“What a piece of work is man! How noble in reason! How infinite in faculty! In form and moving, how like an angel! In apprehension how like a god! The beauty of the world! The paragon of animals! And yet, to me, what is this quintessence of dust?” –William Shakespeare, Hamlet, Act II, Scene II
Q: Can I draft my own Will?
A: Yes, and the average person could repair their own car brakes, but many would be foolish to drive the car afterwards!
A properly drawn, “simple” Will in Texas is very inexpensive, especially compared to the money you would otherwise spend if you don’t have one. In 2009, a properly drawn “simple” Will may cost around $800-$900. If prepared correctly, it will save you thousands of dollars (maybe tens of thousands) in attorney’s fees, surety bond premiums, and court costs.
As long as the correct language from the Texas Probate Code is included, the executor of the estate can use a very simplified, inexpensive proceeding. However, missing that simple language could turn the probate into an expensive, tedious, time-consuming matter.
Often, a layman drawing up a Will simply lacks the training to “dot all the i’s and cross all the t’s”. Spend a few dollars and get the job done right, and save thousands in the process.
Q: Can I prepare a handwritten Will?
A: Yes. Also known as a holographic Will, a handwritten Will is valid in Texas. If drawn properly, it does not require many of the formalities found in a normal Will in order to be honored by the probate court.
Holographic Wills, though often better than nothing, are not recommended. A holographic Will cannot take advantage of the short cuts allowed by Texas law unless it includes the correct statutory language. Other drafting errors are also very common.
Writer’s cramp is a hazard, too: The Will must be completely in your handwriting. You can’t simply type it up and sign it.
Once again, though you can do one yourself, that does not mean you should. The small sum of money you save by not hiring a lawyer will frequently be spent many times over in the probate of the holographic Will. Texas allows a properly drawn Will to be probated much more inexpensively than one that fails to include the correct language. Very few laymen drawing a holographic Will know the proper language to include. Other drafting mistakes can also cause significant and needless additional expense.
Q: Should I have a Living Trust to avoid the expense and inconvenience of probate?
A: Probably not.
Avoiding the expense and inconvenience of probate by having a Living Trust is kind of like avoiding the high cost of food by dying; while the treatment of the problem is effective, the cure is worse than the disease.
In our opinion, Living Trusts are advisable only in very rare circumstances:
Q: Should I buy a Living Trust package that I heard about on T.V. or the radio?
Usually, the advertiser’s pitch is deceptive. For example, they say, “Avoid the cost of probate,” but they don’t explain that the Living Trust costs the same amount as (or more) than the probate with a well drawn will.
They say, “Avoid the inconvenience of probate,” but don’t explain that the work required to create a Living Trust (if done properly) is just as difficult. Worse, the Living Trust must be maintainedmuch like you’d have to maintain a gardenor you’ll end up with some assets “in” the Living Trust and some “outside” it. In that case, you’ll have to pay for both the Living Trust and a probate.
Finally, because Living Trusts are pre-packaged, the people who own them often do not understand how they work. Are you really going to sit down and read those several hundred pages of documents? If so, will you truly understand what you read?
Q: What is probate?
A: Probate is the legal process of using the court to get property out of a deceased person’s name and into the name of the rightful heirs.
Probate is generally a simple, relatively inexpensive process. A probate lawyer will do 80%- 90% of the work. There is nothing to be intimidated about.
Q: Is probate ever a good thing?
With a Will, probate is usually a very easy process. When probate is concluded, the proper heirs all have title to the property in their name and can treat it as their own.
Additionally, one of the biggest freebies Uncle Sam gives us occurs in probate court. It’s called a “stepped up basis.”
For example: In 1960 Mr. B buys a house for $30,000 dollars and when he dies the house is worth $130,000 with no debt. After the house goes through probate and his children sell it, they pay no income taxes on the $100,000 gain. If, however, Mr. B avoids probate by giving the house to his children before he dies, then they will all have to pay income taxes on the $100,000 gain.
