. The representative must settle the decedent's debts and claims before he or she can make any distribution of the assets. So, beneficiaries, do not go to Grandma's house with a moving truck and start taking whatever you want. Most likely, the representative is doing his or her job and making sure everything stays where it is until probate is closed.

As noted above, the representative also must to keep the administration process moving along by settling all of the decedent's debts. He or she must give proper notices to creditors, to include making publication in the appropriate newspaper and sending written notice to known secured creditors by certified mail. Also, some representatives are under the mistaken impression that all debts must be paid. He or she begins paying the decedent's bills immediately, which is not necessarily good. Some states provide "permissive notice" to unsecured creditors and this may avoid paying some unsecured claims.

The representative must keep the beneficiaries in the loop, to include providing each with notice via certified mail that the will has been admitted to probate and a copy of the will. In addition, the representative must inform the beneficiaries regarding any information that might affect their rights. For instance, beneficiaries have the right to ask for a formal accounting by the independent executor.

The representative is responsible for the care and maintenance of estate property, treating it with even greater care than his or her own property. The representative is able to sell any property that is perishable or would deteriorate in value during the probate process.

As you can see, being a representative is a big, big job. Consequently, he or she can be removed if proven to have been guilty of any gross misconduct or mismanagement in the role of representative. The representative may be subject to a suit for breach of fiduciary duty. Along the way, there are taxes to be paid and returns to be filed, along with a many other details.

Probate Avoidance

If probate avoidance planning had not been implemented prior to death and the deceased person, owned assets in his or her name, a court proceeding called “probate” will be required. In Texas, a probate proceeding may be unsupervised or supervised by the probate judge. In a supervised probate, which the court may require at any time, the probate judge must approve each and every detail of the estate administration. In an unsupervised probate, an appointed estate administrator manages assets, pays debts, files tax returns and various court documents, and ultimately distributes the estate assets as the deceased person directed in his or her will.

While probate in Texas doesn’t have to be time consuming and expensive, many times it can be just that. Additionally, probate is often very stressful for the executor, who many times is a family member or close friend of the deceased person, during a time of grieving. Because probate can be a lengthy, costly and stressful public process, more and more people are choose to avoid probate using various strategies.

Some Choose to Avoid Probate

There are a number of legal strategies that will allow you to pass property to another person after death without going through probate.

  • Joint Tenancy & Tenancy by the Entirety
    • If you would like to avoid probate, you may add a joint owner, or "joint tenant with rights of survivorship" to your assets. However, keep in mind that going this route may subject your assets to claims against the co-owner, which exposes them to the co-owner's creditors. This could cause problems while you are still personally utilizing the assets yourself.
  • Beneficiary Designations
    • Texas allows Transfer on Death (TOD) or Pay on Death (POD) beneficiary designations to be added to bank accounts. Unlike joint tenancy, beneficiary designations allow you to pass down assets without withdrawing from your ownership. Unfortunately, opting to use beneficiary designations can also make it difficult to impartially distribute the property among your recipients. Furthermore, your assets will be distributed to any listed beneficiaries in spite of what your last will and testament says.
  • Revocable Living Trust
    • A revocable living trust is a legal document created by a trust maker who designates a beneficiary to invest, manage, and spend the assets while the trust maker is still alive. In most cases, each person is his or her own trustee while still alive able to handle the assets. If the trust maker dies or becomes mentally incompetent, the successor trustee is then appointed to take care of, manage, and/or distribute the assets. A revocable living trust can potentially give marital and creditor protection to your children as well as guardianship.

Estate and Trust Administration

If a trust is drafted and funded correctly, it does not need to be filed with the probate court. However, it is important to remember the five proper steps to administer the trust:

  1. Beneficiaries must be notified
  2. Assets must be gathered, valued, and managed
  3. Potential creditors must be contacted
  4. Taxes, debts, and final expenses must be paid
  5. Remaining income and assets must be distributed in compliance with trust the terms

It's okay to ask for help.

So you see, there is more than a little pressure on the personal representative. As a result, it is essential that the representative work in concert with John M. Lane, an experienced estate planning attorney to guide the representative or beneficiaries during this process … and avoid all of the hidden landmines.

Contact Us Today