HOW TO AVOID PROBATE

OVERVIEW
Probate is the name of the legal process that wraps-up a deceased person's affairs. Depending on the complexity of the estate, the process may be an expensive and time-consuming process. On the other hand, with some advance planning, the process may be relatively painless.

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WHAT IS PROBATE AND WHAT DOES IT INVOLVE?
Probate is the process provided for by state law for settling the affairs of a deceased person. It includes having the Will (if there is one) accepted by the court, identifying the deceased person's probate assets, gathering those assets, paying the deceased person's debts, paying the deceased person's taxes and finally distributing assets to the beneficiaries.

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WHAT ARE PROBATE ASSETS?
Assets owned in the name of the deceased person alone are probate assets and at the time of death must be administered through the probate process. Assets that are not probate property pass outside of the probate process and are not subject to the supervision of the courts. Examples of such property are joint bank accounts, property held by a living trust, and life insurance policies that name as a beneficiary anyone other than the estate. (Keep in mind, however, that for federal tax purposes a life insurance policy owned by the deceased will be considered part of the estate.)

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WHAT IS A LIVING TRUST?
A living trust is the name for a trust that is created during your lifetime as contrasted with a testamentary trust which is a trust that is contained in your will. You can set up a living trust during your lifetime and be the initial trustee and beneficiary of the trust. In that situation you do not need to get a tax identification number for the trust, but rather can use your own social security number for the trust and you need not file separate tax returns for the trust, but can just declare the income on your own individual tax return, making the trust easy to administer. By placing assets into the name of your living trust during your lifetime, you can avoid having any of those assets be subject to probate at death.

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WHAT IS THE PROBATE PROCEDURE FOR SMALL ESTATES?
The Texas Probate Code currently establishes three procedures for settling small estates. First, if the value of the estate, exclusive of homestead and exempt property, does not exceed $50,000, the distributees of the estate may collect the estate on affidavit without awaiting the appointment of a personal representative. Second, the distributees of an estate may apply for an order that no administration is necessary. This application may be filed if the value of the estate's assets, excluding the homestead and exempt property, does not exceed the amount to which the surviving spouse and minor children of the decedent are entitled as a family allowance. Third, after the appointment of a personal representative, the representative may apply to summarily withdraw the estate from administration. Withdrawal is permitted if the value of the estate, exclusive of the homestead property, exempt property, and family allowance, does not exceed an amount sufficient to pay estate creditors whose claims are designated as class one, two, three, or four under the Probate Code classification system.

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If you would like more detailed information on how to avoid probate, please contact the firm. That attorneys at Hargrove & Rea, P.C. will be happy to answer any questions you may have.