Guardianship and Probate Questions

Guardianship Questions

Q. If my husband and I die together, where would our children live for the first day or week or month until a judge can determine who will be their guardian? What if there are relatives we absolutely don’t want them to live with, even temporarily?
 A. There is no simple answer to your question because where your children would live depends on when you die and where your children are when you die.

For instance, you and your husband may be with your children when you both die, thereby leaving them without immediate supervision. Or your children may be at day care, at school, or with a babysitter, and that means the supervision they are receiving would soon be coming to an end. In these types of situations, it is likely that the police will show up and take charge.

The police would allow your children to be placed in the care of a relative or friend as long as they are convinced that person is not unfit to care for the children. The police can use the computer in their car to obtain this type of information. For instance, a relative who has a criminal record would probably not be allowed to take the children.

If your children are old enough to tell the police who to call, the police would likely do so and attempt to leave the children with the proper party. But if your children are too young to know phone numbers, addresses, or even complete names, or if no temporary guardian is available, then the police would take your children to Child Protective Services (CPS).

CPS would care for your children until a suitable family member or friend is located. CPS may place your children in foster care, if necessary, until a judge determines who the permanent guardian will be.

It may be the case that your children are already in the care of a relative or close friend when you both die. In such a situation, the police and CPS may never get involved with the care of the children. Instead, the children would most likely remain with that family until a judge makes a determination as to permanent guardianship.

You mentioned that there may be relatives you don’t want your children to live with, even for a brief period. The problem is that if the police don’t know how you feel, and if the relative otherwise checks out, the children may be placed in that person’s temporary care. Unfortunately, it is too often the case that relatives want to control the children’s inheritance, and they know funds will be available if they are acting as guardians.

You could prepare a witnessed and notarized document stating your intention regarding who you do and do not want to serve as guardian. In fact, that information is often contained in a person’s Will. But the problem is that this document will probably not be available when it’s needed. Most people don’t think to send their kids to school, daycare, or a friend’s house with a copy of their Will or other legal documents, and even if they did, the police may not be inclined to rely on the document’s validity.

If the police show up and several relatives or friends demand to take care of the children, the police will most likely not make a choice between them, but will instead deliver the children to CPS. An investigation will then be conducted by CPS to determine who is most suitable to take care of the children until a guardian is formally named by the court.

You should be sure to state in your Will who you want to serve as the guardian of your children in the event you and your husband pass away before your children are legal adults–age 18 in Texas. You can name any person you want, and you can also provide a list of persons in order of preference. You can even name two persons to serve, but they must be married to each other.

Please note the answer to your question may be different if you don’t live in a large Texas city.

Probate Questions:

Q. Which assets are handled outside of probate?
 A. There are a number of different kinds of properties that may pass outside the provisions of your Will.

The list includes life insurance, retirement plans, individual retirement accounts, and annuities. When you purchased or set up these types of assets and accounts, you were probably asked to fill out a form listing the beneficiaries who will receive payments upon your death. These investments will pass to the named beneficiaries regardless of whether you have a Will. However, if you don’t have a beneficiary named, if the beneficiary named is your “estate,” or if all the beneficiaries are dead, then those investments will be paid to your estate and pass under your Will.

Certain bank and brokerage accounts will also pass outside your Will. For instance, payable-on-death accounts (sometimes called “POD” accounts) will be distributed to the named beneficiary. Additionally, accounts set up by one or more persons as joint tenants with rights of survivorship will pass to the surviving account holder or holders.

Some banks allow you to set up what they call trust accounts even though there is no written trust agreement. These types of accounts will pass to a named beneficiary without going through probate as well.

Not all joint accounts pass to the survivor. When joint accounts are set up as tenants in common, the portion of the account that was owned by the decedent passes under his or her Will.

Many people have decided to create revocable or irrevocable trusts as part of their estate plan. Virtually all such trusts are designed to pass directly to persons or other trusts named in the document rather than under a Will.

You may find that most of your estate consists of non-probate property. Therefore, it is extremely important to coordinate the beneficiaries of all these properties to make certain your assets will be distributed as you want when you pass away.

 Q. Must a Will be probated if the estate is less than $5,340,000? Are insurance proceeds included in that total?
 A. There is no requirement that you probate a Will no matter how much the estate is worth. Wills need to be probated only if property is not transferred by some other means.

You are confusing probate with the filing of a federal estate tax return. Regardless of how the property is transferred at death, if an estate is valued at $5,340,000 or more in 2014, then a federal estate tax return must be filed. And yes, you must include proceeds of life insurance owned by the decedent in computing the $5,340,000.

