PROBATING A SMALL ESTATE

WHEN NO WILL EXISTS

JUNE 2008

By:  James M. Bright

Attorney at Law

The following is provided for informational purposes only and is not, nor should it be construed as legal advice.

            Many times this firm is approached with the problem of attempting to settle a deceased person’s property issues when they have died without a will and the estate is small.

            The problem arises because it is not usually in the best interest of the surviving heirs to incur large legal expenses to settle a small estate.  The cost is not only a problem for the heirs; most responsible attorneys do not wish to become involved with a matter that will cost the client an unreasonable portion of what may be recovered.

            The Texas Legislature has attempted to find a way to settle these estates by providing a means of obtaining a court approved order that may be relied upon by a debtor or transfer agent.

            This procedure has proven particularly helpful when a small bank account, retirement account or other deposit account exist which cannot be accessed absent a court order.  Other instances of need for this procedure arise if a small life insurance or burial policy exists which does not name a beneficiary who is still living.

            What is a Small Estate?  For purposes of a small estate proceeding, pursuant to V.A.T.S., Probate Code §137, a small estate is defined as one that does not exceed $50,000.00 exclusiveof homestead.

            This $50,000.00 limit is the gross (not net) value of the decedent’s separate property plus one-half interest in any community property owned at the time of death.

            In addition to the above, the decedent’s non-exempt assets must exceed the known liabilities.

            Homestead– An important distinction of this approach to settling an estate is the fact that the homestead is excluded.  It is interesting to note that the decedent could own a very expensive homestead, but so long as other assets do not exceed $50,000.00, the estate could still qualify for small estate treatment.

            This use of the statute may become important in those estates where almost everything has been liquidated and turned into cash except the homestead, and the cash has been placed in deposit accounts which pass to beneficiaries via a payable on death “POD” account.

            Although, it is feasible that a sizable estate could pass via an exempt homestead, coupled with “POD” accounts, and still qualify as a small estate, it should be emphasized that this is not a recommended or preferred method.  The most simple and least expensive approach to estate settlement is still believed to be probate of a will authorizing an independent executor to act.

            The information provided by this article is not intended to be used for an estate plan, but rather is intended to state one of the approaches that can be taken when no planning has been done and the decedent has not left a valid will.

            What is included in the Application for Small Estate?  Typically, what will be required is a sworn statement by each heir pursuant to the Texaslaws of intestate succession.  (See  www.houstontxprobate.com under tab “if no will” for a discussion of intestate succession.)

            In addition, there will need to be a sworn statement by two persons who are not heirs regarding the family history and establishing the fact that the heirs listed are the only heirs.  These persons must have knowledge of the family history of the decedent and must not otherwise have a pecuniary interest in the estate.

            The application will also set out the names of each heir together with the particular property rights due those heirs.  In addition to the sworn statements referenced above, the application will list the property which is to be subject of division.

            What record is made if the application is approved?  If the application is approved by the judge, it will be signed by him/her and made a part of the official records in that county.

            Will I get Letters of Administration or Testamentary?  No, the only record will be the one in the county records, but a certified copy of the application and order (obtained through the county clerk) will act as authority for the heirs to transfer property.  A debtor or transfer agent is protected in transferring funds or delivering assets by virtue of the certified order presented to them.

            The small estate affidavit is certainly not the only tool available to settle a small estate, but it is probably the least expensive and least time consuming when the facts surrounding the estate fit the procedure described.

James Bright is admitted to practice before the Federal Courts for the Southern District of Texas and Eastern District of Texas as well as all of the Justice Courts, Probate Courts, County Courts at Law, District Courts, Courts of Appeal and Supreme Court for the State of Texas.  He maintains an office in Houston and by appointment another at 208 McCown Street

in the heart of historic Montgomery.  Contact may be made by telephone (936) 449-4455 or (281) 586-8277.  For more information about wills or probate in Texas, please see- www.houstontxprobate.com