Probate Attorney in Amarillo

TEXAS PROBATE PROCEDURES – INDEPENDENT ADMINISTRATION

You have four (4) years after someone dies in Texas as to offer a Will for probate.  If you wait more than four (4) years, you cannot offer the Will for probate and you will instead have to work with an attorney to determine what else, if anything, can be done in order to see that the wishes of the person who died are followed.  If someone dies without a Will in Texas, then you will have to do an “administration” instead of a probate.  “Probate” is a process that involves handling an estate when a written, valid Last Will and Testament is left by the person who died.

Texas allows for independent administration of a person’s estate, so long as the Will specifically provides for it.  All of the Wills that I prepare provide for independent administration.  What “independent” administration means is that you only have to go to court one time, to become the Independent Executor.  After that, you are able to operate outside the court’s supervision.  This is much less time consuming and expensive than when you have to administer an estate under the supervision of the Court.

When you are appointed by a court to be an Independent Executor, you take on obligations of trust and responsibility.  You have a fiduciary duty to act in the best interest of the beneficiaries of the Will and cannot act in your own best interests.  You should seek the advice of your attorney before you undertake any action with regard to the estate that you have been named the independent executor of.

Related Article: Who can Serve as an Executor or Executrix of an Estate in Texas?

Just because you are named as an heir or Independent Executor in a Last Will and Testament does not mean that you “automatically” inherit or that you are “automatically” empowered to change title to estate assets.  You have to hire an attorney and go to court in order to become qualified to manage the estate and change title of the estate assets to the beneficiaries listed in the Will.  The person who has died is called “the Decedent” and if the Decedent identified you as the person that they wished to handle their estate, you will likely be approved by the Court.  However, the Court has the power to appoint anyone that they choose to be an Independent Executor, if they don’t like the person who was selected for the job.

The general steps that you will go through during the probate process include the following:

1.) Administering the Estate

This includes identifying and gathering the assets owned by the person who died (the “decedent”); paying the Decedent’s bills and debts; and then distributing the remaining assets to the heirs named in the Will.

Related Article: Where to File for Probate in Texas?

2.) Independent Executor’s Qualifications

In order to serve as an Independent Executor in Texas, you have to first “qualify”.  You cannot be a convicted felon or have a bad reputation in the community.  You cannot owe money to the Decedent.  You should also be a resident of Texas (having lived her for at least six (6) months).  However, you can be a non-resident serving as an Independent Executor if you can find someone who is a resident of Texas who is willing to accept the paperwork if the estate is sued.

Once you meet the qualifications to serve as Independent Executor, you must go to court and take the oath of the office.  That is something that your attorney will prepare & you will sign the oath in the presence of an officer of the court.  If you don’t sign the oath at the hearing, you must do it within twenty (20) days from the date that the Court signed the order that appointed you to serve as the Independent Executor.

Most courts do not require an Independent Executor to post a bond.  (A bond is a form of an insurance policy that insures you will fulfill all of the responsibilities of an Independent Executor under the Will.)  If the Court or the Will requires you to post bond (which would be unusual in Texas), then you have to acquire a bond within twenty (20) days of the date that the judge appoints you to serve as Independent Executor.  The bond would have to be executed by a company or corporate surety that is authorized to make bonds in Texas and the amount of the bond would have to be the amount set out in the order that requires the bond to be posted.

3.) Obtaining Letters Testamentary

There are many ways to do a probate in Texas (such as with a Small Estate Affidavit, as a Muniment of Title, etc.).  If there is any “work” to be done, then most often the probate is filed with a request for issuance of “Letters Testamentary”.  The Clerk of the Court will issue the Letters and the Letters can be given to people with whom you hare having to work, such as with an oil and gas firm that is going to have to change the name on the oil & gas production from the Decedent to the heirs.

You can get Letters Testamentary at any time after you have taken your oath and posted any required bond.  The legal effect of Letters Testamentary is to prove to third parties that you have the authority to deal with the affairs of the estate.  You may get additional Letters from the Clerk at any time, by paying a small fee for each Letter.

4.) Creditors’ Notices

You must give notice to all creditors of the Decedent after you have qualified to serve as Independent Executor.  You have thirty (30) days to give this notice by publishing it in a newspaper in the County where the Decedent lived or died.  Your lawyer will see to the publication of the notice and will file with the court a “publisher’s affidavit”, proving that the notice was properly published.

You have sixty (60) days after you have been qualified to serve as Independent Executor to mail a written notice to secured creditors by certified mail, return receipt requested.  This notice must be sent to each and every creditor of the estate who is “secured”.  Who is a “secured creditor”?  That includes anyone who has a lien on property, such as a mortgage on a house or a loan on a car.   The proof that this was done (the green card that is returned from the creditor, showing that they received the notice, attached to a copy of the written notice itself) must be filed with the Clerk of the court.

If you want to send written notices to other, unsecured creditors (such as to credit card companies), you may do so.  If you know that the estate is insolvent (i.e., it owes more than the estate is worth), you may want to notify unsecured creditors about that fact when you give them notice of the estate.

