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Many people might not be familiar with the Texas “120-hour rule” in estate planning. Though it plays a crucial role, its interpretation can be quite vague. In this blog post from the Law Office of Bryan Fagan, we’ll explore the ins and outs of the Texas 120-hour rule and its impact on your family’s estate planning. By the end of this article, you’ll have a clear understanding of this rule, helping you make well-informed decisions for your family’s future.
It is not easy to handle a legal matter after a loved one passes away. There are already so many considerations to keep in mind that it can feel overwhelming to have the responsibility of caring for your family, attending the funeral/burial of your loved one, and thinking about your loved one’s estate. It can even seem crass to be concerned with financial things when your loved one has just recently passed, and your family is still grieving.
With that said, knowing how to proceed can help you in multiple ways. You can be more confident about how to proceed if you are in charge of a loved one’s estate. You would also be able to make changes to your estate plan, if necessary, once you learn some essential pieces of information about the Texas 120-hour rule. If you have never planned your estate previously this could also be the motivation that you need to get moving.
Consequences of dying without a will
When you or a loved one dies without a will it puts you and your family in a tough spot. Firstly, you lose any autonomy you or your spouse may have retained after your passing. A will allows the person who created the will to decide where his or her property ends up after he or she dies. The testator, the person who creates the will, will name an executor to ensure that the property is disposed of according to their wishes. The testator can name as a beneficiary essentially whomever he or she wants as a recipient of the property. It can be a close relative, distant relative, friend, co-worker, church, or charity who receives property.
Dying without a will is a much more complicated situation for your family. Say you were to die without a will. Instead of the executor being able to pick up the will and read through who gets what in terms of your property, your estate must now go through the probate process. Probate allows a judge to make sure that creditors are first paid out of the corpus (body) of your estate before any person receives property.
If you pass away without a will, the laws of intestacy will determine your heirs, defining the individuals eligible to inherit property from you. For most people, your heirs will include a spouse, children, parents, or other close relatives. The judge follows the law on intestate distribution (distribution of property for a person who dies without a will) and that is that. Your estate and your family have little say so in the process. Not exactly what most people have in mind for their property after they pass away.
Ensure your legacy: why you need a will
Without a doubt, you or a loved one should die with a will rather than die without one. This means that you need to take matters into your own hands if you have not completed your will. You may not have all the time in the world to complete the necessary steps to build a wall, as tomorrow is not guaranteed. Therefore, use the time allotted to you and then be sure to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys can walk with you down the uncertain paths that come with drafting a will. If you are unsure about what to do but know where you need to go then contact our office. We can help you develop a plan, educate you on the law, and then allow you to make decisions that are best for you and the people in your life.
On top of that, our team of attorneys is patient and understanding about the situation that you are in. Whether you are trying to create a will for yourself or need to sort through matters related to a loved one’s passing, we are here for you. We prioritize efficiency while respecting our clients’ comfort levels and readiness. Before making any decisions, we ensure thorough education and understanding. Our goal is to address your concerns and complete tasks effectively, recognizing that comfort levels vary in estate planning matters.
What does dying without a will mean on a practical level?
Dying without an estate plan means that your estate will go through the state of Texas. A probate court judge will apply the laws of intestate succession to your case. Instead of retaining autonomy over your property through your estate, the laws of the State of Texas will govern. If you die without any close living relatives, the distribution of your property will involve allocating it among your living family members, including your spouse, siblings, children, or more distant relatives. As a last resort, your property would go to the state of Texas if no relatives can be located.
Bear in mind that we just provided you with a very general overview of the intestate distribution of property. The actual mechanics of determining heirs and then distributing property are typically more complicated than this. First, the probate court judge will ascertain your marital status and whether you have children. If you were unmarried and had no living children at the time of your death, the court will undertake efforts to locate your heirs among extended family members. This can take some time especially if distant relatives of yours live a great distance from Texas.
Understanding property inheritance without a will in Texas
Another complex part of this discussion relates to distinguishing between separate and real property. Separate property is any property that you owned before getting married to your current spouse. Community property is, for the most part, property that you purchased during your current marriage. There are exceptions to this rule but in general, this is what community property is in Texas. If you were married at the time of your passing and have no children, then your spouse gets all your property if you die without a will. If you had children, then your spouse gets all of your community property and then 1/3 of your separate property. The rest of the property owned by you would go to your children. If you die with children but with no spouse then your children would inherit all of your estate, divided equally among them.
As we talked about earlier, dying without a spouse or children means that extended family enters the picture and then inherits property from you. Parents, grandparents, siblings, uncles, aunts, and cousins can all inherit property from you if you die without a will and also have no spouse or children. An interesting subplot is that children who believe that they are your child but are not legally yours can argue this point before a probate court. This could happen if a child was born to a woman that you were not married to and then never acknowledged paternity. Your putative child would need to present evidence that he or she is your child.
What assets will not be passed down via intestate succession laws?
