I got a call from a Dallas couple today. They asked a few questions that I thought I would share. They had heard about Probate and how it should be avoided, but, they really didn’t know what Probate was. So here’s what I told them:
Probate occurs whenever someone dies owning assets in their individual names. An estate can go through probate with a Will and without a Will. The main objective of probate is to change the title of assets from the deceased person to his heirs or beneficiaries. The title of assets is generally held in the owner’s name. When the owner dies, his assets are frozen and cannot be transferred without the names on the titles being changed. The probate court is almost always the only body that can change the title of assets from someone that has passed away. In addition to changing the title, the probate court resolves disputes amongst claimants, approves payment of creditors, inventories assets, and distributes the assets with good legal title to the heirs or beneficiaries named in the will. If there is no valid will, the assets are distributed according to the Texas law of descent and distribution. There are lots of disadvantages to Probate. First, probate can be a long and painstaking process. Probate can take from several months to several years to complete. Another major drawback of probate is that its proceedings and filings are a matter of public record. The probate court records that list your assets and their values and who receives your assets may be open to the public during the probate process and forever after. And, once they are part of the public record, they find their way to the Internet. This leaves the surviving spouse or other heirs vulnerable to financial scam artists who may have access to information relating to the surviving spouse’s and other beneficiaries’ inherited assets.
Probate will occur not only in the state in which you reside at the time of your death, but also in every state where you own real estate. And, in some cases, the probate court may require your executor or administrator to post a financial bond to ensure that he fulfills his duties. Many states’ laws set the fee attorneys and executors can charge. They require that fees be a fixed percentage of the estate. Using this method, fees can range anywhere from three percent to ten percent or more of your family’s gross estate. In Texas, we have a vague “reasonableness standard”. As a result, we sometimes see people paying a lot more than they should for the services that they receive.