Planning Tools to Avoid Probate

Means of Avoiding Probate

Generally speaking, “Probate” refers to a Judicial proceeding in which a Court supervises the administration of the estate of a deceased individual. Such administration can be very limited or can be very closely managed by the Court.

Frequently individuals planning their estates want to plan to try to avoid probate all together. Depending on the nature of their estate, and the planning tools that they utilize, this is a possibility.  Probate is most often required when a person passes away owning assets which are held by a third party or in which ownership is determined by a document, such as a car or property title.  A third party, such as a bank or brokerage house, will not release property upon the death of a their customer unless there is a probate of the customer’s estate or there is some other procedure in place which allows them to turn property or funds over to the person entitled to them.

The key to avoiding probate is to analysis the assets of the person which to avoid probate and determine how all of the property owned can legally be conveyed to the person they desire to have it upon their death.

Living Trusts

One of the most common means of avoiding Probate is to create a Living Trust, sometimes referred to as a Family Trust. A trust is a legal entity which can own and convey property, just like a person. An individual can avoid probate, therefore, by transferring the ownership of all of their property to the trust. The person creates the terms of the trust and can be both the trustee and the beneficiary. When the person passes away, the property in the trust can remain in the trust for the benefit of designated beneficiaries or can be distributed as desired by the creator of the trust.

While such a trust can be effective in avoiding probate, it is not without its own complications. The trust documents can be complex requiring custom drafting by an experienced attorney. In addition, to be effective, all of the property owned by the individual must be transferred to the trust. For real estate, this requires that deeds be drafted conveying the property from the individual to the trust. Car titles must be reissued in the name of the trust and bank funds must be transferred to new accounts owned by the trust. If some property is overlooked, or if the individual fails to transfer to the trust new property acquired after the trust is drawn, probate of portions of the estate may still be required.

Affidavits of Heirship

Texas law provides that the ownership of Real Estate after the death of an owner may be documented by Affidavits of Heirship. The Affidavit of Heirship is a legal document which contains the family background of an individual, the facts of their death, a listing of their heirs as set out by Texas law, and a description of their real estate. One or more such affidavits are signed by individuals familiar with the individual and his family history. They are filed in the Deed records of the County and become documentation of the property passed by the deceased individual. While the use of such documents does avoid the need for probate, they are limited in that the property will pass only to the deceased legal heirs, and not to anyone of the the deceased selection.

Deed on Death

Another means of transferring real estate is a Deed on Death. A Deed on Death is a special deed authorized by Texas law. In a nutshell, it automatically conveys a piece of land to another person upon the death of the properties owner. With a Deed on Death, it is not necessary to conduct any proceeding in the Probate Court to transfer ownership of the real estate covered.  The Deed on Death provides additional flexibility due to the fact that it does not preclude an individual from selling the property and it can be revoked at any time prior to death. Such a deed can also leave the property in shares to more than one person and can provide for contingent distributions.

Vehicle Titles

The Texas Department of Motor Vehicles provides methods outside of probate for individuals to transfer title in vehicles after the death of the owner. One such method is by use of an Affidavit of Heirship for a Motor Vehicle. This document, TDMV form VTR-262, in combination with an Application for Texas Title (Form 130-u), allows an individual to transfer title of a motor vehicle to the heirs of the deceased.  This procedure does not require any planning on the part of the individual before they pass away. Using this procedure, the vehicle will pass to the legal heirs of the owner and not to someone selected by the owner.

Another method is for the owner of a vehicle to enter into a Right of Survivorship Agreement (TDMV form VTR-122) with one or more other individuals. In the case of the death of the owner, the vehicle will pass with probate court intervention to the other owners in the Survivorship agreement.

Thank you for your interest in these articles. Please remember that these articles are designed to provide general legal information and may not apply to specific legal situations. Legal matters can be complicated by issues outside of the scope of our articles. Publishing these articles does not constitute legal advice on the part of Davis McCown, Attorney at Law. Neither review of any article, nor use of the information provided, constitutes an attorney/client relationship. It is recommended that all estate planning documents and decisions be discussed with a qualified attorney.

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