Essential Facts About Texas Inheritance Laws
Texas inheritance law dictates how a person’s property is distributed upon their death, and this can be a complicated process without a legally binding document dictating your wishes. In Texas, if a person dies with a valid Will or Trust, then the inheritance distribution process is fairly straightforward. The testator (or testatrix) of the Will determines who receives the remaining property after the withdrawal of debts after his or her death.
Texas does not currently have inheritance tax or an estate tax. The federal estate tax, however, is still in existence. The Federal estate tax only applies if the total value of the estate exceeds $5.25 million. An estate tax return must be filed with the IRS within nine months from the date of the decedent’s death, and the appropriate payment must be made to the IRS as well.
Yes. In many cases , the Texas Statutory Power of Attorney, Durable Power of Attorney, and Medical Power of Attorney are sufficient to resolve disputes among family members. If you do not have the above Powers of Attorney in place, then the decedent’s family members are mandated to undergo mandatory mediation in an attempt to settle the case without the need of litigation.
The goal of a Texas probate and trust attorney is to ensure that all matters concerning the estate are properly/administered by the fiduciary administrator appointed (named) in the legal documents. This means that the property of the decedent is properly distributed, debts are appropriately paid, Medicare reimbursement is addressed (if applicable), maintains proper accounting records, and meets other duties assigned to the fiduciary.
Wills in the Lone Star State
Wills are an integral part of inheritance law in Texas. At the most basic level, the testator must be at least age 18 to create a will, which may be signed at any time. While a will may be signed at any age, it is often created later in life, especially when the testator has acquired a sizeable estate and seeks to control the disposition of his or her assets on death.
The Texas Estates Code Section 55.001 sets forth formalities to be observed in creating a valid will; i.e., the signature of the testator at the end of the will, witnesses (who must be disinterested), testator must appear before the witnesses while known to be signing the will voluntarily, and the testator must understand that it is a will.
Under Texas Estates Code Section 241.001, Texas recognizes four types of wills: (i) a will in writing and signed; (ii) a will signed by the testator in the presence of two witnesses; (iii) a holographic will (signed by the testator with his or her own hand); or (iv) a self-proving will (a sworn affidavit of the witnesses and testators that is attached to the will).
The testator must complete the terms of the will and sign it. Thereafter, the document may be filed for probate, which is a process by which a court seeks to determine the validity of a will, the identity of the beneficiaries of the estate, and the amount of assets to be distributed.
This process includes preparing a court filing to open a file for the assets of the decedent, filing the original will within 20 days of death, posting notice to creditors, giving notice to the beneficiaries and certain other persons, obtaining the Court’s approval of the Application to Probate the Will as the Last Will and Testament of the decedent, and in some instances, confirming the appointment of an executor for the estate.
The probate process validates the will, and the assets of the testator are distributed according to the terms of the will. In some instances, a court can invalidate the will and set it aside. Cards, letters, recordings and other informal writings, such as pictures, have been found to constitute a will.
There are two types of distributions: tangible, which includes food, clothing and personal effects; and non-tangible, which includes money and notes. A will may include instructions for both tangible and non-tangible items. However, tangible items are often not included. Texas relies on statutory law to address the issue of the distribution and administration of tangible property at the death of a person. In intestacy, for example, the death of a person leaves behind property of less than $50,000; the personal property passes to a person designated under the list in Chapter 201 of the Estates Code.
A will must also dispose of any debts. The provisions in a will regarding the payment of debts take priority over those regarding distribution of property.
Intestate Succession in Texas Explained
When a person dies without a valid will in Texas, the state’s laws of intestacy govern the distribution of the deceased individual’s estate. In the absence of a will, it is essential to note that Texas statute contains rules for identifying the surviving family members who will inherit the deceased person’s property.
The primary principle under Texas intestacy law is that the closest.
If the deceased individual leaves no children, spouse, parents or siblings, then the estate will be distributed to a more distant relative. If a single person (not legally married) passes away without children, all of his or her property will be given to siblings and parents. If no siblings or parents exist, then the property will be inherited by grandparents, aunts and uncles, and finally other relatives as allowed by the law.
If the deceased individual has children but no spouse or parents, then his or her property will be distributed half to children and half to parents if living. If no parent is alive, the property will be equally divided among children of the decedent.
If the deceased individual leaves a spouse and children, the intestate succession law is slightly more complicated. In such a case, the surviving spouse will inherit one third of the decedent’s real estate and personal property, along with the right to decide from which property the spouse will be able to satisfy his or her share of the estate. The surviving spouse will inherit all real estate and personal property if the children of the deceased are not surviving him or are descendants of his surviving spouse.
Intestate succession rules also apply to inherited property. In general, property inherited from a deceased person can be disposed of like any other property owned by the inheritor.
Community Property in Texas Inheritances
Since the passage of the Texas Constitution in 1845, the citizens of Texas have been subject to the laws of community property. Under such laws, all income earned or property acquired by a spouse during marriage is presumed to be community property unless specifically proven otherwise. However, property is presumed to be the separate property of a spouse if the assets were owned by that spouse prior to getting married, inherited by that spouse, or received by that spouse as a gift.
