Tag: Probate

What to Expect During Probate When There Isn’t a Will

Most people know about a last will and testament that helps transfer assets from an individual who has passed away to their listed beneficiaries. In the time following the death of the benefactor or the “decedent” the property and assets go into what has known as probate.

Probate is the legal process involved in transferring property from the deceased’s estate to their beneficiaries. Probate typically occurs when there are real properties or financial accounts involved.

However, if a loved one dies without a will or if they die “intestate,” it does not mean there isn’t hope. In the State of Texas, there are default inheritance rules in place for situations such as this. When this happens, the decedent’s heirs can still be determined and probated. Here is everything you need to know about this process when it happens.

Selecting the Type of Administration

In situations where there is not a will, the first thing you will need to do is to select the type of administration.

Affidavit of Heirship- No administration, or the Affidavit of Heirship is used to establish the title to real estate when the asset is the actual property. No formal administration is needed in these situations where the decedent died without a will and the affidavit of heirship is filed with the county clerk, not the court.

Small Estate Affidavit – This administration is used to collect a small amount of money owed to the estate, like a small bank account. The entire assets of the estate, aside from the homestead, must be less than $50,000 and 30 days must have elapsed since the death of the decedent.

Determination of Heirship – This type of administration is used when all of the heirs of the estate cannot or will not sign a small estate affidavit. The decedent must have died without a will or with a will that didn’t include any real personal property. There must be no debts due on the real estate. After a hearing in court (without administration) the court will declare the identity of the heirs of the estate.

Independent Administration- This type of probate can only occur when the decedent’s date of death was in the last four years. The heirs must all agree on a qualified independent administration (can be a person, firm or corporation). If not, the court will appoint an Independent Administration of the Estate.

Dependent Administration- This probate is used when all of the heirs cannot agree on beneficiaries and there is argument regarding the decedent’s estate. The decedent must have died within the last four years and there has to be a need for a formal administration. This may also be used when one of the beneficiaries is a minor.

Collecting All the Information They Can on Decedent

With the help of an attorney, it is important that the beneficiaries involved are able to get as much information as possible on the decedent. This will only help the attorney assisting you through the process.

If you have any questions about how the process works or are looking for an attorney to help you through this process, contact the attorneys at Hegwood Law Firm today at (281) 218-0880 for more information on probate.

Houston Probate Lawyers Answer, “Will My Inheritance Be Taxed?”

One of the most common questions our Houston Probate Lawyers get from people who just inherited assets is whether or not they owe taxes on the money or property they just received. It is an excellent question, but the answer is a bit more complicated than yes or no. If you have just inherited from an estate, the answers below will help guide you in the right direction.

Income Taxes

The IRS requires everyone to claim every source of income when they file a tax return, however the IRS does not consider inheritance to be part of your income, so you likely do not have to claim it on your tax return.

Capital Gains Tax

You have to pay capital gains taxes anytime a gain is achieved. For example, if you buy a house to renovate and resell, you would have to pay capital gains taxes on the money you made above the original purchase price if it is not your homestead.

If you inherit an asset and the value of that asset increases, that asset would be subject to capital gains taxes from the date your inherited the asset, not when it was originally purchased.  This is called a step up in basis.

Death Taxes

There is a federal estate tax that applies to any asset transfer that is valued over $5.49 million (2017). However a spouse can transfer unlimited assets to their spouse without having to pay the federal estate tax. Some states also have an inheritance taxes, but Texas does not.

Hopefully, you now have a better idea about how your estate will be taxed when it is handed down to your heirs. If you anticipate that your estate is structured in a way that will require your heirs to pay substantial taxes, it may be in your best interest to speak to a qualified estate lawyer. There are many legal ways to reduce the tax burden on your estate. To set up a consultation, call the Hegwood Law Group at (281) 218-0880.

Harris County Probate Law – The Basics

Probate law varies from state to state, but there are several things that you and your Harris County probate lawyer can expect to happen during the process.  The following is a simple breakdown of some of the most common aspects of probate law in Texas.

