If you are dealing with the passing of a loved one and need to administer their estate or go through the Probate process, we are here for you.
Whether expected 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 with the administering of their estate.
When someone dies and leaves assets (real estate, money, stocks, etc.) that have not been transferred to another person, those assets become part of his or her estate, and they have to be handled according to a set of laws. Estate administration refers to the process of managing and distributing a deceased person’s estate after they die.
Estate administration is always made much easier whenever you have an Estate Plan with a Will and/or a Living Trust in place that clearly defines your wishes and lays out instructions for out to administer your assets. These legal documents help by naming Beneficiaries and appointing an Executor, the person who will have the responsibility of administering your estate and carrying out your final wishes.
If you have made mindful preparation of an estate plan, you made a smart move. By creating a Will and/or Living Trust you have made a difficult life event a little bit easier on your loved ones.
Probate is the most common procedure for estate administration. However, if you have planned properly with quality estate planning, you might be able to avoid probate altogether, or if your estate is on the smaller side and meets certain criteria, you might be able to utilize a much easier and simpler process to complete the administration of your loved one’s estate.
What is Probate?
Probate is essentially a court-supervised way of administering the estate of a deceased individual. The purpose of probate is to prevent fraud after someone dies by freezing the assets of the estate until a judge can determine the validity of the Will, verify that all necessary people have been notified (creditors and beneficiaries), all assets of the estate have been accounted for and appraised, creditors and taxes have been paid, and the remaining assets have been properly distributed according to the wishes of the deceased.
If the person who passed away, known as the deceased, left a Will, the Executor is typically the one that must file for probate. If the deceased fails to leave a Will, a representative, usually an heir of the decedent, will need to file for probate.
Important Texas Probate Terms
Decedent: The person who has died and whose estate is being put through the probate process
Assets: Anything that is owned by the decedent (i.e. real estate, vehicles, life insurance policies, retirement accounts, brokerage accounts, stocks, bonds, bank accounts, any personal property or household items)
Estate: All of the decedent’s assets
Will: Legal document that outlines one’s wishes and describes how one would like to distribute their assets to their loved ones
Beneficiaries: Those who will receive the assets from the decedent’s estate. If there was a Will, the Beneficiaries will be named in the Will. If there was not a Will, the Beneficiaries will be determined according to state law.
Executor: This person is named in the decedent’s Will as the person they want to carry out their wishes and ensure all of the decedent’s assets are distributed correctly. The Executor will have to be approved by the court in the probate process and will be responsible for carrying out the entire probate process.
Administrator: The Administrator is the person the probate court appoints to carry out the process of probate
How Long Does Probate Take?
The amount of time it will take to complete the probate of an estate depends on a variety of factors. In most cases with simple estates, it will take on average about 6 months to complete. However, for more complex estates or estates in which the Will is being contested, probate could take anywhere from one year to two or three.
When is Probate Necessary?
Determining whether or not you need to go through probate depends on a variety of factors.
When most people think about probate, they think it involves a Will. And that is true. If an individual dies and leaves behind a Will, then probate is required to carry out the instructions of that Will. However, a probate procedure can also be needed if someone dies without leaving a Will and they have property that needs to be distributed under the state’s intestacy law.
Each state has their own specific laws that govern probate and estate administration more broadly, so of course it ultimately depends on the laws of state the deceased lived in at the time of his or her death as well as the laws of the states where he or she owned real estate. With that being said, here are some general reasons why an estate would be subject to probate.
- The Decedent died without leaving a Last Will and Testament
- The Decedent died with a valid Last Will and Testament
- The Decedent died owning assets in the Decedent’s sole name
- The Decedent died owning assets as Tenant in Common
- The Decedent did not designate any beneficiaries, or the beneficiaries died before the Decedent
What Assets Have to go Through Probate?
If you die intestate (without a Will), everything you own will go through the probate court. But regardless of what your Estate Plan states, the following will always go through probate:
- Any inheritance in which the Beneficiary has passed before you. If someone you have named as a Beneficiary passes away before you and you don’t update your Will, the court will get involved and decide how to settle that part of your estate. This is why it is so important to make sure your Estate Plan is always up to date.
- Property that isn’t titled (non-titled property). Anything you own that does not have paperwork is considered non-titled property. Non-titled property includes household items such as clothing, furniture, appliances, and other general household or personal items.
- Investment property owned with partners. Property that is owned with partners are typically titled as “tenants in common.” Whenever there are not any instructions in your Will for how to handle your share, the probate court will step in. Remember, if your Will clearly states your wishes, the process becomes much simpler.
- Property owned only by you (sole ownership). Any property that is titled only in your name will go through probate to determine who the property passes along to. In certain states, you can add Payable-on-Death (POD) or Transfer-on-Death (TOD) to the title or deed to avoid probate. For Oklahoma, to accomplish the passing of ownership of a piece of property while avoiding probate, you would need to complete a Transfer-on-Death (TOD) Deed. For Texas, you can complete a Lady Bird Deed, also called an Enhanced Life Estate Deed, to pass along property ownership while avoiding probate.
What Assets Avoid Probate?
There are certain assets that do not have to go through probate. By planning properly, you can avoid probate for the following:
Assets with a named Beneficiary. Whenever you name or appoint a Beneficiary on an asset, it means that asset can avoid probate. Life insurance is an example of an asset that has named Beneficiaries. So, in cases where there is a named Beneficiary on a life insurance policy, the proceeds would go directly to that person without having to go through the probate process.
Assets you place as Payable-on-Death (POD) or Transfer-on-Death (TOD). Property and assets that are titled as POD or TOD can often bypass probate and pay or directly transfer ownership to your named Beneficiaries without involving probate. This can be done with items such as bank accounts, retirement accounts, brokerage accounts, stocks, vehicles, and real estate.