As Independent Executor, you have no personal responsibility to pay the Decedent’s bills.   If there is not enough money in the estate to pay all of the Decedent’s bills, then the bills will simply go unpaid.  Secured creditors will foreclose on their liens or deeds of trust and will file a claim with the probate court if there is a shortfall after they have sold the asset that they have reacquired.  The debt is an obligation of the estate and neither you nor the heirs are personally required to pay any claims of creditors.  However, the heirs only inherit what is left after all valid claims are paid.

5.) Required Notices to Each Beneficiary

Within sixty (60) days of the date that the Will is probated, you must give notice to every beneficiary named in the Will if the Decedent died on or after September 1, 2007.  What the notice must contain depends on the date of the Decedent’s death.

If the decedent died before September 1, 2011, then

  1. The notices must be sent to all beneficiaries named in the Will, no matter how much the bequest amounts to.
  2. Each notice must include a copy of the Will that was admitted to probate, along with the Order that admitted the Will to probate.

If the decedent died on or after September 1, 2011, then

  1. You do not have to send notice to the following beneficiaries:

1.) Any beneficiary who has already received all specific bequests given to them in the Will within sixty (60) days after the Will was admitted to probate; and

2.) Any beneficiary whose total aggregate gifts in the Will are valued as less than $2,000.00.

  1. Each notice must include either (1.) a copy of the Will admitted to probate and a copy of the order admitting the Will to probate; or (2.) a summary of the gifts given to the beneficiary under the Will, along with the name of the Court that admitted the will to probate, the docket number for the estate, the date that the Will was admitted to probate, and, if different, the date that the court appointed the Independent Executor.

Other requirements apply to other beneficiaries.  You do not have to give written notice to beneficiaries who:

  1. Made an appearance in the probate proceeding before the Will was admitted to probate (e.g., someone who tried to be named the Independent Executor or who launched some form of Will protest) or
  2. Beneficiaries who waived the right to notice in a waiver that meets the statutory requirements for a waiver and who file that with the Court.  The specific requirements for a waiver vary, depending on the date of the Decedent’s death.  Your attorney will have to tell you what the waiver must say.

You must send all notices to the beneficiaries by certified mail, return receipt requested.  Within ninety (90) days, you have to file an Affidavit or Certificate with the Court that confirms that notice was given or explains why it was not given.  The Texas Estates Code (formerly, the “Probate Code”) sets out what must be included in your sworn Affidavit or the Attorney’s Certificate.

Most courts require you to file the Affidavit or Certificate separately from any other document that you are filing in the case.  If you do combine the Affidavit or Certificate with some other filing (such as the Inventory or the Affidavit in Lieu of Inventory), the title to the document you file must include both the title, “Notice to Beneficiaries,” as well as the title of the document you are combining it with, such as “Estate Inventory and Appraisement”.  This is because the Court wants to be able to easily see if you have complied with your statutory responsibility of giving notice to the beneficiaries.

Why do you have to provide notice to beneficiaries?  It is because there was a real problem in Texas with some of the beneficiaries not agreeing with the Decedent’s decision to leave money to a charity, church, or other organization (or even another person).  They would just probate the Will and never tell the other person or organization that they were entitled to a share of the estate and there was no effective way for the person or charity to find out that they were not getting what they would otherwise be entitled to receive under a Will that was probated.  The Texas legislature amended the law to require notice be given to beneficiaries, so that if the Independent Executor or other beneficiaries don’t want to do what the Will requires, the affected beneficiary(ies) can become involved and fight for what they are entitled to receive.

6.) Filing an Inventory or Affidavit in Lieu of an Inventory

Within ninety (90) days of being appointed the Independent Executor, you must either file a sworn Inventory and Appraisement, or an Affidavit in Lieu of an Inventory with the Clerk of the Court.

If the Decedent died before September 1, 2011, you must file an Inventory and Appraisement.  The Inventory must contain a complete inventory of the estate, with an attached list of claims owed to the estate.  The Inventory does not include debts owed by the estate.  I do not know why this is the case in Texas, and it has always driven me totally crazy. – An estate may appear solvent, based upon the Inventory, but actually be insolvent, based upon the total debt owed by the Decedent.  It has always seemed better to me to have an accurate accounting of the estate, including debt, but the law does not allow you to include the debt owed by the estate on the Inventory.  This results in fights with creditors who are misled by the Inventory and Appraisement, which appears to show a “solvent” estate, but in fact the estate is “insolvent”, due to all the debt that is owed by the estate.

In identifying property that is a part of a married Decedent’s estate, you need to be able to distinguish between separate property and community property.  In general, a person’s separate property is property that they owned prior to marriage or property that they have received as a gift or through an inheritance after they married.  If they have property that is owned along with their spouse (such as a home purchased during the marriage), then they only own one-half (1/2) of the property and the Inventory should just list their share of the marital residence as being owned by them (that being one-half the total value of the home).  Your attorney can help you determine whether property is separate or community property, based upon applicable Texas law.

