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Steven R. Booker, P.C.

Probate

Probate

Whether expected and anticipated or completely out of the blue, the death of a loved one can be a very traumatic experience for the entire family. Many people have difficulty learning how to move on with life without that beloved family member, much less deal with the confusing and time-consuming legal issues that arise upon the death of an individual.

Probate is the legal process by which the probate court assumes authority over the estate or assets of someone who has died. The court identifies assets, identifies who is in charge of the assets, supervises payments of debts to creditors, pays taxes and probate fees, and oversees the distribution of the remainder of the assets to the beneficiaries and or heirs.

The Personal Representative and Their Role

The probate process will begin by determining a personal representative (PR), who is either named in a Will or appointed by the court. The personal representative has multiple responsibilities through this process:

  1. File an application. An application is filed with the Probate Court. If there is a Will, an executor will be appointed. If there is no Will in place, the Court will appoint what is termed an administrator. Notice of the Court hearing over the petition must be given to all of the decedent’s heirs and beneficiaries. This begins the process into Probate.
  2. Publish a “Notice to Creditors”. Once appointments are made, the personal representative must address any debts the estate has. This is done by giving written notice to any and all creditors.
  3. Inventory assets. The deceased person’s property and assets must be identified and inventoried. Sometimes this can be done by the personal administrator and other times a court-appointed appraiser or an independent appraiser must conduct this step. This inventory includes all real property and stocks and bonds, among other things. Generally, assets cannot be sold or distributed until the probate process is complete.
  4. Pay off any debts. Any and all debts and taxes of the deceased must be paid.
  5. Distribute the remaining assets. After all debts, taxes, and other probate costs, whatever is left of the assets are distributed. If there is a Will, the assets are distributed according to the decedent’s wishes. If there is not a Will, the assets are distributed according to state law.

How Long is the Probate Process and Can it be Avoided?

The Probate process can be a lengthy one. Some of the less complicated estates take about six to nine months to complete. Before the distribution of any assets, the creditors notice must be published for four months, so this step alone takes quite a while. On top of that, you have the inventory and appraisals, paying the creditors, and the distribution of assets to the beneficiaries, which all add additional months to the process. There are also some issues that could arise, which would further delay the process. These delays could include the Will being contested, disagreements regarding the property and/or assets, difficulties with the transferring of titles, or complicated tax problems.

There are certain circumstances in which Probate can be avoided. Each state has their own laws and statutes; however, these are some common Texas and Oklahoma ways to maintain exemption from Probate:

  • Living Trusts – A Living Trust can avoid Probate for virtually all of the assets you own – real property, bank accounts, stocks and bonds, vehicles, and so on. You will create a Trust document that names an individual to take over as trustee, termed successor trustee, upon your death. Next, you transfer the ownership of your property to yourself as the trustee of the Trust document. Once completed, the property will be maintained and controlled according to the terms of the Trust. Upon your passing, the successor trustee will have the ability to transfer the property and assets to the beneficiaries without having to go through probate court proceedings.
  • Joint Ownership – If you and someone else owns property and the ownership includes the “right to survivorship,” then whoever survives automatically inherits complete ownership of the property when one owner passes away. Although some paperwork will be required in order to show that title to the property is now held solely by the surviving owner, probate will not be necessary to actually transfer the property.
  • Enhanced Life Estate Deed/Lady Bird Deed – With this type of document, you can name a beneficiary to inherit your property while maintaining ownership of it for your entire lifetime. You also are able to avoid probate. This option is only available in Texas.
  • Transfer on Death Deed – This is a simple and inexpensive way to transfer property to another individual upon your death. This document also avoids probate.

Again, Probate is the official and legal way for an estate to get settled with the supervision of the court. If there is no Will at the time of death, a person, usually being the surviving spouse or an adult child, is appointed by the court to carry out this process. If there is a Will, however, the person to carry out this process should be named in the Will. Once established, the Executor or Personal Representative must collect and value all of the assets of the estate, pay all bills and taxes, and finally, distribute the remaining assets to the heirs or beneficiaries.

The whole reason for probate is to prevent fraud. Essentially, it freezes the estate until a judge can determine the validity of the Will, ensure that all of the necessary people have been notified, the assets of the estate have been identified and appraised, and that all creditors and taxes have been paid. Once all of these have been completed, the court usually issues an Order for the distribution of the property and the estate is closed.

How Probate Works in Texas

The general procedure required to settle an estate via probate in Texas is either a relatively simple procedure, called Independent Administration or a court-supervised process, called Dependent Administration.

