For those of you reading this article who have a Will, do you know what happens after you pass away? Does the Will automatically move your property where you want? Can the executors named in your Will walk into your bank, show the banker your Will, and gain access to your accounts? Does somebody have to go to court first? Certainly, we don’t blame you for not thinking about such things, life is for living after all. But for those of you who are curious, continue reading for an explanation of different types of probates in Texas.
After your death, your beneficiaries should find your Will (ideally the original and not a copy) and meet with a probate attorney to determine whether the Will has to be probated to transfer your property. Probate is the process by which a court formally declares your Will to be valid and appoints the individual named in your Will as Executor. Your Will is just a piece of paper with no effect until it’s probated. Assuming the Will must be probated, there are three types of probates in Texas.
An Independent Administration is the least burdensome and likely most common form of probate in Texas. The Will has to specifically authorize an Independent Administration and most Wills drafted by competent Texas attorneys do. Theoretically, the beneficiaries of a Will that is ambiguous as to the type of administration or the heirs of an individual who died without a Will may agree to an Independent Administration but it’s far better to make sure your lawyer drafts your Will to require an Independent Administration.
First, an application for Independent Administration is filed with the Court along with the original Will. Then, the individual named as Independent Executor in the Will goes to a hearing with an attorney. The attorney asks him or her several straightforward questions in front of the judge establishing that the deceased died, that the Will filed with the court is the deceased’s Will, that the Will must be probated, and that the individual named as Independent Executor is not disqualified from serving. Assuming all goes well, the Judge then signs an order admitting the Will to probate and appointing the individual as Independent Executor of the Estate and issues “Letters Testamentary” (“Letters”) to the Executor. The Executor must present the Letters to institutions holding the property of the deceased to prove that he/she now has authority to manage the account in place of the deceased.
Once Letters are issued, the Executor must fulfill several statutory requirements, including publishing a notice to creditors of the Independent Administration of the estate, sending notice of the probate to the beneficiaries of the estate, filing a certificate with the Court certifying that notice to beneficiaries has been sent, and filing an inventory listing the deceased individual’s (“decedent”) probate assets and date of death value of each asset. Once the inventory is filed the court no longer has any involvement with the probate. The Executor should work with his or her attorney to satisfy legitimate creditor claims and distribute the estate to the beneficiaries.
In contrast to an Independent Administration, the court exercises heavy supervision in a dependent administration. For individuals who die without a Will, the default form of probate is a dependent administration, although the beneficiaries may elect to have an Independent Administration if all agree to it and agree on who should be appointed Independent Administrator.
While Independent Executors serve without bond, Dependent Administrators typically must post bond in an amount equal to the value of the probate estate. Dependent Administrators may be required to hire appraisers to value estate property while the requirement that appraisers be hired is typically waived in Independent Administrations for estates under the estate tax exemption amount. As long as a dependent administration remains active an annual accounting must be submitted to the court, and a final report must be filed at the conclusion of the administration. There are no such requirements in an Independent Administration. Unlike Independent Administrators, Dependent Administrators must obtain court approval prior to selling and distributing estate property.
As you can imagine, with heavy court supervision typically comes significant legal costs and it’s not uncommon for legal fees to consume a large portion of the estate in a dependent administration. For this reason as well as the sheer hassle of constantly working through the court, dependent administrations are typically to be avoided. In some circumstances, such as when an individual doesn’t trust anybody to settle his or her estate properly, it may make sense to specify a dependent administration in the Will. This decision should be made in consultation with an attorney.
MUNIMENT OF TITLE
A Will may only be probated through an administration, either independent or dependent, within four years of the decedent’s date of death. However, if property is discovered that must be transferred from the decedent to his/her beneficiaries after four years of death and the Will was not already probated, the Will may be probated as a Muniment of Title. Under this form of probate, the court does not appoint an Executor. Instead, the court issues an order stating that the beneficiaries of the Will are entitled to treat the decedent’s assets as if record title were vested in their names and that third parties holding the decedent’s assets may transfer the assets to the beneficiaries without liability.
In order to probate a Will as a Muniment of Title more than 4 years after the decedent’s death, the applicant must prove that he/she is not in default for failure to probate the Will within 4 years of death. Essentially, the applicant must prove that he or she had a good reason for not probating the Will earlier. Also, it is possible to probate a Will as a Muniment of Title within 4 years of death but the applicant must testify that a formal administration of the estate is not necessary, that the decedent’s estate does not owe any debt, and that the decedent did not apply for and receive Medicaid benefits after March 1, 2005.
While the probate process in Texas is relatively painless and inexpensive compared to other jurisdictions (except for dependent administrations), you can probably already sense that it’s not exactly simple and may be wondering what you can do to avoid it. Stay tuned for future articles on getting your affairs in order so you can pass your property to your loved ones outside of probate.