Probate

How to Handle Debts and Taxes in Probate

Published on: November 22, 2024 | By David W. Miller

The probate process can vary in complexity, depending on the size and nature of a decedent’s estate. While many executors think first and foremost about the assets in a decedent’s estate, it is equally important to consider the debts and taxes that might be involved. Without addressing these crucial elements, it is impossible to have an accurate accounting of how much a person has left behind in his or her estate plan.

Part of every estate executor’s job is to thoroughly review the estate at issue. The estate could include real property, cash, bank accounts, investment accounts, retirement accounts, and tangible items that the decedent left behind. The estate could also include outstanding debts and unpaid taxes. How do you handle these debts and taxes? How do they effect the rest of the estate?

Paying Taxes

It is the responsibility of the estate executor to file the decedent’s final tax return. The executor must ensure that all of the individual’s taxes are paid, whether the taxes are federal, state, or local. The payments for these taxes come directly out of the decedent’s estate.

Paying Debts

The executor must also handle any debts on the estate. These debts could include bills, mortgages, or loan repayments, which can all add up over time and which the decedent might not necessarily have been open about during his or her lifetime. One requirement during the probate process is that the court must give debtors an opportunity to file a claim on the estate in order to notify the executor that the decedent owed them money. Only after creditors are given sufficient opportunity (and only after the debts have then been paid) can beneficiaries begin to inherit from what is left over in the estate.

When a Small Estate Affidavit Makes Sense for Texans

Published on: November 16, 2024 | By McCulloch & Miller, PLLC

Some individuals in Texas qualify for what is called a “small estate affidavit,” which simplifies the probate process and serves as an efficient way to pass assets to heirs. When does the small estate affidavit make sense for Texans? What are the requirements? Today’s blog summarizes some of the basics regarding the small estate affidavit, but as always, with specific questions and concerns, you should speak with a Houston estate planning attorney that can look at your circumstances and tailor your legal advice accordingly.

What is the Small Estate Affidavit?

The small estate affidavit is a sworn statement that settles a decedent’s estate. It must be signed by all of the decedent’s heirs (or otherwise signed by someone with legal authority to sign on the heirs’ behalf).

What are the Requirements for the Small Estate Affidavit?

Individuals in Texas are able to use a small estate affidavit only if the decedent died without a will and if that decedent left less than $75,000 in property behind. The $75,000 value does not include the decedent’s home and some other probate-exempt property. Additionally, the decedent must not have left behind more debts than assets, and he or she must not have owned real property in addition to his or her home.

How Long Does Probate Take? Factors That Affect Probate Timelines

Published on: November 15, 2024 | By David W. Miller

When clients or potential clients ask us how long the probate process typically takes in Texas, we always say that “it depends.” This answer can be frustrating, but there is unfortunately no cookie cutter answer to this common question. As we have described in past blogs, probate is the process through which a court authenticates and approves a decedent’s will, which allows the decedent’s beneficiaries to then inherit from the will. Probate can take anywhere from three months to one year from the date of filing (sometimes longer, in rare cases). There are several key factors that affect probate timelines in Texas.

Estate Planning Documents

Does the decedent have a will, trust, or other estate planning document in place? Is it thorough, detail oriented, and valid? If the court can quickly 1) identify the decedent’s estate plan and 2) confirm that the plan is legally valid, the beginning of probate can go pretty quickly. Sometimes, though, decedents die without any estate plan at all. Other times, they die with estate plans that are not up to standard and are difficult for the court to authenticate. Incomplete estate planning documents can delay the probate process significantly.

Disputes from Third Parties

If a beneficiary or other third party decides to dispute the validity of the will, this elongates probate. Sometimes, individuals that were left out of the will tend to argue before the court that the decedent fraudulently or mistakenly left them out as a beneficiary. It takes time for the court to consider these arguments and determine if they have merit.

