The Ultimate Executor’s Probate Guide

The Sad Story That Made Me Write this Probate Guide

When I was in the Army, this probate guide would have really helped me!

Huh?

Let me explain.

During my 10 years of active service, I served as a Summary Courts-Martial Officer more times than I cared for. My particular job was to take care of the property of a deceased soldier or veteran, and ensure next-of-kin knew their rights and responsibilities. I did this for many different circumstances, for suicides, soldiers killed in combat (some single, some married), and retired veterans. Each case was slightly different and posed its own challenges. One 18-year old single soldier had his entire life’s belongings in a foot locker. I simply boxed it up and mailed it back to his parents. Even though this was a simple case, it was obviously very depressing and challenging. Other cases weren’t so straightforward.

On one occasion, a senior enlisted man had died in combat in Iraq, and I was appointed as the Summary Courts-Martial Officer. Prior to deploying, this man had asked his girlfriend to be the executor of his will if something should happen to him. These conversations happen all the time, usually as a formality, because no one actually thinks they’re going to die. This man lived in Germany, was divorced and had a daughter who lived with his ex-wife in the United States. He had been dating his girlfriend for a while, but she was also in the United States. Getting notified that your loved one has died is traumatic enough, but to have the additional burden of dealing with the administrative responsibilities is too much for some people. Every conversation with this hero’s girlfriend consisted of her sobbing uncontrollably and me trying to calmly outline what she had to do next to settle his estate. I realized she would have had a much easier time if she’s had a simple, yet comprehensive probate guide to refer to. Discussing where to ship belongings and how to file a will in court was not a fun conversation to have for either of us during this time of mourning.
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Is This Probate Guide For You?

Disclaimer: This post is for informational purposes only and does not provide legal, accounting, or financial advice. I am not a lawyer or accountant. Visitors should not rely upon this information as a substitute for legal, accounting, or financial advice. While I make every effort to provide accurate website information, laws can change and inaccuracies happen despite our best efforts. If you have a specific problem, you should seek advice from a qualified professional in your own jurisdiction.

This probate guide is for those who have just recently found themselves responsible for the estate, will, and affairs of a deceased person. I know from personal and professional experience that this is an incredibly difficult and stressful time. The brain and soul just want to mourn but the bureaucratic society around us forces us to act.

The focus of this probate guide will be Texas, although most of the general information will apply to probates across the United States. So if you’re handling a probate in Texas, this probate guide is for you.

But first,

What is Probate?

First of all, what is probate exactly? Probate is simply the legal process of dealing with a deceased person’s affairs. This usually includes going through court to prove the person’s will is valid, paying off all debts, and dispersing assets in accordance with the will.

That’s great! But why do we have to do this and where did it all come from? To understand that, let’s take a step back to examine the origin of probates:

History of Probate

Although private property and formal judicial systems have existed since the days of the Ancient Greeks, modern probate law evolved over centuries. The concept of a property owner “willing” his or her property to inheritors didn’t arise until the early Middle Ages, with the first probate trial being recorded at least as early as the 13^th century. In those days, everyone had a will. In fact, it was considered a sin to not have a will! Not only should one have a will, it should specify a large portion of a person’s belongings be donated to the Church once that person died. Because of this, the Church had a very keen interest in making sure everyone’s will was properly carried out.

The term “probate” derives from the Latin probatio, meaning “to prove.” When someone died, the executor was to “prove” that the will was official in order to carry out the true wishes of the deceased. The earliest probate cases on record dealt with executors suing debtors of the deceased. This obviously prevented someone going into debt and trying to weasel out of debts when someone died. At the other extreme, it prevented someone from escaping debts through the murder (or “untimely death”) of their creditor. Since there was no overarching government to oversee these cases, the earliest probate cases were overseen by judges appointed by medieval church courts. Punishment for not fulfilling debts against an estate was excommunication.

Although it was less common, many probate suits were filed by creditors when people died still in debt. Of course, the will usually didn’t specify how to repay debts, so this often had to be settled by the Church courts and fulfilled by the executor.

By the early 1500s, the Church had begun to lose its jurisdiction over probates, with secular courts taking over as governments began to exert their power.

When the English colonists settled the Americas, they brought this system with them, and American probate law closely resembles the traditions that arose and evolved in the United Kingdom prior to and during the Middle Ages. The first probate court in the United States was created in Massachusetts in 1784. It has evolved since then to its current form, which is fairly standard throughout the United States, although with slight variations in each state.