The probate process is primarily a method of changing title from the deceased to the person or persons who inherit the property. Some assets require probate, such as real estate and bank accounts held only in the name of the deceased, while others do not, such as life insurance policies or retirement plans payable directly to named beneficiaries.

 Q. I’m named as the executrix of my father’s Will. What do I do when he dies?
 A. There are some steps you must take and other steps you may need to take. Exactly what you must do depends on the types of assets your father owns and the size of his estate.

Find the Will. Locating an original Will can sometimes be difficult. Many people keep their Wills in a safe deposit box, while others keep them at home or some place else. It may be a good idea to talk to your father and find out where his is kept. If it’s at the bank, be sure you’re authorized to enter the box, otherwise it may be harder to get the Will out.

Hire a Lawyer. Most of the time, it’s necessary to hire a lawyer. The judges in some smaller counties allow people to represent themselves in probate matters, but you still may have trouble preparing all the necessary forms that are required. It’s safe to say, therefore, that lawyers must be hired in the vast majority of cases. 

Application For Probate.
The first document your lawyer will prepare is an application for probate. The original Will is filed at the court house along with the application and a filing fee. The application is usually several pages long, and it describes certain facts about your father, his Will, and his property. 

The Probate Hearing.
After a ten day mandatory waiting period, a probate hearing will be held. Your lawyer will schedule this hearing for you. Under ideal circumstances, you can get your hearing two weeks after the application is filed. However, it often takes three weeks or longer to schedule a hearing because of the backlog in the courts and other scheduling conflicts. In larger counties, the hearings are held in a crowded courtroom, and dozens of cases are heard one after another. In smaller counties, the hearings are often less formal, with the judge often shaking your hand at the door to his or her office, and then showing you to a chair right there in the office.

Testimony and Order. At the hearing, your lawyer will ask you a number of routine questions. Most of the time, the judge will then sign an order admitting the Will to probate. The order is a document which your lawyer will have prepared and brought to the hearing. You will also be asked to sign the written document containing your testimony.

The Oath. After the hearing, you will need to sign an oath stating that you will fulfill your duties as independent executrix of your father’s estate. The word “independent” means that you will not need to ask the court for permission to sell estate assets or to conduct any other duties as executrix.

Letters Testamentary. After your oath is filed, you will be able to order “letters testamentary” from the county clerk. The letters will authorize you to close bank accounts and collect and claim other estate assets. You can order as many letters as you think you will need.

Notices. Within 30 days of receiving letters testamentary, you must publish a “notice to creditors” in a local newspaper. This notice lets creditors of your father’s estate know where they may file claims to recover money they are owed. It must be published even if your father has no creditors. Certified letters must also be sent to all of the charities named in your father’s Will. Proof that you performed these tasks must be filed with the court as well.

File the Inventory. Within 90 days of qualifying as executrix, you must file an Inventory with the court. The Inventory lists all the assets which pass under your father’s Will. (Note, though, that is now often possible to file an Affidavit in Lieu of Inventory with the court rather than filing the Inventory.) Importantly, the inventory doesn’t always list everything a person owns, since you don’t have to list assets that pass directly to named beneficiaries. For instance, life insurance, retirement plans, some joint accounts, and many other properties are designed to pass directly to a named beneficiary. After the Inventory is filed, the judge will sign an order approving the Inventory.

Tax Returns. Estates valued at over $5,340,000 must file a federal estate tax return and a Texas inheritance tax return within nine months of death. Taxes will be owed if the net estate exceeds that amount. The tax rate on assets over $5,340,000 is 40%. You may also be required to file income tax returns for the estate. Often, the lawyer handling the estate will also prepare the estate and inheritance tax returns. However, few lawyers prepare income tax returns.

In answering your question, I have assumed your father’s Will was executed, witnessed and notarized properly, and that it contains all the right language. Not all probate proceedings are as easy as this answer indicates. For instance, you may find yourself in the middle of a Will contest, or your father’s Will may have been written in another state, thus complicating the probate.

One more thing: Not all Wills need to be probated. You may find that everything your father owns passes directly or automatically to named beneficiaries. If the only assets left are his household goods and other personal items, there is no need to hire a lawyer and go through probate.

Q. For years, I’ve heard that probating a Will in Texas is simple and can be done by a lay person, but in response to a recent question on the subject, you said the first step is to hire a lawyer. To clarify, can a lay person probate a simple Will in Texas without the need to hire a lawyer?
 A. The answer to your question depends on where you live.

