Probate

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The legal role of the probate lawyer is to admit the decedent’s will to probate, advise the newly appointed executor on their responsibilities and duties, help the executor inventory all of the assets of the decedent’s estate, settle debts and distribute the assets to the beneficiaries named in the will.  Of course, numerous legal issues may arise, which complicate this basis process, but that is the essential role of the probate lawyer in the conventional sense.

But there really is more.  In many cases, particularly an unexpected death, the probate lawyer must deal with a client who is emotionally devastated.  The client may be depressed, panicked or angry or some combination of all of the above, and the lawyer must understand this and know how to respond.  The probate process is necessary, but the client may not want to deal with it.  The lawyer must be compassionate, responsive and diligent.   For example, the client may be more comfortable meeting at home rather than the office.  Things have to be done, but how they are done can make all the difference.

Many times I have the family of the second spouse contact me regarding probate of his or her estate.  As I discuss the matter I learn that the first spouse died years earlier, and, since everything passed to the second spouse, no probate was done for the first spouse.

While this isn’t an insurmountable problem, it does complicate the probate process.   If the first spouse died more than four years ago, the first spouse’s will cannot be probated.  An affidavit of heirship can be filed in the real property records, but it must be on file five years to be determinative of title.  In cases where five years have not passed, an heirship proceeding must be commenced for the first spouse.  This increases the cost of probate considerably.

Accordingly, probate the first spouse’s will.  It may be that all you need to do is a muniment of title to pass title to the second spouse, and no administration is necessary.  Regardless, spending the time and money at the death of the first spouse to get it right will save considerable time and money later at the second spouse’s death.

If you own real property outside of your state of residence when you die, you will have to conduct an ancillary probate in that state to transfer title to the property to your beneficiaries.  In some states, like Texas, ancillary probate is a simple process of recording copies of the out of state probate in the state in which the real property is located.  In others, the process is more complicated and will require hiring an attorney in the state and prosecuting a court proceeding.

One way to avoid ancillary probate is to form a limited liability company (LLC) or limited partnership (LP) to own the out of state property.  If the client does this then he will no longer own real estate out of state.  Instead, he or she will own an interest in an entity that owns real estate in that state.  Accordingly, there is no longer the need to prosecute an ancillary probate.  The entity can be formed in the client’s state of residence, the state the property is located or some other jurisdiction.  It doesn’t matter.  Use of the LLC or LP also adds a layer of asset protection for the client.

Note that using an LLC or LP doesn’t mean the client will not owe property taxes or income taxes (if a rental property) in the state in which the property is located.

The probate question I get asked the most often is whether a client should use a living trust to avoid probate.  In many states the answer is an unqualified “yes.”  In Texas, the answer is “it depends, but probably not.”

A living trust is a revocable trust to which the client will transfer his or her assets during life.  Since the trust owns the assets and not the client, there are no assets to probate at the client’s death.  Typically, a living trust is more expensive to complete than the drafting of a will, since the client will have to pay for the lawyer to draft conveyance documents to transfer the assets to the trust.  Of course, the cost of probate is avoided when the client dies.

Probate in many states can be a slow and expensive process.  Some states set fees for the court and attorneys, and most states require court approval of most executor actions during the probate process.  Texas is somewhat unique in that it has probate system that is largely independent of court approval.  Typically, the only trip to probate court the executor will make is the hearing to prove up the will and become appointed as the independent executor.   The executor will have to file various notices and prepare an inventory of the estate’s assets, but will not have to seek approval from the judge to proceed with his or her duties.

Historically, one advantage of the living trust, even in Texas, is privacy concerns.  Probate proceedings are public record, and the executor has to prepare an inventory listing the assets of the estate which is filed in the probate proceeding.  A few years ago, however, Texas probate law was changed to allow the executor to file an affidavit in lieu of the inventory if the executor has paid off all unsecured debts of the estate.  The executor still has to prepare the inventory, but does not have to file it.

It should be noted that while a Texas resident need not worry too much about avoiding probate in Texas, he or she should make sure probate is avoided in other states if property is owned there.  For example, a Texas resident may have a vacation home in Colorado, and an ancillary probate in Colorado would be required to transfer ownership of the Colorado property to loved ones.  Ancillary probate can be avoided by transferring the Colorado to a trust or limited liability company.

 

 

 

 

A colleague of mine, who was named as executor under the will, is faced with the not uncommon circumstance of managing the two children heirs who don’t like each other.  He can’t yet act for the estate, but there is the real possibility that things could escalate into an ugly and unfortunate situation.  In these situations it is imperative that the executor consult with counsel before communicating with the children.

For example, the named executor may need to block access to the home if the children are indicating a fight over personal property is possible.   A suggestion of a sharing arrangement might be advisable for a vacation rental property that both children want to access immediately.  Instructions may need to be given to the officers of a family business, if a child indicates he or she may disrupt the operation of the business.

Of course, the named executor should endeavor to admit the will to probate as soon as legally possible.  Babysitting disgruntled heirs is an occupational hazard of serving as executor.  It also may be helpful if the will has a no contest clause.