At one point or another, many of us will face the difficult process of dealing with an estate left behind by a loved one. Navigating probate proceedings can be a lengthy, complicated and ultimately taxing experience. Unfortunately, not everyone is familiar with what the term ‘probate’ actually means – let alone how it works – and that is why we are bringing you this blog post to help give you clarity around this complex system.
What is Probate?
Probate is a legal process that occurs when a person dies that involves settling the decedent’s estate. The first step is the validation of their will, then the appointment of an executor to settle the estate. One of the executor’s tasks in probate is retitling the decedent’s assets. As advisors, in lieu of saying the probate process, we say the retitling process. When someone passes away, they generally leave assets such as bank accounts, investment accounts, real estate, business, etc., to persons or individuals listed in their will. Part of the probate process is to retitle assets per the decedent’s wishes as listed in their will. If the decedent does not have a will then the deceased person’s estate will still go through the probate process. If the decedent did not create a legal record of how they wished to distribute their assets – that’s what a will does – then the executor and the probate court must distribute the estate according to state law. This is called intestacy.
How Probate Works
When a person dies with a will, the will names an executor – someone who steps into the shoes of the deceased person. The executor is now responsible for initiating the probate process. The executor is responsible for filing the will with the probate court. In the state of Texas, once the will has been filed then the court will issue Letters Testamentary that then allow the executor to begin the duties that have been outlined in the decedent’s will. They will need to provide the county clerk with an inventory of the person’s assets and debts, and complete application of the decedent’s estate within 90 days. The executor is, among other things, responsible for filing income tax returns, estate returns (if necessary), and paying off outstanding debts. After debts have been cleared up, the executor can begin distributing the remaining assets from the estate. Any assets or debts that go through the probate process are a matter of public record.
Is the Probate Process Required?
In Texas, technically no. However, if the descendant has a will the only way for the provisions in the will to be executed are through the probate process. Many types of assets can be transferred or retitled while avoiding the probate all together by things like a Lady Bird deed for a home, transfer on death instructions for investment assets, beneficiaries listed on retirement accounts, payable on death instructions for bank accounts, life insurance beneficiaries, and more. Additionally, assets held within a revocable living trust avoid going through probate. The caveat to this is if anything is missing (car, tractor, rental property, etc.), then in order to get this asset retitled appropriately it will then be required to be probated. If you have a revocable trust, it is very important to make sure all your assets are titled appropriately.
Here at BentOak Capital, we understand that the death of a loved one is already a traumatic and trying time. Dealing with their possessions and assets shouldn’t add to that stress. That’s why we’ve outlined some key points about what occurs during probate in the state of Texas. If you find yourself in this difficult situation, remember that you are not alone; reach out to us for questions or support through this tough journey.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