The Inventory has to be “verified” by sworn affidavit. – That means that you have to swear to a notary public that the Inventory is a true and correct summary of all property and assets that are known to exist.  It has to include all real estate located within the State of Texas and include a list of all personal property, whether owned in Texas or elsewhere.  If the Decedent owned real property outside the State of Texas, you are likely going to have to do another probate in the state where that real property is located.

Most courts do not require appraisers to value estates.  The only time that I seek out appraisers is when I think that the estate is close to being large enough that it is possible for it to be a taxable estate.  (In 2014, the maximum amount that an estate can be exempt from federal estate tax is $5,340,000.00.  If the estate exceeds that amount, then you need to seek a specialist in order to minimize the impact of estate taxes.)  For most “mom and pop” probates, estate taxes are not a concern and therefore there is not a need for any appraisers and the court will not require appraisers to be appointed.  You can use “garage sale estimates” for most belongings, Kelly Blue Book for vehicle values, and local tax appraisals for most real property.

If the Decedent died on or after September 1, 2011, you can either file an Inventory and Appraisement, or an Affidavit in Lieu of the Inventory.  You are allowed to file the Affidavit in Lieu of Inventory if the Decedent left no unpaid debts, except for debts that are secured (so, no credit card debt), no estate or property taxes are owed, and/or no administration expenses existing at the time the Inventory is due, including any extensions.

If you are eligible to file an Affidavit in Lieu of Inventory and choose to do so, the Affidavit must contain the following information:

a.) It must clearly state that all debts, except for secured debt, taxes and administration expenses have been paid.

b.) It must state that all beneficiaries have been given a verified (sworn) full and detailed inventory of the entire Decedent’s estate.

c.) The Affidavit must be filed with the Clerk of the Court within ninety (90) days of the date that the Will was admitted to probate.

7.) Estate Taxes

Executors must file a U.S. Estate Tax Return, Form 706, if the estate is large enough to require a tax return to be filed.  The taxable limit is re-valued every year and you will need to speak with an attorney to determine whether or not a taxable return is required.  (In 2014, the gross taxable limit is $5,340,000.00, so only an estate worth more than that amount would have to file an estate tax return.)  The tax return has to be filed with the federal government nine (9) months after the date of the Decedent’s death, unless an extension is granted.  All taxes must be paid before you can close an estate.

In general, the tax is the obligation of the estate, not of the Independent Executor or the heirs.  The heirs only inherit what is left after all obligations, including any estate tax owed, are paid.

8.) Independent Executor’s Powers and Obligations:

Once the court appoints you as the Independent Executor, you have the duty to take possession of all property that belonged to the Decedent.  That includes money in the bank, assets in a safe deposit box, and other similar items.  Any cash that you locate must be maintained in a bank account separate from your own personal funds.  You should never mix together estate assets with your own personal assets (except when you are the sole beneficiary of the estate).

You owe a duty of due diligence in collecting all claims and debts owed to the estate.  If necessary, you may employ an attorney to sue to have property returned to the estate if it has been wrongfully taken.  For instance, I had a client a few years ago who had to sue the Decedent’s mother who took his car and “sold” it to someone else, even though she could not deliver title to the buyer.  We had to sue to get the car returned to the estate.

In general, you have all of the powers to administer the estate as are set out in the Will itself and in the Texas Estates Code.  You can operate independently of the court if you are named an “Independent Executor”.  That means that you can sell property, transfer stock ownership, or do anything that needs to be done under the Will, without specific court approval.  In fact, most Texas probate courts will not ratify or approve any Independent Executor’s actions, including the granting of a deed to a purchaser or a beneficiary.

9.) Claims Against the Estate

Claims of creditors against the estate may be present to you at any time while the estate remains open.  You may allow any claim that you believe to be a valid debt owed by the estate.  It has to be “authenticated” in some way, so that you can determine that it is not a “made-up” debt, but is instead a debt actually owed by the Decedent.  You cannot pay a debt that is barred by the applicable statute of limitations.  In general, there is a four-year statute of limitations in Texas.  So, if someone presents you with a claim that is more than four (4) years old, you likely should deny it as a proper claim.  There are rules that might “revive” an expired debt, however, so you should consult with your attorney before deciding whether or not a debt is valid.

Once a claim is presented to you, you must respond by either allowing the claim (and paying it) or denying it.  In the event that you deny a claim, the creditor will have to file suit against the estate in order to secure payment of the claim.  They will have to prove to the court’s satisfaction that their claim is valid and not barred by the statute of limitations.

10.) Finally, Closing the Estate

You are ready to close the Estate once you have (1.) identified and collected all of the assets of the estate; (2.) the Inventory and Appraisement has been presented to the Court and approved; (3.) you have given proper notice to all the heirs; (4.) you have paid all valid debts and taxes; and (5.) you have determined who is entitled to receive the remaining property.

Do not begin the procedure to close the estate until you have sought the advice of an attorney.  Once you have closed the estate, you should then deliver the assets of the estate to the beneficiaries who are entitled to receive the property under the Will.  This final distribution concludes your responsibilities as the Independent Executor of the estate.