The community property laws of Texas can have a clear effect on inheritance laws within the state. In Texas, a spouse may inherit property from a spouse who dies without a will regardless of whether the property is community or the deceased spouse’s separate property.
Where a person dies with a Will, the testamentary document can have a major impact on the surviving spouse’s interest in the decedent’s estate. There are many reasons why a spouse may choose not to leave his or her spouse anything in a Will or a Will may be written in such a way that ends up leaving a surviving spouse with no inheritance whatsoever. The most common of these is where one spouse might leave their property to the children from a previous marriage. Such Wills often specifically exclude a surviving spouse from inheriting anything from the deceased spouse’s estate. Even so, such a Will does not entirely disinherit a surviving spouse.
Under the laws of community property, a surviving spouse has a right to a one-half (1/2) interest in his or her deceased spouse’s community property, estate and interest. As such, every inheritance is subject to a claim by the surviving spouse for such property. While much is written about challenge of Wills, a surviving spouse may also file a suit for an elective share within months of the passing of the other spouse.
A surviving spouse that inherits a general disposition from their deceased spouse has a right to support and maintenance during the administration of their estate which must be paid from the separate property of the deceased spouse. This support may include either food and shelter alone or the same plus other forms of support such as clothing.
Where a spouse leaves his or her Property upon his or her death to the children from a former marriage, the property will be apportioned correctly so that the deceased’s estate does not incur the wrongful loss of any community property as a result of the election of a surviving spouse. For example, if an adult child is bequeathed his or her one-half interest in the decedent’s community property, the other half of the interest in community or separate property shall be apportioned from the deceased’s separate property, unless separate property is not available.
There are several exceptions proscribed by the law of intestates and testates that will not require a surviving spouse to contribute to the support of the deceased’s spouse. One such exception relates to auto insurance. Where the deceased has a motor vehicle with liability coverage, the one-half interest of the surviving spouse shall not be required to contribute to such liability coverage, unless such liability coverage originated from the deceased’s separate property.
It comes as a surprise to many people that most Wills do not disinherit a surviving spouse but such is the case under Texas inheritance law. In the event of an intestacy, spouse rights in Texas are great. In the absence of a Will, the surviving spouse’s inheritance will probably amount to a great deal of money and property. Even where a decedent does leave a Will, the amount of community property that must be apportioned to the surviving spouse may be far greater than assumed.
The Texas Probate System
The administration of the decedent’s estate will follow the law and any valid Will, and will be subject to the authority of the probate court. In Texas, most estate administration occurs in the Dallas County Court at Law in which the decedent was domiciled (lived in), or, if he or she had no domicile in Texas, the decedent’s county in which the principal estate assets are located. An ancillary probate will occur in each county in which the decedent owned property.
Upon filing the application for probate, the probate court may, upon request of the applicant, issue citations, that is, court orders, requiring notice to be given to all persons interested in the estate, and ordering them to appear and contest the application within a specific time period, or forever bar such person from filing a later contest of the Will, and bar them from inheriting any property that may lawfully be inherited under the Will. Under the "Deadline Statute," the date for a Will contest is the earlier of 2 years from the time that the Will is admitted to probate, or the death of the Decedent, whichever occurs first.
Notice of the hearing on the application for probate must be given not later than the 14th day before the date of the hearing to each named executor of the Will who is age 12 or older, to the following other interested persons, and to any persons requested to be cited, not later than the 14th day before the hearing. These persons will have the right to receive notice once the time-period for the probate has lapsed.
The Court may, after a hearing, enter an order admitting a Will to probate, and appoint an individual or corporation as independent, dependent, or community administrator of the estate, or order a previous court’s prior order to be vacated and set aside.
In addition to the lien of the estate for debts that may be owed by the Decedent, the real estate of the estate will also be subject to claims for property taxes that are assessed against such property. The property passing by inheritance is subject to the claims of all persons having secured debts on such property. Hence, the successor of such property or those claiming under the Will must pay the property taxes and such debts within six months from the date of the decedent’s death, with interest, in order to conservatively protect the property from claims of tax foreclosure or other asserted liens.
Duties of Executors and Administrators
A will in Texas must contain provisions which name an executor, or leave the appointment to be made by the Probate Court under applicable law. The executor of a will is nominated in the will itself, a testamentary writing. On the other hand, an administrator is appointed by the Probate Court under the application of someone with standing (such as the spouse of a decedent, the children of a decedent, a creditor of a decedent, the parent of a minor child of the decedent, etc.) under applicable law.
The executor or administrator gathers all of the decedent’s assets, pays the debts of the estate, and distributes the net assets to the persons who are entitled to inherit property from the decedent under his or her will or under the laws of intestacy of the State of Texas. The executor or administrator is responsible for valuing the estate, preparing an inventory of the property, filing tax returns , and collecting all property belonging to the estate. An executor or administrator of a decedent’s estate must also perform an accounting of the funds collected and spent during the administration of the estate.