An executor can request Independent Administration if the Will says that the executor can do so, or, if the Will is silent, if the beneficiaries all agree. Independent Administration is quicker and less expensive than a Dependent Administration. No bond is required, and no court supervision is needed to take most of the steps an executor must take to settle the estate. The executor must still publish notice of the probate (to inform potential creditors of the probate) and still file an inventory of the estate's assets.

If Dependent Administration is required, a bond is required and the court will need to supervise and approve of the executor's actions. This would be the forum to resolve a contested estate, where the beneficiaries do not agree on what should happen.

There's also a simplified probate procedure to transfer assets if there's a Will and no unpaid debts (other than secured real property) and no Medicaid claim against the estate called a Muniment of Title as well.

Independent Administration of Estates

Independent administration is much quicker, simpler, and less expensive than the dependent administration. Whether the Will directs the executor to pursue independent administration or not, or even if there isn’t a Will at all, the executor or administrator may ask the court for the authority to act as an independent executor. The stick here is that all beneficiaries have to agree to this.

If granted the authority to act as an independent administrator, the executor is no longer required to post a bond, which is essentially an insurance policy to protect the estate against any losses it may incur due to any carelessness or dishonest acts by the executor. Moreover, the executor is free to take a number of steps to settle the estate that he/she would have otherwise had to have had permission from the court to carry out. These steps include paying debts, setting aside a family allowance, selling estate property, and distributing assets to the beneficiaries or heirs.

However, the independent executor must still publish a notice to creditors and file an inventory list of all assets of the deceased with the court. The executor is responsible for collecting and safeguarding estate assets until it is time to transfer them to their new owners.

The executor is also entitled to a commission, which can be up to five percent of all money the estate receives and pays out. Only transactions that are involved in the management of the estate, like paying bills, are counted. Money that was already in the estate at the time of death or that is distributed out is not counted.

Dependent Administration of Estates

This kind of administration requires more court supervision than that of an independent administration.

Muniment of Title

This is a relatively simple and inexpensive way to transfer estate assets with a title. (Tex. Estate Code Ann. § 257.001.)

However, there are certain requirements that must be met in order to use this process:

  • A valid Will.
  • No unpaid debts. The exception to this is debts secured by real estate.
  • No claim by Medicaid against the estate to recover benefits received by the decedent.

To initiate this process, someone files the Will with the probate court and requests to probate the Will as a Muniment of Title. If the probate court decides probate administration is not necessary, the court admits the Will into probate as a muniment, or evidence, of title to the estate assets. In other words, the Will serves as the documents which transfers the assets to the individuals or entities named in the Will. The court takes no role in the appointment of an executor or an administrator. Rather, the person who requested probate as a muniment of title is required to file an affidavit (sworn testimony) with the probate court within six months which states that the terms in the Will have been properly carried out (or if some haven’t, then which ones and why).

Small Estate Affidavit

If there is no Will in place and the total value of the estate is $75,000 or less, the people who inherit the property has the ability to file a simple affidavit (sworn testimony) in order to collect the property

Small Estate Procedures

If the value of the property does not exceed what is needed to pay the family allowance and certain creditors, then Texas executors can use a simplified small estate process (Tex. Estates Code Ann. § 354.00), in which the executor presents an accounting which lays out where the estate money has gone. The court will approve and then close the estate.

Under either process, these are these steps:

The Will must be filed with the probate court in the county where the decedent lived within 30 days.

  1. A Petition for Probate is filed with the probate court. This filing of the Petition requests the appointment of an executor. If there is a Will, the executor should be named in the Will, however, if there is no Will, the court will appoint a Personal Representative of the estate. Next, per the court’s requirements, notice must be given to all heirs and beneficiaries.
  2. The Court then issues “Letters Testamentary” to the Executor or Personal Representative, which gives that person the legal authority to act on behalf of the estate.
  3. The Notice of the Probate is required to be published in a newspaper where the decedent lived. Creditors then have up to 4 months after the date of publication to make a claim.
  4. The Executor/Personal Representative must file an inventory of the estate's assets with the court. This must be done within 90 days of the executor's appointment.
  5. Once the debt of the estate has been paid, i.e. all of the creditors and taxes have been paid, a Petition must be filed with the court to close the probate.
  6. The Court will then issue an Order, which distributes the estate's remaining property to the beneficiaries.
  7. For the carrying out of the steps of probate, the executor is entitled to a fee for their services. This fee is of five percent of the estate. However, since such fees are subject to income tax (which inheritances usually are not, unless Texas has an inheritance tax), many executors forfeit the fees. 

There are a few exceptions to probate, however, and not all estate must go through the process.

First, if an estate is relatively small and falls below a certain threshold, it may meet the requirements to be considered as a “small estate” and thus does not require probate to be settled. To find out about Texas’ small estate threshold and procedure, click here.

