Estate Planning

Why do I need a Will?

There are many reasons to use a Will in Texas. If you have minor children (under 18), you should have a Will to appoint guardians for them and trustees to manage the property that they will inherit from you. You should have a Will even if you have no property, as your spouse may not inherit everything. Your parents or siblings might inherit part of your home or other property and become co-owners with some control over your home. You need a Will so that you decide who inherits your property and not the State of Texas (under intestacy rules). You need a Will if you own a home or other real estate. The Will can save the heirs significant expense and trouble later, when it is time sell your home or other real estate. With a Will, many expenses of probate can be avoided, such as the costly bond that could be required of an administrator in a "no-Will" situation. You may need a Will if you have a large estate, to avoid federal estate taxes.

Who will get my property if I die without a Will and I am not married?

Under Texas law, if you have children, your children will inherit all of your separate property equally. If any child has died before you, his share will pass to his children, but if that child has no children, it will pass to your surviving children. If a child of a deceased child is also deceased but has left a child of their own (your great-grandchild), that great-grandchild well get his parent’s share of your estate. If you have no children, your father and mother will each inherit one-half of your property. If either parent is deceased, your siblings will inherit that parent’s share. If a sibling is deceased but has left a child (a niece or nephew), that child will inherit his parent’s share, and so on. If a sibling is deceased and has left no children, the surviving siblings will take that sibling’s share. If neither of your parents nor any of their descendants survive you, your grandparents will inherit your estate equally. If either grandparent has died before you, their descendants (your aunts, uncles, and cousins) will inherit your estate.

Who will get my property if I am married and I die without a Will?

Texas law is complicated in this area. If all of your children are also the children of your spouse at the time of death, then your spouse will inherit all of your community property. Your children will inherit a two-thirds interest in every item of your separate property. The remaining one-third of each item of separate property will go to your spouse, but if the item is real property (such as a home), the spouse only gets a life estate in the real property. If you have children from a previous marriage, your children will inherit your entire one-half of the community property. Your spouse will keep her one-half of the community property. Your separate property will be distributed the same way as mentioned in the previous paragraph. If you have no children, your spouse will inherit all of your community property. Separate property that is considered personal property (property other than real estate) will also pass to your spouse. Real estate that is separate property will pass one-half to your spouse, one- fourth to your mother and one-fourth to your father. If either parent is deceased, that parent’s share will be inherited by your siblings if they survive you. If none of your parents or siblings survive you, your spouse will inherit all of your separate real property.

Probate Administration

What happens if I die with a Will?

At the death of most Texas residents, it will be necessary to have a probate proceeding to administer the estate of the decedent. In larger counties in North Texas, these proceedings are usually filed in specialized courts called statutory probate courts. If the decedent dies with a valid Will, the Will be admitted to probate in probate court and an executor named in the will is usually be appointed to handle the decedent's affairs, including collecting the assets of the decedent, paying his debts, and distributing the remaining assets according to the terms of the Will. Generally, the persons who can file a Will for probate are the executor named in the will, a devisee under the will, a spouse or a creditor. An application to file a will for probate must generally be filed within four (4) years of the date of death of the decedent. The proceeding may be more "streamlined", if it qualifies as an "independent" administration, or more complicated if a "dependent" administration is required.

An executor cannot file a will for probate pro bono, but must use a Texas attorney.

What happens if I die without a Will?

If the decedent dies without a Will, or "intestate", a probate proceeding, called a "determination of heirship", may still be necessary and the Texas rules of intestacy will determine who inherits the property of the decedent. Those rules are complex and are discussed in another FAQ. When there is no Will, an administrator is appointed by the probate court to handle the decedent's affairs, including collecting the assets of the decedent, paying his debts and distributing the remaining assets according to the rules of intestacy. Generally, the persons who can file for a determination of heirship are one or more of the heirs of the decedent. A "determination of heirship" proceeding may be combined with proceeding to appoint an administrator for the estate. As with a proceeding to probate a will, the proceeding to determine heirship and to appoint an administrator of the estate may qualify as an "independent" administration or may be a more complicated "dependent" administration.

What are the duties of the Executor or Administrator?

