One of the great misconceptions as it relates to estate planning and end-of-life planning generally is that you need to have a will to have your property distributed upon your death. That's not to say that having a will isn't important. I'm here to tell you that having a will is important and you should have a will if you are over the age of 18. Wills aren't for rich people, poor people, or in-between people. Wills are for every adult. You can draft a will quickly and easily with the assistance of the Law Office of Bryan Fagan. Don't believe me? Call our office today for a free-of-charge consultation and we can walk you through your situation.
You do not need a will for your property to be divided up between your relatives upon your passing. Note that if you do not want your relatives to inherit your property then this is not an ideal spot for you to be in. If you want friends, charities, or your church to be able to get your money after you pass on then you need to have a will. If you pass away without a will and want your church to end up with your money, then you will be out of luck. As you will find out, the state of Texas’ laws on intestate distribution of property would be applied by a probate court judge and your church or charity of choice would be out of luck. Your closest family members, if not the State of Texas, would stand to inherit the bulk of your estate.
What is probate?
When you pass away, the property that you own is a part of your estate. Property can mean real property your home, vacation home, raw land, or commercial property. Cash, personal property, bank accounts, investments, cryptocurrency, and the like are also part of your estate. If you are married, then much of the property that you own will be together with your spouse as part of your community estate. However, you also likely own some property that is separately owned from before your marriage. Your separate property stands to be divided upon your death. Much of your community property would be divided between your spouse and your children when you pass away.
When an estate is probated that means a probate court will legally recognize that you have passed away and will give permission for your estate to be administered and distributed either according to the terms of a will, trust, or along the lines of the Texas Estates Code. If found to be valid a will or trust would supersede what the Texas Estates Code has to say regarding property division. Meaning that you could divide up property in your will however you would like- it does not matter what the Texas Estates Code has to say about it. If you do not have a will then the court would distribute the property as best, it can along the lines of what the Texas Estates Code would suggest.
The bottom line is that probate seeks to transfer the property of a dead person, in this example you are that dead person, and into the names of living people- family, friends, charities, churches, etc. The devil, as in many situations, is in the details when it comes to this subject, however. You will need to make sure that your situation is airtight as far as end-of-life planning. No, I don’t mean that you need to constantly review your estate plan to make sure every “I” is dotted, and every “t” is crossed. What I mean is that you need to be sure that what you have for estate planning right now is that you are comfortable with when you pass away. As we talk about frequently on this blog, the trouble with deciding this is that you do not know when you are going to pass away.
If I gave you a ten-year deadline to get your affairs in order, you probably could manage to get around to creating or updating your will. You would know that on January 9, 2033, you would need to have your will up and ready to go. However, you don’t get that kind of advance notice when it comes to your will in real life. You need to be ready right now for an end-of-life situation. This is not me trying to be dramatic or anything like that. This is the reality of the situation staring us right in the face. The will or lack of a will needs to be what you want it to be always. Is it realistic for you to look at your will every week and make sure it still comports with your wishes? No. Very few people have the time, desire, or need to do that. All you need to do is make sure that your will is well drafted when you create it. Then, as major life events occur- marriage, deaths in the family, etc.- you can then reassess your will to make sure that it is in line with what you want and where you want your property to go at your passing.
What to do when a family member dies without a will
This happens all the time- a relative passes away and you have no idea what to do. This isn't the type of thing that you take a class for in high school or college. It may be your first time having a loved one who is close to you pass away so it can be difficult to consider that one. There is sure to be a lot of grief, stress, and anxiety in the home when a loved one passes away. Not knowing exactly how to proceed through all of this makes life even more difficult. This blog post is a great resource to provide you with some basic, general knowledge about how you may need to proceed if someone close to you dies and he or she does not have a will (that you know of). Here are the steps that you or the person named as the administrator of the estate by a court may need to follow.
Depending upon the size of the person's estate (how much property he or she owned at the time of their death) the estate may need to be probated. Not only is the size of the estate relevant to this discussion but so too is the kind of property that is contained in the estate. Some types of property can be passed on after a person's death without the need for probate. If the item or property already has an assigned beneficiary, then there is no need for probate. You, a spouse, or another person with authority to act on the person’s behalf would need to provide proof of death to gain access to the life insurance proceeds, investment, or bank account that has a named beneficiary attached to it.
Life insurance is a great example of a kind of property that does not need to go through probate. Life insurance likely has a named beneficiary who can contact the life insurance company with the policy or account information to notify the company that the policyholder has passed away. That person would need to provide proof of death, usually in the form of a death certificate, to gain access to the funds contained in the life insurance policy. There are two different types of life insurance policies- whole life and term life insurance.