Property that is titled jointly (with Survivor’s Rights). Property that is titled in this automatically goes to the survivor upon your death. There is no need for probate in this scenario.
Assets placed in a Living Trust. Whenever you create and fund a Trust, you personally no longer own whatever assets you put into the Trust. Rather, the Trust owns them. So, whenever you pass, any assets that are in the name of the Trust can be distributed directly to the Beneficiaries according to the instructions you laid out thereby skipping probate.
Do All Estates Have to Go Through Probate?
In general, most estates will need to go through probate. However, there are exceptions where an estate may qualify for a more simplified version. Although it could still be considered a modified version of probate, it ultimately avoids all the extreme demands of a traditional probate, so we refer to these types of estates as non-probate estates.
Texas and Oklahoma have their own laws governing estate administration and non-probate estates.
In Texas, your options to avoid or shorten probate, expediting estate administration include:
- Affidavit of Heirship: Used when there is minimal debt and heirs are just seeking to transfer title of real estate and/or vehicles.
- Muniment of Title: Used when there is a Will, no unpaid debts (except debts secured by real estate), and Medicaid has no claim. This is an expedited way to transfer title of property into the heirs name.
- Small Estate Affidavits: To qualify as a small estate in Texas, the total value of the estate must be $75,000 or less. When qualified, a Small Estate Affidavit can be executed by the heirs of the deceased, which they would use to obtain ownership of the deceased’s assets such as real estate or bank accounts.
In Oklahoma, your options to avoid or shorten probate are a bit more limited:
- Small Estate Affidavit: To qualify as a small estate in Oklahoma, the total value of the estate must be less than $50,000. When qualified, a Small Estate Affidavit can be executed by the heirs of the deceased, which they would use to obtain ownership of the deceased’s assets such as real estate or bank accounts.
How to Avoid Probate
There are certain tools and methods to avoid the burden or probate and limit the headaches that your loved ones are subject to after your passing. There are many benefits to avoiding probate including avoiding stress, saving time, saving money, and maintaining privacy.
In the absence of a Will, probate can take a very long time (in some cases years). While the cost of probate can vary, probate generally means Executor fees, administrative costs and legal fees. And of course, the longer a probate drags on, the more fees there will be associated with it. One of the biggest reasons people seek to avoid probate is for privacy purposes. Probate proceedings are public, but by creating a Trust, you can maintain your privacy and keep the distribution of assets completely private.
There are several approaches you can take to lessen the burden and stress of probate for your loved ones, including each of the following:
Create a Living Trust. Whenever you create a fund a Trust, you are making the Trust the owner of your assets instead of yourself. Therefore, when you pass away, the named Trustee automatically takes over management of those assets, per your instructions and guidance as laid out in the Trust.
Gift assets to loved ones while you are still alive. By giving assets to loved ones while you are still alive, you are reducing the value of your estate, which can greatly simplify the probate process. This can also potentially have positive tax advantages.
Maintain a small estate. Most states have a limit that will allow for a quicker and easier probate process if the estate is very small, and the totaled assets are not above a certain amount.
Title assets as Payable-on-Death (POD) or Transfer-on-Death (TOD). As mentioned before, this method can work for bank accounts, retirement accounts, brokerage accounts, stocks, vehicles, and real estate and some other assets.
Title real property jointly. Property that is owned jointly means it can be transferred from one person to another without having to go through probate.
Common Estate Planning Tools & Strategies for Avoiding All Types of Probate
Seeking to avoid probate is a favorable choice for many of our clients as they want to avoid any delays in their beneficiaries receiving their inheritance, and they want to save their loves ones from any unnecessary costs, delays, and extra heartache. Although it costs a little bit more upfront to get the right tools and strategies in place to avoid probate, you save your loved one’s time and money on the backend, and you alleviate a great burden off them.
There are several different methods in which assets can avoid the probate process, including:
- Joint Ownership: When you own something jointly with someone, you are able to avoid probate because once you pass, your share of ownership automatically passes to the other joint owner. Assets that can be titled this way include real estate, vehicles, and bank accounts. If you are looking to utilize this method, it is important that you check your titles to ensure the title is held properly and to ensure the correct individual is named.
- Transfer or Payable on Death: When you list an asset as transfer or payable on death, these assets automatically pass on to someone else after your death. Assets that can be designated this way include real estate, vehicles, stocks and bonds, and certain bank and financial accounts. If you are looking to utilize this method, it is important that you complete the necessary documentation to ensure the correct beneficiaries are designated.
- Living Trusts: When you create a Living Trust, you are able to place your assets in the name of the Trust, which allows them to avoid probate. You name yourself as Trustee so you have maintain full control over the Trust and your assets that are within it, and you name a successor Trustee to manage and distribute those assets after your death. This is a really effective way to completely avoid probate.
Unless you plan properly, your estate will go through some form of probate. With that being said, the probate process is significantly simplified, and sometimes avoided altogether, when you have a solid Estate Plan in place. The more planning you do right now, the easier it will be on your loved ones after you pass away.
One way to lessen the burden of probate, or even totally avoid it, is by creating a Trust. Whatever assets you place in the name of the Trust will automatically bypass probate.
Contact a Wichita Falls Estate Administration Law Firm
If you have experienced the loss of a loved one and need some direction, we are here to help. We can make sure everything is taken care of and lift the burden off of you and your family.
If you are needing to probate a loved one's estate and are feeling lost and overwhelmed, we are here to help you with this process. Contact a Wichita Falls probate attorney today at (940) 569-4000 or fill out our contact form for a free, confidential, no-obligation consultation.