A Primer on Probate
Courtesy Leu & Peirce, PLLC
Losing a loved one is never easy. Many people describe the weeks and months following such loss as “a blur.” After notifying family members, and planning and carrying out the memorial service, comes the question of how to handle the loved one’s estate. Many times, the answer is probate. While the probate process has a reputation for being time-consuming and costly, in Texas, it is relatively quick and inexpensive.
Probate provides for an orderly transition of property ownership following a death. Probate is necessary when an individual who has died owned property that does not pass directly to another individual through beneficiary designations. Accounts with rights of survivorship or payable-on-death beneficiaries, including life insurance policies, are examples of property that passes directly to a designated individual without the need for probate. Importantly, and despite common belief, title to real property listed in more than one name does not automatically pass to the survivor. Therefore, probate is often necessary to transfer title to the surviving spouse.
Any “interested person” may initiate the probate process. This includes anyone having a property right in, or claim against, the estate being administered. Texas has two types of formal probate procedures. Most probates are handled as independent administrations, meaning the executor or administrator does not have to post a bond or ask the court’s permission before settling the estate. By contrast, a dependent administration is a court-supervised administration. If there is no Will, or if the Will does not provide for an independent administration, then the administration will be “dependent,” unless the beneficiaries agree otherwise. Dependent administrations tend to be more expensive, since the administrator must seek court approval for every major decision. However, this added burden and expense may be preferable to protect the administrator if the estate has multiple creditors or feuding beneficiaries.
An “executor” is a personal representative who was named in a Will that has been admitted to probate, and who serves in the capacity stated in the Will. An “administrator” is anyone else who is appointed to handle the estate. The individual named in the Will has first priority to serve as executor. However, the judge may refuse to appoint an individual named in the Will if the judge finds that person to be unsuitable.
Once the judge is satisfied that the Will is valid and the person asking to be appointed executor is a suitable person to serve, the executor will be issued Letters Testamentary, which evidences the executor’s authority to gather assets and act of behalf of the estate. The executor must issue notice to creditors, notify beneficiaries, and gather the assets, which the executor must safeguard until the time comes to distribute to the beneficiaries. Collecting and protecting estate assets is the primary job of the executor, who should care for the property of the estate as a prudent man would care for his own property. Once the business of the estate has been concluded, assets have been collected, and debts have been paid, the executor may distribute the property to the beneficiaries.
In addition to independent and dependent administrations, Texas law allows for another simple probate procedure known as a muniment of title. A muniment of title may be used when an individual died with a valid Will, there are no unpaid debts, except those secured by real property, and the individual was not receiving Medicaid benefits prior to death. This proceeding allows for the probate of a Will without the requirement of appointing an executor or administrator, notifying creditors, or filing an inventory, thus making the process easier and less expensive. A muniment of title is not a feasible option if the individual owned property outside the state of Texas or held non-probate assets, such as insurance or retirement accounts, that were payable to the estate, rather than an individual.
There are many factors and variables to consider when determining whether and what type of probate proceeding is appropriate for an estate. A Will remains a valid legal document for four years after death. After that time, if administration of an estate is necessary, it will be handled as if there was no Will. Therefore, if a loved one has died, it is important to contact an attorney who handles probate to discuss which of the various options is best suited to meet your circumstances.
Lori Leu, Erin Peirce, Lauren Olson, and Laura Chavero are Elder Law attorneys with Leu & Peirce, located in Plano, Texas. They can be reached at 972-996-2540.