Important Terms You’ll Find in This Probate Guide

Take anything you’re not familiar with, add in historical effects and legal mumbo-jumbo, and you have a complex array of terms that will make your head swim.

Here are some important legal terms you’ll encounter in the probate process.

• Executor. This is the person “executing” the will, and legally recognized as the personal representative of the deceased person’s estate. If you’re reading this, it’s likely you. When someone writes a will, they name someone they trust to make sure the will is carried out. That doesn’t mean the executor gets everything. In fact, the executor may actually get nothing! The executor simply ensures that the affairs of the deceased are properly taken care of.

• Administrator. What happens when someone dies without a will? That person won’t have an executor (since there’s no will)… but someone still needs to take care of their affairs. The person who takes care of an estate in the absence of a will is the administrator, and is appointed by the court when an executor is not specified or available.

• Testator. This is the person who’s will the executor must carry out. The word comes from the Latin testari, which means “to declare.” Think “testator” is a cool word? Testatrix (a female testator) is even cooler!!

• Decedent. This term is interchangeable with ‘testator.’ This is the legal term for the person who has died and whose estate is in the probate process.

• Beneficiary. A beneficiary is someone that is receiving assets from the deceased. They are ‘benefiting’ from the estate of the testator. In regards to probate, the term “beneficiary” is usually used interchangeably with “heir” although in general terms they mean different things.

• Intestate. You may hear this term during the probate process. When someone dies “intestate,” it means they died without a valid will. In cases like this, there are laws about who inherits the estate, usually a spouse, and then children if there’s no surviving spouse.

A Step-by-Step Explanation of the Probate Process

In theory, the probate process is simple: officially log the will, notify everyone who has financial ties to the deceased, settle debts, then disburse the remaining assets according to the will. In practice, this can be a very time consuming, bureaucratic, and frustrating process. Let’s dig a bit deeper into each step.

1. File petition with court

The first step is to officially and legally start the process with the courts. Every county has a probate court, and you’ll have to do this in the county of the decedent’s will. This is usually pretty straightforward but can get complicated, especially if you live far away from the court.

Once you know what county probate court to use, you’ll file the will with the court, notifying or claiming to the court (usually through application) that you are the legal executor of the will. If there are no objections to the will by family members, this is usually a pretty simple process. You show evidence the person is dead (through death certificate), prove the will is a legitimate legal document, and that you are the person identified in the will as the executor.

This is the general concept of how to file a petition but details will vary by state and county. The best place to find exact requirements is the county probate court itself. Simply call or look on their website for all the steps, forms, fees, and explanation of county probate requirements.

Probate Guide for Texas:

Relative to other states, Texas has a simple process to conduct probate. In many cases, the entire time in court may consist of a 5- minute hearing. Here are a few nuggets to know about going through probate in Texas:

• Timeline: In Texas, you have 4 years from the death of the decedent to file the will. Once begun, the filing process takes at least 2 weeks, starting with your application at the county courthouse. The next 2 weeks serve as a waiting period, during which time the county clerk announces that a probate application has been filed. This alerts everyone who might want to contest the will and directs them how to proceed. Once this waiting period is over, you will go before the probate judge and present the required administrative paperwork. This includes proving the person is dead.
• Even though probates are relatively straightforward in Texas, some county probate courts have been known to require you to hire a lawyer. See below for advice on hiring a lawyer.
• If you don’t live in Texas, you have to appoint a resident agent to represent you to the court.
• If there is no will, or the executor declines to serve, the judge will appoint an administrator according to this priority: spouse, principal inheritor, other inheritor, next of kin, creditor.
• Texas has a “small estate” process when someone dies without a will and the value of their assets (excluding homestead) is less than $50,000.

2. Notify all heirs and creditors

Once the court has recognized you as the executor of the will, you will need to start the process of notifying debtors and creditors that the person has died. Heirs will also be notified. Note: at this time, you cannot promise anything to heirs. This is because all debts must be settled by the estate’s assets, including expenses related to the death (such as legal fees and funeral expenses). For example, if someone wills their mansion to a nephew, but owes $1 million in back taxes, the mansion may have to be sold to pay the taxes first.

Probate Guide for Texas:

• Texas law requires that the executor publish a “Notice to Creditors” in a local newspaper. This notifies the public that the estate is in probate and gives them directions on how to make a claim.
• The other requirement is the executor must provide the court an “Inventory of Estate Assets” within 90 days of being appointed. This inventory is a line-by-line description of everything that the deceased owned.