Secondly, there are certain kinds of assets that automatically transfer upon the death of the owner with no probate required. Here is a list of the most common kinds of assets that avoid probate:

  • Joint Tenancy – With Joint Tenancy, when one joint tenant passes away, the surviving joint tenant becomes the sole owner of the entire asset automatically without a court order. This is called, “right to survivorship.”
  • Tenancy by the Entirety or Community Property With Right of Survivorship – This is a form of property ownership that basically functions exactly like joint tenancy, but this is only available to married couples.
  • Beneficiary Designations – this has to do with accounts, such as retirement accounts and/or life insurance policies that have designated beneficiaries. Upon the death of the account holder, the named beneficiaries are entitled to the assets in the account or the proceeds of the policy.
  • Payable on Death Accounts/Transfer on Death Accounts – Just like your retirement accounts and your life insurance policy, banks and brokerage accounts have named beneficiaries as well. All the account holder has to do is fill out forms that designate who should receive the proceeds of the account upon their death. 
  • Affidavit of Heirship – An Affidavit of Heirship allows you to resolve your spouse’s estate with little court supervision and without going through the lengthy probate process.

Third, if the deceased had created a Living Trust which holds their largest assets, and the remaining assets left outside the Trust don’t add up to more than Texas’ small estate threshold, then that estate, too, will avoid probate.

However, for any estate in Texas that exceeds the small estate limit, regardless if there is not a Will or there is a Will (but no Living Trust), probate is required and no assets can be transferred to the heirs or beneficiaries before probate is completed.

How Probate Works in Oklahoma

Generally, the probate procedure in Oklahoma goes like this:

  1. A Petition for Probate is filed with the probate court. This filing of the Petition requests the appointment of an executor. If there is a Will, the executor should be named in the Will, however, if there is no Will, the court will appoint a Personal Representative of the estate. Next, per the court’s requirements, notice must be given to all heirs and beneficiaries.
  2. The Court then issues “Letters Testamentary” to the Executor or Personal Representative, which gives that person the legal authority to act on behalf of the estate.
  3. The Notice of the Probate is required to be published in a newspaper where the decedent lived. Creditors then have up to 3 months after the date of publication to make a claim.
  4. The Executor/Personal Representative must file an inventory of the estate’s assets with the court. This must be done within 2 months of the Executor’s appointment.
  5. Once the debt of the estate has been paid, i.e. all of the creditors and taxes have been paid, a Petition must be filed with the court to close the probate.
  6. The Court will then issue an Order, which distributes the estate’s remaining property to the beneficiaries.
  7. For the carrying out of the steps of probate, the executor is entitled to a fee for their services. This fee is based on the size of the estate. However, since such fees are subject to income tax (which inheritances usually are not, unless Oklahoma has an inheritance tax), many executors forfeit the fees. 

There are a few exceptions to probate, however, and not all estate must go through the process. Oklahoma is very similar to Texas, but may have a few small differences.

First, if an estate is relatively small and falls below a certain threshold, it may meet the requirements to be considered as a “small estate” and thus does not require probate to be settled. To find out about Oklahoma’s small estate threshold and procedure, click here.

Secondly, there are certain kinds of assets that automatically transfer upon the death of the owner with no probate required. Here is a list of the most common kinds of assets that avoid probate:

  • Joint Tenancy – With Joint Tenancy, when one joint tenant passes away, the surviving joint tenant becomes the sole owner of the entire asset automatically without a court order. This is called, “right to survivorship.”
  • Tenancy by the Entirety or Community Property With Right of Survivorship – This is a form of property ownership that basically functions exactly like joint tenancy, but this is only available to married couples.
  • Beneficiary Designations – this has to do with accounts, such as retirement accounts and/or life insurance policies that have designated beneficiaries. Upon the death of the account holder, the named beneficiaries are entitled to the assets in the account or the proceeds of the policy.
  • Payable on Death Accounts/Transfer on Death Accounts – Just like your retirement accounts and your life insurance policy, banks and brokerage accounts have named beneficiaries as well. All the account holder has to do is fill out forms that designate who should receive the proceeds of the account upon their death. 

Third, if the deceased had created a Living Trust which holds their largest assets, and the remaining assets left outside the Trust don’t add up to more than Oklahoma’s small estate threshold, then that estate, too, will avoid probate. Living Trusts were created to avoid probate after the death of the trust’s Grantor.

However, for any estate in Oklahoma that exceeds the small estate limit, regardless if there is not a Will or there is a Will (but no Living Trust), probate is required and no assets can be transferred to the heirs or beneficiaries before probate is completed.

 

If you need help with this process, contact us today at (940) 569-4000.

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