If a person dies owning property, and no one has the authority to act to gather and distribute that property, no one has any property interest in the property owned by that person until a court authorizes the gathering and distribution of the property under the supervision and authority of the court. The executor or administrator acts subject to the authority and supervision of the probate court whose jurisdiction attaches upon filing of an Application for Probate. Where there is a decedent with an estate subject to probate, but no will, an administrator is appointed. Where there is a decedent with an estate subject to probate and there is a will, the probate court will exercise its jurisdiction over the estate by granting Letters Testamentary to the Independent Executor named in the will. The independent executor is then subject to the supervision and control of the court only if the will so directs.
Will Contests in Texas
If the deceased left behind a will or a "Death Certificate" indicating there was a will, you may contest its validity. It is a common misconception that you have to be the executor of the will, or the person named in the will, to challenge it. Any interested party has the right to file a lawsuit contesting the decedent’s will, including a distant relative or person named in a competing will.
The facts upon which a will contest is based fall into four categories: (1) lack of testamentary capacity; (2) undue influence exerted on the testator; (3) improper execution of the will; and (4) the presence of another valid will. Another ground for contesting a will is the testator being a person of unsound mind. This is similar to lack of testamentary capacity, but requires independent proof of the testator’s mental state. After the testator is deceased, this could be by submitting a medical record or a previously written letter or statement wherein the testator states he or she has been diagnosed with Alzheimer’s or dementia. However, if the testator suffers from a physical condition that results in an inability to communicate properly, you can prove unsoundness of mind simply by proving the existence of the affliction and the incapacity it causes.
Undue influence involves fraud, deceit, coercion, or misrepresentation of the testator by the person attempting to benefit improperly from the provisions of the will. Under intended undue influence, the person trying to benefit improperly exerts control over the testator by implying threats or actual threats of physical or financial harm to the testator or his family if he or she does not comply with the misleading or deceitful instructions. Undue influence is difficult to prove because it requires proof of actual control over or domination of the testator. This is a focus on control and not the content of the will. For purposes of undue influence, being a caregiver who transports the testator to locations where the will was signed is not sufficient to prove undue influence.
Improper execution of the will means the will was not executed as required by law. To be valid in Texas, a will must be signed by the testator in the presence of at least one other witness who also signs the will in the presence of the testator. The presence of witnesses is required to protect against fraud in which the testator could be deceived into signing the wrong document. Testamentary intent is also required for execution; this means the testator signed the will with the intent for it to take effect immediately upon exiting the presence of the witnesses. A will may still be valid in Texas even if improperly witnessed by two or more witnesses and improperly attested. A defective will may be deemed valid if the proponent of the will can prove by convincing testimony that the document was in writing, signed by the testator, and that the testator intended it to take effect upon his or her death.
If another valid will exists written by the testator after the creation of the contested will, a recent will usually invalidates all prior wills.
If you believe you might want to contest a will, you should consult with an attorney before filing the contest.
Federal and State Taxation Implications
Impact of Federal and Texas State Taxes on Inheritance
For 2019, the IRS has established a federal estate exemption amount of $11,400,000 per individual. That means that an estate can distribute $11,400,000 without any federal tax paid. Any amount greater than this will be taxed at 40%. For a couple, the exemption amount doubles to $22,800,000. While the idea of having a $22,800,000 taxable estate seems unrealistic, and it is, there still is such a thing as a gift tax exemption. Individuals can gift to one or multiple individuals up to $15,000 in 2019 without having to file any gift tax returns or paying any gift tax. This gift tax limit applies only to the annual gifts and not to lifetime gifting. Many people assume that they cannot give away more than $15,000, but, in fact, the exception to that rule is spousal gifting. There is no limit to how much you can gift to your spouse, tax-wise.
The State of Texas does not have an estate tax or an inheritance tax. Although it was repealed in 1981, Texas did have a gift tax, and individuals could deduct the value of gifts made to persons who were not family members. The only time that Texas has an inheritance tax is when the decedent dies with a principal estate in Texas and some interest in property located in a different state. If the estate subject to tax is in Texas and real estate located in Texas, then the state where the decedent resided does not put any inheritance tax on its residents.
Estate Planning with Legal Guidance
In this context, legal assistance will help when preparing the documentation necessary. In many instances, those who have written a will may be too ill, or cannot, due to other reasons, change their will to include property not there previously. Individuals can come into assets later in life that they may want to bequeath; without changing a will, those assets will become a part of the estate and handled according to intestacy laws. A durable power of attorney will ensure the transfer of those assets or even the ability to write a new will if circumstances allow.
Some estates will not have a will , even when there was an estate plan. If a will was never made, then state law will apply. However, if there was a will and property has been excluded through no fault of the grantor, the estate must be probated using the affidavit procedure.
Those administrating estates without a will should be aware that the amount specifically excluded from the inheritance is only $75,000.00. Amounts above that threshold are subject to dispute, especially if the economic circumstances of the decedent are not known. An attorney helps individuals avoid this kind of mistake during the estate planning process.