First of all, probate is the name of the legal process that takes place to distribute a person’s estate once he or she has passed away.  With some exceptions, such as trusts, life insurance payments, retirement plans, and a few other things, all of a person’s assets must go through this process in order to ensure they are being distributed legally.  An “estate” is not just a term used for rich people.  The majority of the assets left behind—houses, vehicles, money, personal property, retirement accounts, etc. are all considered part of the estate.

Once an individual passes away, someone will need to petition the court to be named as the Executor of the estate.  Typically, this is a family member or close friend of the deceased.  If the deceased had a will, he or she will likely have chosen the person they want to fulfill that role.  If not, however, the courts will decide who should have the position if multiple people step forward.  This person will work closely with the probate lawyer throughout the process.  It is a big responsibility and can be time consuming.

Again, if there was a will, then one of the first steps the executor and the Harris County probate lawyer will do is to “prove” that the will is valid; this is the first part of the court process.  They will then compile a list of assets, debts, and heirs to be presented to the courts.  The executor and probate lawyer are also charged with alerting creditors and family members of the death.

Because the probate process can take a considerable amount of time, it is also the executor’s job to manage the assets of the estate throughout the legal proceedings.  Many people find that this job is much easier under the guidance of the probate lawyer, as the attorney will likely have far more experience than the executor.

Based on debts and assets, the personal representative will have to determine whether or not assets will need to be sold to pay for outstanding debts, including taxes.  The representative is also required to have all the assets appraised for value.  If there is a will that bequests money to heirs that is currently tied up in investments, then the probate lawyer will also help the executor sell those assets to meet the terms of the will.

A good Harris County probate lawyer will be able to guide the representative when it comes to how to manage, sell, and distribute assets according to the findings of the courts.  Once all the property has been distributed, the executor and probate lawyer will follow up to make sure the estate is “closed.”

If you would like to talk to an experienced Harris County probate lawyer, feel free to call us (281) 218-0880. With the mention of this article, we will be happy to offer you a free consultation.

Dealing with Non-Probate Assets| Houston Probate Lawyer

As a Houston probate lawyer, I am often asked if every asset a person owns will have to go through the probate process when they die. The short answer is that it depends.

While most real estate owned by a person does go through the Harris County probate court following the loss of a loved one, a few asset classes are exempt. They are referred to as non-probate assets.

Instead of being distributed through a will, non-probate assets are automatically transferred to the survivors/beneficiaries, outside of probate. The assets are transferred at the death of the testator regardless of any instructions in the will. As an example, if a husband and wife own a piece of property together, the property is automatically transferred to the surviving partner. There is no distribution of property needed.

There are other assets besides jointly owned assets that are distributed outside of probate. Any assets with a named beneficiary typically avoid probate. Life insurance is one such example where payouts go directly to the beneficiary. In addition, retirement money is a non-probate asset. Life estate and inter vivos trust also are considered non-probate assets.  Here is a brief list of the most common assets that are passed outside of Harris County probate for your reference:

  • Assets held in joint tenancy with rights of survivorship
  • Retirement accounts such as IRAs or 401(k)s that have a beneficiary named
  • Life insurance proceeds that do not have the estate named as a beneficiary
  • Assets held in a living trust
  • Money in a payable-on-death bank account (POD)
  • Securities, bonds, real estate, or other assets with a transfer-on-death provision
  • Pension plan distributions

Remember, non-probate assets are distributed immediately. Simply contacting the bank or company where the asset is located and presenting the death certificate is usually enough to get the ball rolling to distribute the funds. On the flip side, the probate process can take a year or more to get to the point where assets can be distributed to a beneficiary.

The good news is that there are ways to structure your assets so that none of them have to go through probate—even if the assets you are leaving to your loved ones fall outside of this list.  An attorney can help you utilize legal tools and planning to minimize your exposure to probate, or avoid it all together. But, only an experienced estate planning attorney can help you set up your assets to ensure that outcome.

If you would like to speak to a probate lawyer today to set up an estate plan to best protect your assets and minimize the impact of probate court, call our office at (281) 218-088 to set up a consultation.