What You Need to Know About Muniment of Title in Texas

Published on: November 9, 2024 | By Thomas W. McCulloch

What You Need to Know About Muniment of Title in Texas

If one of your loved ones has recently passed, and that loved one died both with a will and without any debts, you might be able to probate your loved one’s estate through Muniment of Title. Muniment of Title is a tool that shortens the time that probate typically takes, and it allows for a more efficient and cost-effective solution for beneficiaries. There are, however, certain things to keep in mind if you are wondering whether Muniment of Title might be right for you.

Requirements for Muniment of Title

As mentioned, for a person’s estate to qualify for Muniment of Title, the person must have died both with a will and without any debts. Thirdly, the person must not have applied for Medicaid benefits at any point in his or her lifetime. The applicant (typically an heir) for Muniment of Title must be able to testify to these three facts, both in written and oral form.

The Process for Muniment of Title

Once an applicant determines that his or her loved one’s estate meets these requirements, the applicant submits the required documentation to the court. Although the process is relatively straightforward, we recommend having a Houston estate planning attorney look over the paperwork to make sure everything is procedurally correct before submitting. Once the court receives and approves the will, the court will post notice for ten days, advising the public that it will be holding a hearing on the decedent’s estate.

Top Mistakes to Avoid During Texas Probate Administration

Published on: November 7, 2024 | By David W. Miller

Probate is a pain for most involved parties. It entails court filings, hearings, and fees, and it can take longer than many people want to wait. At the same time, probate is a necessary hurdle that allows beneficiaries to access the assets that their loved one left behind. Sometimes, though, estate executors can unintentionally prolong the probate process. On today’s blog, we cover a few basic mistakes that you should avoid in order to keep probate administration running as smoothly as possible.

Mistake # Failure to Keep Up with Deadlines

The first and most important tip for probate that we offer for probate administration is to write down key deadlines and avoid missing them. In Texas, estate executors have four years from the testator’s death to file his or her will with the probate court. If you begin the process four years and one day after a loved one’s death, the court will be unlikely to accept the estate plan for filing. Even after probate begins, there are important filing deadlines that you must keep in mind in order to ensure you comply with the probate court’s orders.

Mistake #2: Failure to Secure the Decedent’s Assets

Once a testator dies, the estate executor’s job is to quickly and efficiently secure all of that person’s assets. These assets could include bank accounts, investment accounts, stocks, real property, or even sentimental items in the individual’s home. No matter the kind of property, the executor’s job is to make sure the assets are safe from third parties. Failing to property secure assets could lead to confusion down the road when money or property is not where the testator originally left it. This could, in turn, significantly delay or confuse the probate process.

What is a Revocable Living Trust? Should You Have One?

Published on: September 7, 2024 | By Thomas W. McCulloch

The estate planning process in Texas offers a variety of tools for those looking to avoid probate. One such tool that we encounter often in our practice is the revocable living trust. On today’s blog, we cover the basics of the revocable living trust as well as a couple of signs that might indicate a revocable living trust might be right for you.

The Revocable Living Trust

A revocable living trust is a trust that you make 1) during your lifetime and is 2) revocable (meaning you can revoke, amend, or change it at any point during your lifetime). This trust is a vehicle you use to hold title to other assets. For example, your house or your brokerage account might be contained in a revocable living trust. This trust helps you control what happens to your assets when you pass, and it helps your loved ones avoid probate when administering your estate plan down the line.

Why It’s Important to Learn About Probate Before Filing

Published on: August 8, 2024 | By Thomas W. McCulloch

The reality is that no one wants to find themselves in probate court. Probate courts evaluate a decedent’s will and decides whether the will is valid before approving the distribution of the decedent’s assets. If you are planning on filing in probate court, it is wise to take some time to first understand how the court works and what you need to do. By learning about probate court before filing, you can save yourself a major headache down the road.

Reason 1: There Are Several Texas Probate Courts

The first reason to learn about probate before filing is that there is more than one probate court. If you file in the incorrect court, the court could determine it does not have authority to hear your claim. You will then have to re-file in another court. To save time and money, figure out ahead of time which of the four Texas probate courts you should use. In general, if the decedent was a Texas resident, the county where he or she died will be the county where you should file for probate.