Bank accounts are another type of property or asset that can pass without having to do so through probate. This can be done by having a payable-on-death form associated with the bank account. You can take a death certificate to the bank which holds the account and access the funds contained therein as long as you are the person named as the payable-on-death beneficiary of the account. Depending upon the financial institution in question you may need to bring additional information when you plan on providing the death certificate, however.
Does the deceased person have a 401K, IRA, or another retirement account? If so, then these are accounts that do not have to go through probate to be distributed upon the death of an individual. All you would need to know is the beneficiary information on each account for that person to contact the financial institution to line up how to access the funds. Like the other non-probate assets, you would likely need a death certificate to access these funds if you are named as the beneficiary.
Where is probate filed for?
If you do need to file for probate if a loved one passes away, then you would do so at the county clerk’s office for the county in which the deceased person lived. Depending upon the size of the county in which he or she lived a county court may have jurisdiction or there may be a probate court that is designated to hear these types of cases. There will likely be filing fees associated with the case and more costs to have the case administered and finalized by the court moving forward.
When determining the heirs to a particular person's estate you will need to determine what property owned by the person was separate property and what property was community property. Other important questions to answer would be whether the person was married, had children, and if those children were also the children of the deceased individual's spouse.
Why should you want to die with a will?
You probably have at least a general idea of how you would like your property to be handled when you pass away. It can be undesirable, therefore, to be in a position where you die without a will since those plans likely cannot be followed if you do pass and have no will in place. You risk not having the property you own inherited in the manner that you choose if you do not have a will in place. You may want to make sure that your spouse inherits all of your property- community property or not when you pass away. You would prefer that your spouse be able to divide up the property as he or she sees fit rather than having the laws of Texas dictate exactly how your property will be divided. If you were to die without a will then there is no way of guaranteeing that this can happen. Your spouse may only end up inheriting their one-half share of the community property if you are also survived by children who are not also children of your surviving spouse.
Additionally, your spouse would only stand to inherit 1/3 of your separate property and a life interest in 1/3 of any separate real property. This is a tricky and touchy situation where your current spouse may own property alongside your children from a prior marriage. It would be inevitable that conflict and acrimony would arise out of an emotional and contested situation involving a sizeable estate, hurt feelings, and grief over the loss of a loved one. All of this could have been avoided had you died with a will and discussed these matters with your loved ones before your passing.
As we have talked about in this blog post already, if the people that are most special to you are not your immediate family members, then those people will be left in the cold when it comes to inheriting property in a probate case when you die without a will. If you are unmarried and die without a will then the people that you live with such as roommates or close friends will not be able to inherit any property from you. We see this happen frequently when a close friend has been the one caring for you at the end of your life. Dying without a will means that that close friend would not be able to inherit any property from you even if that was your desire all along. You would need to specifically leave property to that friend in your will for that to take place. Otherwise, it would be your family members who would stand to inherit your property.
In Texas, a parent does not have to leave property to their children. However, if you die without a will then the court will leave property to your children whether that was your desire in the first place. Again, the lesson that we need to take away from this situation is that your property will be inherited by your children if you have any when you pass away. This may not be what you want to see occur. If it is not what you want, then you certainly need to work to have a will that reflects your actual wishes rather than relying upon the Texas estates code and their laws for the intestate distribution of property.
There are also risks associated with unnecessary costs and delays if you were to pass away without a will. Your assets can be tied up in the probate process for an indefinite period which almost certainly will negatively impact the people in your life. Going through probate not only can take money but also takes time. Determining your heirs can be complex depending upon your specific circumstances. The court will likely have to appoint an administrator who would be responsible for settling your estate and distributing property as well as paying off creditors. Not only that, but the administrator would also have to locate heirs, keep track of all your assets and then distribute property to heirs after creditors are paid.
The probate court will resolve disputes between parties if an estate cannot be settled civilly. Probate courts especially in larger counties are oftentimes very busy which means that it can take months or even years to settle an estate. While this is going on legal fees and other court costs can add up quickly. It is not uncommon for the value of an estate to be severely diminished or even depleted if the court proceeding lasts long enough. Having a will can not only save time and money but can help your potential beneficiaries. If there is someone in your life that you know could use the money you are leaving to him or her immediately then doing so through a will is a much better plan than assuming the money will get to him or her through the probate process. All of these are relevant considerations for you to think about and act on as part of your estate planning.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
if you have any questions about the material contained in today's blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas estate planning as well as about how your family’s circumstances may be impacted by the filing of a probate case.