You Can’t Take it with You, but it has to go Somewhere by Ryan T. Webster

You can’t take it with you, but it has to go somewhere

We all know you can’t take it with you when you die, but you can take steps to ensure “it” goes were you think it should; otherwise, Texas law will decide for you. Ownership of some assets, such as life insurance proceeds and funds in bank accounts, may transfer to a designated beneficiary upon death. The property a person leaves behind is his estate. What follows is a general description of what may happen to a person’s estate after he departs and before it is distributed to his distributees.

The contents and value of an estate may change after death. Estates receive income and pay debts incurred by the deceased or his estate. Common income sources include rent owed to the deceased and dividend payments. Insurance premiums to insure estate property and funeral expenses are common estate debts.

In many cases, a personal representative must be appointed by a court to manage the estate’s affairs until it is closed. The personal representative figuratively steps into the shoes of the deceased and is tasked with such things as gathering the estate’s property and keeping it safe, filing a final tax return for the deceased, filing estate tax returns, paying debts, selling estate property, notifying estate creditors and beneficiaries, filing an inventory of the estate’s assets, and ultimately making distributions. A personal representative may have to account for all property that came through the estate while she is in charge. In carrying out her duties, the personal representative should never comingle estate assets with her own and should open a bank account solely for estate transactions.

A personal representative is either independent or dependent. An independent representative has autonomy to carry out her work with very little court oversight. Alternatively, a dependent represetative is closely supervised by the court that appointed him. Dependents must get court approval to purchase or sell property, pay most debts, make distributions, etc. Whether an administration is independent or dependent depends on the circumstances surrounding the estate and whether the deceased left a valid will.

A will may be offered for probate within four years of the testator’s date of death. The person who offers a will for probate is referred to as an applicant. To probate a will and have a personal representative appointed, the applicant’s attorney must file an application and the will with the proper court, provide certain notices, and present evidence at a hearing to substantiate the application. Most wills name a personal representative and do not require her to post a bond or file a final accounting. Wills that waive these requirements reduce costs to the estate. Once a will is admitted to probate, its directives may be carried out.

Alternatively, when a person dies intestate (without a valid will), different rules apply. The application process is similar but requires more steps and is usually more expensive. An attorney ad litem must search for missing or unknown heirs, additional witness must be called to testify in support of the application, and the personal representative is usually required to post a bond and file an accounting. Intestate administrations are also more likely to be dependent.

Intestate distributions to the devisees are governed by statute, not the wishes of the deceased. The Texas Legislature has considered multiple family structures in determining how estate property gets distributed. The right to receive distributions is based on marital status and degree of consanguinity to the departed. For example, if a married person dies leaving Wife and their two children, Wife inherits the community property and separate property is divide among Wife and the children, but no one else would inherit. If the two children were not Wife’s children, then the children inherit ½ of the community property and Wife the other ½. When someone dies without children or a spouse, their parents and siblings inherit. If there are no living parents or siblings, more distant relatives will inherit. If no heirs are found, an estate will ultimately go to the state. These statutes do not account for friends or more distant relatives who may be the natural object of the deceased’s affection. For example, a niece or neighbor who cared for mom during the year prior to her death. The statutes are ridged and may not allow the deceased’s wishes to be carried out.

This article does not discuss every way in which an estate may be distributed. Regardless of whether we depart with a will or die intestate, our property will ultimately go somewhere. To benefit those you love and to ensure your wishes are carried out, it is best to consult with an estate planning attorney and make a plan.

Ryan Webster can be reached at [email protected] and www.dentonlaw.com.