Reason 2: Probate Costs Money and Time

It can be costly to go through probate. Filing fees and attorney’s fees can take a toll on a family, and it is important to look into these fees ahead of time so that you can plan accordingly. Probate attorneys are required in most probate cases in Texas, and finding the right attorney can be a process. You should always make sure your chosen attorney is upfront about their fees before you decide to retain them.
The time that probate takes can also be frustrating for beneficiaries that are anxious to receive the assets a decedent left behind. Probate can take anywhere from a few months to over a year. By going into probate equipped with this knowledge, you can plan your finances accordingly.

Probate Avoidance Techniques in Texas

Published on: May 31, 2024 | By Thomas W. McCulloch

Probate is the process through which a court determines the validity of a person’s last will and testament. Once the court determines that a decedent’s will is valid and enforceable, the court approves the process of passing the person’s assets to his or her chosen beneficiaries. Probate can take anywhere from several months to a year (or, in some cases, it can take longer). Probate can also end up costing families significant resources, chipping away at the estate that the decedent left behind.

There is, however, good news: with the right strategies in place, you and your loved ones can avoid probate altogether. Today’s blog covers a few basic probate avoidance techniques in Texas. To find out if these strategies might work for you, contact a Houston estate planning attorney you trust.

Trusts

The first, and perhaps most commonly used, probate avoidance technique is the formation of a trust. By definition, a trust is a legal arrangement where a person gives an appointed trustee the right to hold assets on his or her behalf. The creator of the trust, or the trustor, communicates to the trustee how the money should be used. Trusts can shield assets from outside influences like debtors, creditors, and probate.

How to Effectively–and Legally–Bypass Probate in Texas

Published on: April 30, 2024 | By David W. Miller

In Texas, there are several basic strategies you can implement to bypass probate. If you have been part of probate proceedings following a loved one’s death, you know that probate can be difficult to navigate and frustrating to deal with when you have other things on your mind. The process can also take time and resources that unnecessarily delay the process of passing assets from the descendent to his or her beneficiaries. Today, we cover some probate avoidance strategies that you can implement to bypass probate with your own assets.

Create a Revocable Living Trust

One basic tool we often recommend to our clients is the revocable living trust. This tool allows you to put assets in a trust, essentially sealing the money from outside influences such as creditors, debtors, and probate. While creating a revocable living trust, the grantor often names him or herself as the trustee, therefore allowing him or herself to maintain control of the assets.

Once the grantor dies, however, control passes to a second trustee, often named in the estate planning documents. The next trustee then distributes assets however the grantor asked for them to be distributed.

What Assets Goes Through Probate in Texas?

Published on: February 24, 2024 | By Thomas W. McCulloch

Probate is the legal process through which a court reviews a decedent’s will or estate planning documents and accepts the documents as valid and enforceable. In Texas, there are certain assets that must go through probate. There are, however, ways around probate, which many clients are interested in, given the cost and time that probate requires. On today’s blog, we review which assets must go through probate in Texas, but as always, it is best to speak with a Houston estate planning attorney if you have more detailed questions about the process.

Put simply, your estate goes through probate in Texas. The “estate” includes: financial accounts in your name, real estate, notes (i.e. money that someone owes you), personal property, LLC interest (companies you own or operate), lawsuits (where you might have a chance of a recovery), and inheritance. Assets in your estate will be subject to probate, no matter how bi or small those assets are.

Many individuals are interested in avoiding probate, and there are several strategies we recommend with this goal in mind. You can, for example, organize your assets in a way that excludes them from probate. One such method of organization is forming a trust – the money in the trust will be protected from probate. You could also open a transfer-on-death account. This is essentially a bank account that tells the bank to automatically transfer money to a beneficiary upon your death, therefore avoiding the probate courts.