When people hear talk of the probate process, they may cringe and have an idea that probating a will or going through an estate administration if someone dies intestate (without a will) should be avoided at any cost. Fortunately for those of us who live in Texas, the probate process is not nearly as onerous as it may be in other states. Thus, while there may be situations to seek out an alternative to the probate process, it is certainly not a goal that exists for every estate. Indeed, in many circumstances, going through the probate process or an estate administration may well be the cheapest and most efficient way to settle an estate.
That said, there are a number of alternatives to probate that may be available in certain situations. This blog post will highlight the most common probate alternatives for those involved in agriculture. For additional information, click here for a podcast I recorded with Stephanie Bradley Fryer. For additional information on alternatives to probate, click here for a podcast I recorded with James Decker.
Muniment of Title
My friend and estate planning attorney, James Decker, refers to a muniment of title as “express lane probate.” It is not necessarily an alternative to probate, but a different–simpler–approach to the probate process. This option may be ideal in circumstances where a person owned limited property such as a house or one tract of land and where there is no debt other than that secured by a real estate note. Importantly, a valid will is required in order to utilize probate as a muniment of title.
The probate of a will as muniment of title is governed by the Texas Estates Code Chapter 257.
Essentially, a muniment of title transfers title to property as directed by the decedent’s will without having an administration, meaning there are no Letters Testamentary issued by the court and no Executor appointed. In order to qualify for a probate as muniment of title, a court must determine that a valid will exists and should be admitted to probate, and either (1) the estate does not owe any unpaid debt, other than any debt secured by a real estate lien or (2) there is another reason that there is no necessity for administration of the estate. See Texas Estates Code Section 257.001.
An application for the probate of a will as a muniment of title including a number of required details must be submitted to the probate court. See Texas Estates Code Section 257.051. Once an Order admitting a will to probate as a muniment of title is granted, this is sufficient authority for persons to purchase, transfer, or otherwise transfer assets in accordance with the will.
Small Estate Affidavit
When a person dies intestate with an estate value of less than $75,000 (excluding the homestead and exempt personal property), a small estate affidavit may be a valid alternative to probate. This can be a useful option for persons who die intestate with the majority of their estate consisting of their homestead and non-probate assets like transfer on death accounts or other accounts with designated beneficiaries. Importantly, the small estate affidavit is only an option if the homestead is the only real property owned by the decedent and the property is to be inherited only by the decedent’s spouse or minor children. These requirements make the situations in which the small estate affidavit can be used fairly limited.
The small estate affidavit will allow the person’s estate to be distributed without the appointment of a personal representative. Small estate affidavits are governed by Texas Estates Code Chapter 205.
In order to qualify to utilize a small estate affidavit, the following requirements must be met:
(1) 30 days have passed since the death;
(2) No petition for the appointment of personal representative has been filed or granted;
(3) The value of the estate assets, excluding the homestead and other exempt personal property, on the date of the affidavit do not exceed $75,000;
(4) The affidavit setting forth family members, estate assets, known liabilities, and distributees of the estate;
(5) The judge approves the affidavit; and
(6) The distributees (people receiving assets) comply with the statute.
Importantly, note that the value of the estate is determined not on the date of death as is usually the case, but the date of the affidavit being executed. Additionally, the $75,000 asset limit does not include the person’s homestead, exempt property, or non-probate assets (such as retirement accounts or other accounts that will pass via contract to designated beneficiaries rather than by probate). For rural land, the homestead may be up to 200 acres per family or 100 acres per single person. See Texas Property Code Section 41.002. Personal property up to $50,000 per single person or $100,000 per family that will be used for the use and benefit of the decedent’s spouse, minor children, unmarried adult children, or incapacitated children is excluded from the estate value calculation. See Texas Property Code Section 42.001. There are a number of types of property that may be included under the definition of personal property including home furnishings, farm or ranch vehicles and implements, tools and equipment used in a trade or profession, jewelry, two firearms, and specific numbers of various species of livestock. For more details, see Texas Property Code Section 42.002. Lastly, keep in mind that non-probate assets are not counted toward the estate value, so were a person to have beneficiary designations or transfer on death accounts for all financial accounts, these would not be included when determining the value of the estate with regard to the $75,000 limit.
Do note one important limitation–the only real property that may be transferred pursuant to a small estate affidavit is the decedent’s homestead. See Texas Estates Code Section 205.006. That transfer may only be made to the decedent’s spouse or minor children; if anyone else is receive an interest in the homestead, a small estate affidavit is not a viable option. See Texas Estates Code Section 353.051.
Affidavit of Heirship
An affidavit of heirship may be an option in both situations where the person died with a will or died without a will (“intestate”). The affidavit of heirship is essentially the sworn statement of someone with knowledge regarding the surviving relatives of and property owned by the decedent. This is not an option where there may be unknown heirs. It may be useful in situations where real property is the only asset. These affidavits will likely not be options for estates with bank accounts or other financial assets as financial institutions are unlikely to recognize the affidavit of heirship since it is not executed by the probate court.
Affidavits of heirship are not based on statutory authority, but there is a statutory form for drafting an affidavit of heirship found in the Texas Estates Code Section 203.002. The form essentially identifies the person executing the affidavit, the deceased, the relationship between the two, and then sets forth the family members of the decedent including spouse, children, parents, siblings and any property owned by the decedent. The affidavit is filed with the County Clerk to be filed in the property records, rather than with the probate court. The affidavit may be executed by anyone with knowledge of the facts set forth in the affidavit, but depending on circumstances, there may be situations where a disinterested person to execute the affidavit may be necessary. For example, title companies often require that two disinterested persons execute the affidavit.
Deeds Transferring Property Outside of the Probate Process
I also want to mention that there are deed options that would result in the transfer of property outside of the probate process. These include Transfer on Death Deeds, Life Estate Deeds, and Lady Bird Deeds (aka Enhanced Life Estate Deeds). Each of these deeds must be executed before the death of the owner and will result in automatic transfer without the need for probate once the death does occur. For more information on Transfer on Death Deeds, click here. For more information on Lady Bird Deeds, click here. For additional information on Transfer on Death Deeds and Lady Bird Deeds, click here for a podcast episodes with Garrett Couts.