Probate is the official way that an estate gets settled under the supervision of the court. A person, usually a surviving spouse or an adult child, is appointed by the court if there is no Will, or nominated by the deceased person's Will. Once appointed, this person, called an executor or Personal Representative, has the legal authority to gather and value the assets owned by the estate, to pay bills and taxes, and, ultimately, to distribute the assets to the heirs or beneficiaries.
The purpose of probate is to prevent fraud after someone's death. Imagine everyone stealing the castle after the Lord dies. It's a way to freeze the estate until a judge determines that the Will is valid, that all the relevant people have been notified, that all the property in the estate has been identified and appraised, that the creditors have been paid and that all the taxes have been paid. Once all of that's been done, the court issues an Order distributing the property and the estate is closed.
Not all estates must go through probate though. First, if an estate falls below a certain threshold, it is considered a "small estate" and doesn't require court supervision to be settled. Click here to find out Texas's small estate threshold and procedure.
Second, not all assets are subject to probate. Some kinds of assets transfer automatically at the death of an owner with no probate required. The most common kinds of assets that pass without probate are:
Joint Tenancy assets-when one joint tenant dies, the surviving joint tenant becomes the owner of the entire asset, without the need for a court order. This is called "right of survivorship." For example, if a house is owned this way, "Jane Sage and John Sage, as joint tenants," and Jane dies, John owns the entire house.
Tenancy by the Entirety or Community Property With Right of Survivorship-these are forms of property ownership that function like joint tenancy, in that the survivor owns the entire property at the death of the other tenant, but are only available to married couples.
Beneficiary Designations-retirement accounts and life insurance policies have named beneficiaries. Upon the death of the account or policy owner, these beneficiaries are entitled to the assets in the account or the proceeds of the policy.
Payable on Death Accounts/Transfer on Death Accounts-bank and brokerage accounts can have designated beneficiaries, too. The account owner can fill out forms to designate who should recieve the account assets after their death.
Third, if a dececent had created a Living Trust to hold his or her's largest assets, than that estate, too, won't go through probate, unless the assets left outside of the trust add up to more than Texas's small estate limit. That, in fact, is why that Living Trust was created, to avoid probate after the death of the trust's Grantor.
But for estates in Texas that exceed the small estate's threshold, and for which there is either no Will, or a Will (but not a Living Trust), probate will be required before an estate can be tranferred to the decedent's heirs or beneficiaries.
The general procedure required to settle an estate via probate in Texas is either a relatively simple procedure, called Independent Administration or a court-supervised process, called Dependent Administration.
An executor can request Independent Administration if the Will says that the executor can do so, or, if the Will is silent, if the beneficiaries all agree. Independent Administration is quicker and less expensive than a Dependent Administration. No bond is required, and no court supervision is needed to take most of the steps an executor must take to settle the estate. The executor must still publish notice of the probate (to inform potential creditors of the probate) and still file an inventory of the estate's assets.
If Dependent Administration is required, the court will need to supervise and approve of the executor's actions. This would be the forum to resolve a contested estate, where the beneficiaries do not agree on what should happen.
There's also a simplified probate procedure to transfer assets if there's a Will and no unpaid debts (other than secured real property) and no Medicaid claim against the estate called a Muniment of Title as well.
Under either process there are these steps:
The Will must be filed with the probate court in the county where the decedent lived within 30 days.
A Petition for Probate must be filed with the probate court as well. This requests the appointment of an executor. If there is no Will, the Court will appoint someone to serve as the Personal Representative of the estate. Notice must be given to all heirs and beneficiaries, as required by the court.
The Court will issue "Letters Testamentary" to the executor/Personal Representative -- this gives the executor legal authority to act on behalf of the estate.
- Notice of the Probate must be published in a newspaper where the decedent lived. Creditors have 4 months after the date of publication to make a claim.
An inventory of the estate's assets must be filed with the court listing the estate's assets within 90 days of the executor's appointment.
Once all of the creditors and taxes have been paid, a Petition to close the probate must be filed with the court.
The Court will issue an Order, distributing the estate's property to the beneficiaries.
The executor is entitled to a fees for their services of five percent of the estate, but since such fees are subject to income tax (which inheritances aren't, unless Texas has an inheritance tax), many executors forgo the fees. Click here to see if Texas imposes an inheritance tax.
Texas's probate forms can be found here.
Click here for a useful article that summarizes the probate process in Texas.