3. Pay all claims, expenses, debts from estate

Even though someone dies, their debts don’t get forgiven. Mortgages, taxes, and expenses still must be paid. This is done by the executor from the assets of the testator.

Common debts include:

• Mortgages
• Taxes
• Medical bills
• Medicaid
• Personal, car, and/or student loans
• Alimony/Child support

Common expenses include:

• Legal fees
• Funeral expenses
• Accounting & tax filing fees
• Appraisals (for businesses and real estate)

Although debts must be paid, in many cases, the dead person’s estate will also have claim to assets. This may have to be handled by the executor, and usually involves a lot of paperwork, essentially proving over and over again that the person has died and that you are the person to collect the assets. Common examples include:

• Life insurance
• Retirement accounts

However, most of the time, life insurance and retirement accounts will have beneficiaries named, which means those beneficiaries can claim those assets and they won’t have to go through probate.

4. Transfer property and assets

Transferring and collecting debts often involves a lot of accounting work and administrative paperwork by the executor. Once that is finished, the executor should have a complete picture of the assets. At this time, s/he can begin distributing the property and assets of the deceased according to his/her will.

In many cases, the testator will make it simple, specifically assigning property and assets to specific heirs. In this case, it’s simply a matter of transferring ownership, and probably involves simply filling out some paperwork.

In more complex situations, the executor will have to take further action to fulfill the will. For example, if the major asset is a house, and the will declares the heirs should “share and share alike,” the inherited house may have to be sold so that its value can be split and distributed to the heirs. In a situation like this, the probate process could drag out for months, as the executor prepares the house to be sold, lists it on the market, collects the payment, and distributes the earnings to the heirs.

5. Closing out probate

Once you’ve settled all debts and distributed all the assets of the estate according to the will, your final step is to close out probate with the court. This usually entails filling out a specific form provided by the court. If the probate process was very complicated, this is where keeping track of everything through strict accounting will come in very important. Many courts will ask for receipts as part of this last step. Once you’ve shown that the estate has been sufficiently and legally closed out, the court will officially relieve you of your duties as executor.

Probate Guide for Texas:

There is no specific requirement to close out probate in Texas, but the option exists via a “Notice of Closing Estate” form you can file with the county court. This form simply states that all assets have been distributed, and lists the people who received the assets and their addresses.

Should You Hire A Lawyer?

This process is definitely manageable by a nonlawyer. However, there are situations where having a lawyer will make the process much easier, give you peace of mind, and protect you against potential legal pitfalls. If any of these situations apply to you, this probate guide won’t be enough, and you should strongly consider hiring a lawyer to help you with the probate process.

• • When someone is going to contest the will. Less than 3% of wills are contested, but they get ugly. If someone is going to contest the will, it’s time to lawyer up.
  • When required by the court/county law
    • Some counties and states require a lawyer represent the executor before the court.
  • There is a wide mix of assets.
    • Stocks or cash are very easy to divide among heirs. If the deceased owned a lot of real estate, or businesses, it’s going to be much more difficult.
  • Assets won’t cover liabilities.
    • What if there is $1 million in debt, but only $500,000 in assets? That could be a messy situation.
  • Conflicting or confusing guidance from deceased
    • If a CD has a long lost daughter listed as the beneficiary, but the will disowns her, you might need a lawyer to provide guidance on how to proceed. Or better yet, the deceased never updated his life insurance to remove his ex-wife. That’s a fun one.

How to find the best probate lawyer

If you decide you want a lawyer to help you navigate the probate process, here are some tips for finding the best lawyer.

1. Determine what kind of help you need.
   • Process or transactional help. If you just need a lawyer to help with administrative paperwork, and help with navigating the legal process, look for a transactional lawyer.
   • Litigation help. If someone is contesting the will, or there will be lawsuits (or threats of lawsuits), you definitely need to hire a probate litigator. Litigators will be experienced in fighting contentious battles and arguing in front of a judge.
   • Many probate lawyers can handle both transactional law and litigation. I recommend getting one specifically focused on whatever your need is. If you’re going to court, you want the lawyer who spends a lot of time arguing in court. A lawyer focused on probate litigation is your best bet. You’ll also find that most probate attorneys also practice other areas of the law as well, such as divorces or even criminal defense. When it comes to litigation, look beyond the “jack of all trades” and find the lawyer who eats, breathes, and sleeps probate law.
2. Look for areas of expertise in other relevant areas.
   • If the estate has large real estate holdings, it would be wise to look for a lawyer who also understands real estate law.
3. Look in the typical places you shop. Google, word of mouth, even Yelp, will provide you with numerous options to choose from. There are also many online review sites (which you can easily find through Google), such as Martindale, and SuperLawyers.