In densely populated counties, the courts are extremely busy, and they have adopted policies of not allowing people to probate Wills without a lawyer. But in smaller counties, the judges will often let people probate Wills on their own.

The courts in the larger counties simply don’t have the time to explain the probate process to all the people who call asking for help. More often than not, when people try to conduct a probate proceeding without a lawyer, forms are prepared incorrectly or not at all, and the required court hearings are slowed to a crawl.

Courts justify this decision in a number of ways. Some courts say the “client” in a probate matter is the estate of the person who died and not you, the Executor. You may be allowed to represent yourself in a legal matter, but you cannot represent another party–which is the estate in a probate matter–unless you are a licensed attorney.

Other courts say that because many probate proceedings are not straightforward or because witnesses may need to be deposed or cross-examined, a lawyer should be present. Judges are sometimes unwilling to let non-lawyers handle the representation and conduct the court hearing.

 Q. I was told that a Muniment of Title could be used to settle an account with a brokerage house. I tried that approach with my wife’s estate, of which I am the Executor. The brokerage firm would not accept the Muniment of Title because I was not appointed by the court to be the Executor, and they wouldn’t look at the Will at all, where my role is laid out. What did I do wrong?
 A. It’s hard to say what was done wrong. Wills are probated as muniments of title–which is a simplified way of going through probate–all the time, and they usually work just fine.

Let’s review the steps you should have taken in probating your wife’s Will as a Muniment of Title. Perhaps you’ll discover what went wrong as you read through the process.

You should have started by filing the original Will along with an application for probate with the county clerk’s office. The application should have stated (among other things) that there is no necessity for administering your wife’s estate and that there are no debts of the estate other than those secured by real estate. (You can probate a Will as a Muniment of Title if there is a mortgage on your home.)

After a mandatory 10 day waiting period, you should have attended a hearing where you or another person would have testified before the court about certain facts relating to the decedent. Most people hire lawyers to prepare the paperwork and handle the scheduling and conducting of the hearing. In fact, most courts don’t allow people to appear in court without a lawyer.

Assuming all went well at the hearing, the judge then would have signed an order prepared by your lawyer directing that the assets owned by your wife be distributed as provided in her Will. It would have been advisable to add language to the order specifying the name of the brokerage firm, the account number, and the person or persons to whom the securities must be distributed. The order should have also contained a provision waiving the requirement that you report back to the court once the brokerage account has been distributed. Courts will routinely waive this requirement, but you must remember to ask for the waiver.

Once the probate hearing was over, you should have ordered a certified copy of the Will and the signed order from the clerk’s office, and then forwarded those documents to the brokerage house. They may prefer for you to be the court-appointed executor of your wife’s estate, but when presented with a court order requiring them to disburse the account, they should do as directed.

According to Texas law, the order admitting the Will to probate as a Muniment of Title is sufficient legal authority for banks, transfer agents, brokerage houses or other businesses holding assets of the estate to pay those assets to the person or persons named in the Will.

Other Common Estate Planning Questions:

 Q. What is a holographic Will, and how does it work?
 A. A “holographic” Will is a Will that is written entirely in your own handwriting.

No witnesses are required, and no portion of the Will may be typed. If you type some or all of the words, or you incorporate other markings or other documents into the text, you could inadvertently invalidate the Will. The idea behind holographic Wills is that since the entire document is in a person’s handwriting, there is no need for witnesses to sign it to establish its validity. Holographic Wills don’t need to be notarized either, but they do need to be signed.

Most lawyers would tell you it’s a bad idea to write your own Will because you can easily create ambiguities and other defects that can lead to litigation following your death. This is especially true in second marriage situations when one or both spouses have children from prior marriages or relationships.

If you decide to write your own Will, you should be sure to say in the introductory sentence that it is your Will, and that you are revoking all prior Wills. If you don’t revoke all prior Wills, your handwritten Will and any other Wills that have not been revoked will be looked at together to determine who inherits your estate. As you may expect, problems arise when the various documents conflict.

Be sure to identify each bequest clearly and to give away all of your property. A frequent problem with handwritten Wills is that they list some accounts and properties, but then leave out others. Property that you don’t mention in your Will passes to your heirs as determined by our legislators in Austin. Your heirs may not be the same persons named in your Will. Also, going to court and figuring out who your heirs are can be an expensive and time-consuming matter.

It’s often the case that handwritten Wills don’t name an executor, and the ones that do may fail to state that the executor should serve as an “independent” executor. Failure to name an “independent” executor could result in an administration of your estate which is fully court supervised, expensive, and lengthy.