Intestate succession can pass down property if it could have been done through a will. Here are some types of property, on the other hand, which will not need to go through the intestate distribution process. If you own real property with another person who owns a right of survivorship, then this asset does not go through intestate distribution. An example of this is real estate that you own with a relative, sibling, or business partner. Intestate distribution doesn’t pass down a family home. If married, the spouse inherits a life estate in the property.
Your life insurance- whole, life, universal- does not have to go through probate whether you do or do not have a will. There are many reasons why you may want to consider purchasing life insurance. You may see life insurance as a type of investment into the long-term future of a child or grandchild. Life insurance can serve as a cost-effective alternative to investments, especially if you lack disposable income for investment purchases. The main downside to this idea is that you must die for your beneficiary to get their hands on the money.
Maximizing retirement funds: benefits and planning
Retirement funds like 401Ks and IRAs are terrific investment vehicles to become involved with on multiple fronts. First, depending on the type of retirement account that you become involved with you can invest with tax-free growth through Roth options. This has to do with your income primarily, and there are even “backdoor Roth” options for you to invest in a Roth IRA even if your income is above the threshold limit. However, you should speak with an experienced financial planner about this before committing your money to any investment.
On top of that, IRAs and 401Ks are like life insurance policies in that they do not have to go through the probate process. You can name a beneficiary within your retirement account so that your funds go to a certain person after you pass away. You may even be able to name secondary beneficiaries. Go online and look through the account that you have and there is likely a place to fill out your beneficiaries. If not, call your human resources manager if the account is a 401K or contact the brokerage firm for your IRA to see where to put your beneficiaries’ name(s). This can save a lot of hassle and position yourself well when it comes to not having to go through probate on these accounts.
Benefits of payable-on-death accounts
A simple method of saving is to have a bank account. Not because the interest rates are good on savings accounts necessarily but because it beats having your money in a coffee can buried in the backyard or keeping money under the box spring of your bed. Banks and credit unions also allow for you to have payable-on-death accounts which do exactly what you would think that they do in terms of paying another person upon your death the contents of your account.
Whoever you name as the payable-on-death beneficiary would only need to provide a copy of a death certificate to the bank or credit union to be able to gain access to those funds. If you are a spouse, for example, who may need money to pay bills or the mortgage after your spouse passes (or vice versa) it is a good idea to talk with the bank or credit union about what their requirements are to have a valid payable on death account. Being able to access the money in that account in a timely fashion is critical, as well, to be able to take full advantage of one of these payable-on-death accounts.
A bit more on the 120-hour rule
The 120-hour rule is not something that comes up all that often. Tragically, it often happens in accidents, such as if both you and your spouse are involved in a traffic accident. If one of you passes away in the accident itself and then the other passes away on the way to the hospital the 120-hour rule would apply. Had your spouse survived you by more than 120 hours then her estate would receive the traditional share of your property. If the 120-hour rule is not met, the property in your estate will be divided equally among your children or other heirs according to the intestacy laws of Texas.
Importance of wills and probate without one
This is all to say that having a will is the most important step that you can take in terms of your estate planning. Every adult should have a will- it’s that simple. If you are in a position where you need to settle an estate for a person who died without a will then you need to submit paperwork to the probate court for the county where he or she resided. The main document is an affidavit, which is a sworn statement under oath completed by the person. It outlines their assets and liabilities, family history, and the names of any known heirs. The heirs should sign the affidavit in front of two witnesses. A small estate’s affidavit can usually expedite the processing of estates under $50,000.
When you have a situation involving estates larger than $50,000 then you run into a situation where the process becomes more complex. Someone in the life of the deceased person will need to apply to the court to become the estate administrator. The spouse of the deceased would be a logical person but sometimes he or she may not be in an emotional position to deal with that responsibility. It is difficult, to say the least, to lose a spouse. Handing the complexities of a probate case at that point may be asking too much. As a result, sometimes a child or more extended family member fulfills this duty.
Probate process and estate distribution in Texas
The probate process for larger estates involves determining who that administrator will be and then figuring out heirs and creditor roles. Creditors of the deceased must be notified of the estate administration so that they can have an opportunity to have their debts fulfilled. Depending upon the size of the estate this may not be possible if debts are substantial. After settling creditors, the judge will distribute the remaining property to the heirs based on their interpretation of Texas intestacy laws.
This brief overview serves as an excellent introduction to the Texas 120-hour rule and the repercussions of not having a will at the time of your passing. However, should you seek further clarification or have inquiries regarding the content covered in today’s blog post, we encourage you to reach out to the experienced attorneys at the Law Office of Bryan Fagan. They stand ready to provide you with additional information and guidance tailored to your specific circumstances.
In summary, the Texas “120-hour rule” is a critical aspect of estate planning that can significantly affect your family’s future. Understanding how this rule applies and its implications can help you navigate the complexities of estate planning more effectively. By familiarizing yourself with the 120-hour rule, you ensure that your estate plan aligns with legal requirements and truly reflects your intentions. Armed with this knowledge, you can make confident decisions that safeguard your family’s well-being and secure your legacy.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions, 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 what the consequences can be if a probate case is filed on behalf of a loved one.
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