You can start with these sources but just use them to start your search. Don’t rely on them to affect your final decision.

4. Interview the lawyer. Call the law office and talk to the lawyer about your case. Most lawyers will offer a free consultation. If they don’t, move on! The first meeting is an important meeting for both you and the lawyer. The lawyer is trying to decide if s/he should take on your case, and at the same time, convince you to hire them.
   

What to ask the lawyer

• As executor, what parts of the probate process can I do on my own, without an attorney’s help?
• The estate owns property in another state, can you handle the probate process there, or can you recommend someone who can?
• The will names my sister and me as coexecutors, but she doesn’t want to be involved. Can I do the job without her?
• Is the lawyer responsive? (How long did it take you to get an appointment? That might be a good indicator)
• How big is your staff? What administrative help do you have? Who will actually be handling the paperwork, prepping for trial, etc.
• What is your experience in handling probate cases?
• Are you willing to work with me if I want to handle much of the probate work myself?
• About how long do you think it will take to go through probate and distribute the property?
• About how much do you think it will cost?
• How do you determine your fees?

How to approach disposition of assets

• Financial (stocks, bonds, CDs, money)
  • Financial assets are fairly easy to distribute, and depending on the bank / brokerage, might even be disbursed without selling.
• Real estate and businesses
  • If the deceased owned real estate or a business, you’ll have to get a formal appraisal before proceeding. This will tell you how much its worth so that you can divide the asset properly. Since these assets aren’t liquid, one of the sad things about inheritances is that often the asset has to be liquidated in order to satisfy the will. When the heirs are splitting the family home, they might be able to work out a solution to keep the home in the family. But creditors won’t be so flexible. This is the source of stories of families forced to sell the family farm just so they can pay the inheritance tax. Thanks Uncle Sam!
• Life insurance
  • Life insurance should be transferred automatically to the beneficiaries of the policy. If there are no beneficiaries, or the beneficiaries are already dead, the life insurance will be transferred to the estate. As the executor of the estate, you’ll have to distribute the proceeds based on the guidance in the will.

Tax consequences

• For the estate.

The executor has to file income taxes for the last year of the decedent’s death (assuming there is no surviving spouse). The executor is also responsible for past years, so if there are any years of unfiled taxes, it could get messy.

If there is a long period of probate, the estate might have to file taxes as well. For example, if a rental house goes into probate, the estate will get income from that property until the rental house is transferred to the correct heir. So in addition to filing income taxes for the deceased owner, the executor now will also have to file income taxes on the estate for the income it got from the rental property.

If the estate is large enough, the executor is going to have to file an estate tax return. As of 2017, any estates valued at over $5.49 million will have to file and will likely owe the IRS estate taxes (in addition to income taxes).

State taxes vary, and it’s possible you’ll also be filing state taxes for the individual and the estate.

Certain assets will be included in the estate for tax purposes, while others won’t. For example, annuities will be included in any estate taxes, whereas life insurance will not. Consult a tax expert for details.

• For the heirs

There are tax implications for the heirs also. For property, the “basis” value readjusts to the value of the property at the time of death. Take the example of someone who bought a house for $10,000 in 1970, and died in 2017 when the property was worth $1 million. If the property had been sold prior to the death, the individual would have had to pay taxes on the $990,000 gain. The heirs can sell the house for $1 million and not pay any taxes, since the basis is actualized to $1 million upon the owner’s death. If the heir sells the house a year later for $1.2 million, s/he will have to pay taxes on a $200,000 gain. This “step up” applies to all assets, including stocks and bonds (not just real estate).

Most states do not have inheritance taxes, but a few do (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania). If the decedent lived in these states, they will make you pay taxes on the inheritance.

While assets are “stepped up” in value when passed to an heir (allowing them to avoid taxes), distributions will be taxed. This often comes into play when someone inherits an asset (like a stock), that pays dividends or distributions. The dividends will be taxed when the heir received them, even if the overall asset was not. Similarly, a rental house may not be taxed, but rental income will be.

If the estate is complicated with various forms of assets, this probate guide is just a start. I recommend hiring an accountant to make sure all the i’s are dotted and t’s crossed. 
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