Another important provision that is often left out of a holographic Will is a waiver of bond. When you don’t request a waiver, the judge can require that your executor post a bond. Sometimes, it’s not possible to even get a bond, and if your executor can get one, it will undoubtedly be expensive.

Lastly, it should be noted that handwritten Wills are almost always more difficult to probate than typed Wills because courts require two witnesses who are familiar with your handwriting to testify that the Will was, in fact, written by you.

 Q. I’ve moved to Texas from Florida, where I had a simple Will drawn with my daughter as the only beneficiary. Do I need to get a new Will made in Texas?
 A. Yes, you should prepare a new Texas Will.

While it is true that Texas recognizes the validity of a Will executed in Florida, your daughter will have an easier time probating your Will if you have a new one prepared using correct Texas language.

For instance, there is almost no chance your Florida Will names your daughter to serve as the “independent executor” of your estate. In fact, she is probably called your “personal representative” which is the lingo used in Florida. Being an independent executor means she will not be supervised by the court, the preferable way to administer an estate. If you don’t state in your Will that your daughter will be your independent executor, she can still make a special request to the judge after your death asking that she be allowed to act independently, but there is no guarantee that her request will be approved.

Also, the end of your Will should have what is called a “self-proving affidavit” which is a long statement discussing the signing ceremony. Texas has its own unique form of “self-proving affidavit” and it is different from the one used in Florida. It is possible that the judge will refuse to recognize Florida’s “self-proving affidavit” thereby causing your daughter unnecessary delays and expenses.

 Q. My sole assets are a car, personal belongings and a savings account with less than $50,000 in it. Do I need a Will?
 A. You would think there’s a simple yes or no answer to your question. But as with so many other legal questions, the answer is: maybe, maybe not.

With regard to your bank account, you can set it up so that it passes to one or more persons who are named as the beneficiaries. This type of account is normally called a “payable on death” or “transfer on death” account. Most, if not all, banks allow their customers to establish this type of account.

If the persons you have named are alive when you pass away, all they will need to do is present the bank with a death certificate, and they will be given the money. However, if you die without having named a beneficiary or if all of the beneficiaries you have named die before you, then some sort of probate will be needed.

In that situation, if you die without a Will, your estate would probably be small enough to qualify as a small estate. That means the normal probate process could be simplified by filing a Small Estate Affidavit. The Affidavit will list the properties you owned, and it will state who your heirs are under Texas law. Once an order approving the Affidavit is signed by a judge, your heirs can claim the money by presenting a certified copy of the order to your bank.

If your estate does qualify as a small estate, but you have a Will, then your heirs can’t file a Small Estate Affidavit. Instead they must take the more expensive route of probating your Will. So, depending on the expected size of your bank account, you may be doing your family a disservice by having a Will. Wills that transfer property must be probated, and in nearly all situations, that means hiring a lawyer and paying court costs and other fees.

Also, a Small Estate Affidavit will not be available if your savings account contains more than $50,000 upon your death. In such a case, it would be necessary to conduct a formal probate at the courthouse, and having a Will would make the probate process far simpler than not having one.

As far as your car is concerned, it can be transferred at death without the need for probate by completing a Form VTR-262 “Affidavit of Heirship for a Motor Vehicle.” Your heirs can obtain this form at any county court annex or online at www.dot.state.tx.us. This Affidavit will establish that the car was owned by you, and the persons who inherit your estate will need to sign it. When completing the form, your heirs might also be asked to provide other documentation such as a certificate of title, release of lien, affidavit of physical inspection, bill of sale and/or proof of liability insurance.

The problem with letting your heirs simply use the VTR-262 form is that the car may not be passing to the person or persons you would want. For instance, if you have two children, but you want your car to go to only one of them, then you may want to execute a Will which names the one child who will get the car.

Your personal property does not have title, so it’s not necessary to probate a Will in order to validly transfer ownership to your heirs. It’s unfortunate, yet true, that personal belongings are available on a first come, first serve basis to your children, friends and neighbors. You may want to limit the number of people who have keys to your residence and also make a list of who gets what particular items. But don’t forget, it’s often a free-for-all following a person’s death.

Note, however, that if you have minor children, my answer would be yes, you need a Will. With a Will, you could name guardians as well as a person to serve as trustee or custodian over the children’s inheritance.

So, if you set your bank account up properly, if your car will be passing as you would want, and your beneficiaries are all adults, then you don’t need a Will. On the other hand, it can’t hurt to have one just in case it’s needed.

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