Q: Does everyone have to go through probate?
Probate is only necessary when the deceased has property titled in his name that must be transferred to the heirs. For example, if someone died and only actually owned the furniture in the apartment that they rented, then probate would not be necessary or advisable. The items could simply be handed to the heirs and they would be free to use them.
If, however, someone dies owning real estate, stocks, etc., then a transfer of the record title to that property must occur. Since the deceased is not present to sign anything, the probate court must step in. Unless the deceased held title to property in their name (car title, land, bank accounts with no beneficiary designation, recovery from a pending lawsuit, etc.), there may be no reason to file for probate.
Even if you have property that you need to access, occasionally Texas allows short cuts that let you either avoid probate or go through a less expensive form of it.
If, for example, someone dies who lives in a rental home, all of the deceased’s bank accounts allow another person to sign on them, there is no life insurance (or what there is has beneficiaries properly designated) and the only assets are some furniture and a car; then all of that can, usually, be resolved without having to go through probate.
When in doubt, meet with a good lawyer, tell them your situation and follow their advice.
Q: Do I need a Will? Why?
A: If you don’t have a Will, Texas essentially writes one for you. Since the state’s version is ‘one size fits all,’ chances are you won’t like the way Texas divides your property, or the cost that goes along with it. The “Will” Texas writes for you does not use any of the legal “short cuts” available.
When you draw up your own Will, you designate your heirs as the people who will inherit your belongings. You can include language from the Texas Probate Code in your Will that will save you and your heirs thousands of dollars and avoid many nights of lost sleep.
Lawyers who bug you about having them prepare your Will are actually looking out for you and costing themselves a lot of money. When there is no will, a “dependant” probate will keep the lawyer employed for many months, possibly years, and generate a great deal of income for him.
Q: If I don’t have a Will, will the State of Texas get my money?
A: No, probably not.
It is very rare for property to “escheat” to the State of Texas simply because you had no Will. The person who will end up with a big bunch of the deceased’s money will be the lawyer. His work is a lot more difficult, so his billing goes way up.
Q: My spouse died years ago and I didn’t probate the estate. Is that bad?
A: It could be.
No one will knock on your door after your spouse or loved one dies and ask you, “When will you be filing for probate?” After a death, some people go into denial about the situation and never follow up with probate. This can create several problems. First, after four (4) years you may not be able to probate the Will or the estate. Second, heirs could die, and the complexity and cost to “clean up” the titles to land and property could skyrocket. Sometimes, an heir will also die, and leave small children as heirs. The latter requires you to open a guardianship for the children in addition to the probate ($$$$$). Finally, you may need to act quickly (e.g. the problem was discovered when the living spouse is trying to sell the house because they are in desperate need of funds) and the probate drags the process out for many months.
Ideally, the process will be started within 60 days of the death. Waiting four or five months to begin is not a problem (unless there are other issues that surface—like not having access to funds solely in the deceased’s name).
We have had cases where the living spouse never got around to probating the estate. Time passed and the heirs died, some with Wills and some without. When the heirs died, their children became the new beneficiaries. By the time the family came to us, the cost of the probate would exceed the value of the land. The more time that passed, the worse the problem got.
The general rule is—beginning sooner is better than later.
Q: Should I make my estate the beneficiary of my life insurance?
A: Generally speaking, no.
Life insurance passes outside the estate and is handed directly to the beneficiary. Since the lawyer is not involved in the process (or has very limited involvement), you will pay very little or nothing in attorney’s fees on the transition of those funds. If you put them into the estate, then the lawyer will have to take actions on those funds and you will incur those charges.
Sometimes it makes sense to put the funds into the estate. For example, if you have a child under the age of 25 and you want the funds to go into a Testamentary Trust, then making the trust the beneficiary could make sense. As always, confer with a good lawyer before you make the decision to run life insurance proceeds thru your estate.