In each type of probate proceeding, the attorney will assist the executor or administrator with their duties with respect to the estate, such as filing the necessary documents with the Court, collecting the assets, paying or settling the debts, making sure any necessary income tax returns are filed for the estate, and funding trusts created in a Will.

Are there any short-form procedures for Probate in Texas?

Occasionally, a shorter form of probate may be available, such as "muniment of title" proceeding for a will, or using a small estate affidavit in an intestate situation in place of a full administration, but you should consult with an attorney to determine if one of these alternate proceedings is available in your situation.

Premarital Agreements

Why are premarital agreements important in Texas?

A premarital agreement, also called a prenuptial agreement, can help a couple determine property rights before they are married that will protect both parties in the event of divorce or death. These agreements can be particularly important in Texas, which is one of only nine "community property" states. They can deal with determining who will own various types of property after the marriage, such as wages, inherited property, a home acquired during marriage, spousal support, allocation of income taxes during the marriage and other types of property issues that arise during marriage. Such an agreement can also be used to allocate financial responsibilities, such as determining who will be responsible for debts existing at the time of the marriage or incurred during the marriage, how mortgage, rent and insurance payments will be made and by whom, who will be responsible for credit card debts. Estate planning can be addressed, such as whether each spouse will leave the other spouse assets under his or her Will.

What are some specific situations in which a premarital agreement might be useful?

These agreements can be particularly important in these situations:

· one spouse is entering the marriage with significantly more wealth than the other.

· one or both spouses has children of a prior marriage or prior relationship.

· you own a business.

· you have family property (such as heirlooms) that you would like to ensure remains in your family.

· one spouse earns significantly more than the other spouse or one spouse does not work at all.

· one spouse has much more debt than the other.

Community Property

What is the difference between community property and separate property?

Community property rules differ from state to state. In Texas, community property is distributed differently than separate property if you die without a Will. All property (including cash) is classified as community property or separate property based on when and how it was acquired. Converting assets into cash and back again does not alter the classification. For example, if a separate property asset is sold during the marriage, the proceeds of that sale and anything purchased with them will remain separate property. However, you must be able to “trace” the proceeds from each sale to each purchase to prove that the property is separate property. Unless you keep excellent records, this process can be difficult.

What are some examples of community property?

Earned income from the work of either spouse during the marriage
Most property acquired during marriage
Dividends, interest, and rents from community property
Dividends, interest and rents earned from either spouse’s separate property during the marriage

What are some examples of separate property?

Any property owned by a spouse before marriage
Gifts and inheritances received by either spouse before the marriage
Gifts and inheritances received by either spouse during the marriage, including joint gifts.
Earned income from the work of either spouse before marriage
Capital gain on separate property

What if an asset is purchased with both separate property funds and community property funds?

A particular asset can be a mixture of community property and separate property. For example, suppose you and your spouse purchase a home using a cash gift from your parents as a 20% down payment. You obtain a mortgage to purchase the rest. The house is 80% community property because you used community credit to cover 80% of the purchase price. Ten percent (10%) of the house is your separate property, and ten percent (10%) is your spouse’s separate property, because gifts are always separate property. If you die without a Will, your minor children will inherit most of your 10% separate property portion, which will create extra expense and hassle for your spouse.

Is community property the same as jointly owned property?

Don’t confuse community property with jointly owned separate property. Anyone can jointly own property, whether married or not. But only spouses can own property as community property. Before they can partition community property, they must convert it to separate property. To convert or partition your community property or separate property, or to create a premarital agreement, you should consult an attorney with experience in this area.

What if I don't know if a particular asset is separate or community property?

If you mix community property with separate property, such as by depositing both in the same bank account, the entire amount will be presumed to be community property, until and unless you can prove otherwise. The best way to protect your separate property is to keep it separate!

How do community property laws work with beneficiary designations on life insurance and IRAs?

Other laws can sometimes trump community property laws. If a husband uses community property to purchase a life insurance policy and then names his mother as the beneficiary, his wife generally will not be entitled to any of the proceeds upon his death, because insurance law may take precedence in this situation. Similarly, if a wife contributes community property to an IRA and names her children as the beneficiaries, her husband may not be entitled to any of the IRA funds upon her death. To fully determine your rights in your property, you should consult an attorney who can take your particular facts into account.