Death and Taxes... and Probate Too

PBenjamin Franklin once wrote that, "... in this world nothing can be said to be certain, except death and taxes." Nothing may be more certain than death and taxes, but after death - probate is high on the list of likely procedures your family will have to navigate through to handle what you owned at death. As likely as it is that you and your family will go through probate in the future - do you know what probate is or what it means?

A process is required when someone dies to both ensure that successors that should receive assets from the estate have proof that they are the new owners of the property of the person who has passed away and to pay any creditors that the deceased individual may have owed money to. Probate is one process that accomplishes those requirements.

Probate comes from the Latin word, "probatus," and is literally translated as "to prove" or "approve of." In this sense, probate literally refers to proving or approving of a will and more generally refers to a process of identifying and distributing a deceased person's assets after they die.

Whether you die with or without a will, if you have money in bank accounts, a house, or other assets titled in your name, your family will need to go through the probate process in order to pay your debts and hopefully, inherit what is left after court costs, executor compensation, legal fees, appraisals, accounting costs and taxes. The probate process includes the following steps:

  1. The original will must be found and filed by someone with an Application for Probate of Will and Issuance of Letters Testamentary.
  2. The County Clerk issues a citation and also posts a notice at the courthouse that an Application for Probate of Will has been filed.
  3. If there is a will, it has to be proven valid in court.
  4. Unless the will is “self-proved,” witnesses will need to testify as part of this process.
  5. If the will is not proved in court, then the court will treat the person as having died without a will and apply applicable laws to determine who gets the assets. If the will is proved in court, the process continues according to the proven will.
  6. The next step is called estate administration, and this is where the estate is managed and eventually settled by a personal representative approved by the court.
  7. The court appoints and swears in an executor (if named in the will) or an administrator (if no will exists or is proven) to carry out the duties of estate administration.
  8. Estate administration requires the following steps to be accomplished through the executor or administrator:
    • Collection of assets and creating an accounting of all assets;
    • Payment of debts and claims against the estate;
    • Payment of estate taxes;
    • Determination of heirs (if no will exists or the will is not proven);
    • Distribution of the remainder of the estate to the appropriate parties.
    • New titles are issued.

The amount of time a probate can take varies, but when you are going through the process, it often seems to take too long. The process can take between months and years depending on the complexity of the estate and whether or not anyone is contesting all or part of the will or administration of the estate. 

Also, keep in mind that when your estate goes through the probate process, that debts you leave behind are paid from your estate assets, along with all probate costs before your heirs receive a dime. Lawyer's fees are paid from your assets. Taxes are paid from your assets. Costs the executor incurs administering your estate- things like mileage, postage, running newspaper notices, etc. are paid from your assets. Court costs are paid from your assets. Accountants hired to assist with the detailed accounting required by the Court are paid from your assets. Even the Executor is entitled to up to 5% of the total receipts in and debts paid out from your estate assets, (of course, unless your will specifies that your executor work for free).  But even then, the person you name as executor can choose not to accept that responsibility or may not qualify under the laws.  And, if there are not enough funds to pay all of those costs, then assets like your home can be sold to pay these costs.

It is not a common practice for all lawyers to discuss the emotional and financial impact on your family resulting from the probate process. Things to consider include: how your assets are frozen until the probate process is completed; how the probate process takes months, even years to complete before your assets are distributed to your heirs; how time-consuming and tedious it may be for the executor you named to get through the process; and how much of the estate assets your heirs will lose due to court costs, attorney fees, executor costs and fees, accounting costs, appraisals, etc.

Another question to consider is whether you have to hire an attorney to navigate the probate court process in Texas or not?  Most of the time, you need to hire an attorney. Executors do not simply represent themselves; they also represent the interests of the estate of the deceased, which includes interests of beneficiaries and creditors. Only members of the State Bar of Texas (attorneys) are allowed to represent the interests of others in court proceedings and other legal matters. As such, preparing and filing pleadings in a probate matter without the assistance of counsel could constitute the unauthorized practice of law. Courts allow limited exceptions to this rule, but ultimately the result is that executors in Texas almost always have to hire an attorney to navigate the probate process.

As you can see, the law is comprised of a default plan to dispose of your property after you die that involves a court process and fees that have consequences for your heirs. The alternative is to plan things ahead of time and whether your estate is a complex or relatively simple one, having an attorney to help you is essential. Through proper education and preparation, a knowledgeable estate planning attorney can help you to simplify the process and aid you in preparing your estate in a way that best suits you and your family needs, including the possibility of avoiding the probate process altogether.