If you’ve ever experienced the death of a loved one, particularly the death of an adult who owned property, you may have been through the probate process. On the other hand, if you haven’t served as an Executor, you may yet have questions about this oft-maligned legal process that most want to avoid, and some avoid even when they shouldn’t.
Probate is the process through which a decedent’s (the person who died) heirs or beneficiaries acquire good title to whatever property has been left to them under the will, or in the case of someone who died without a will, under the intestacy laws.
The Texas 3 Step
In its most basic form, probate happens like this:
- The Probate Court (or possibly some other type of court, depending on the county) appoints someone to serve as the Executor or Administrator of the estate;
- The Executor or Administrator gathers and accounts for the decedent’s assets and pays any debts that must be paid (including estate and income taxes);
- The Executor or Administrator distributes the remaining property to the beneficiaries or heirs.
Now, there are many, many details that must happen during each of the above steps. The idea here is just to give you an understanding of the basic framework.
Should I Avoid Probate?
That depends (sorry, couldn’t resist). If we’re talking about the estate of a deceased parent, spouse, or loved one who owned property and either had a will or maybe didn’t have a will, but owned property in their own name, then no. You do not want to avoid, delay, put off, procrastinate, or blow off going through probate. People do this, but it leads to bad results.
First, until a representative is appointed by the court to deal with the property, no one has any authority to do anything with regard to Dad’s stuff.
Second, there are deadlines to consider. If you wait too long, you won’t be able to do the normal process and your legal fees will necessarily be higher. Third, if there are other beneficiaries, you could subject yourself to liability for any reduction in their ultimate share, if the reduction is because of your delay.
On the other hand, if we’re talking about the estate of someone who is still alive and well, it is entirely possible to take steps to avoid probate without any adverse consequences. Why would anyone want to?
First, privacy. Probate creates a public record of your property in the form of an inventory and appraisement. That means a list of everything you own and how much it’s all worth will be filed in the public, searchable court records. It also creates a public record of who gets what. If there is any dispute or contest, guess what? That is a matter of public record, too.
Second, strategies that are often used to avoid probate are also fairly effective for reducing the likelihood of a will contest between your beneficiaries, all of whom appear to now love each other and live in perfect harmony but may one day find any number of things to litigate, given the opportunity. It happens. Sometimes it happens for no other apparent reason than Mom and Dad gave the kids a forum for the fight.
How Do I Avoid Probate?
There are lots of ways to avoid probate, each with its own pros, cons, and pitfalls. Here is a short, non-exhaustive list:
- Don’t own your home. Instead, convey it to a trust.
- Keep financial assets in beneficiary designated or payable/transfer on death (POD/TOD) accounts and hope the intended beneficiary survives you.
- Keep business assets in a business entity. such as an LLC, partnership, or corporation.
- Transfer your business entity interest or shares to a trust.
- Own property as a joint tenant with right of survivorship with someone else.
- Establish a living trust and convey most or all of your assets to yourself as trustee.
Some are more effective than others. None is perfect. Some involve greater risks than others. Your best course, if you really want to explore how best to avoid probate is to seek the counsel of an attorney who practices in this area.
Probate is a fact of life unless you proactively take steps to avoid it. If you stand to inherit or are named as Executor for someone who has died recently, don’t put it off. Speak to an attorney sooner rather than later. If you would like to speak with us about your case, call our offices at (713) 489-7101.
*This article discusses the probate process as it exists in Texas, and is not to be relied upon as legal advice. Concepts and procedures may differ in your state.