Everyone has an estate plan, whether they realize it or not. In short, if you don’t have an estate plan, Texas has one for you, and its rules are in the intestacy chapter of the Texas Estates Code. Your debts will be paid, your assets will get distributed, and someone will take care of your kids. But who gets what, and who cares for the kids? You can answer these questions ahead of time with your own estate plan instead of leaving the matter Texas’ intestacy laws. But, if intestacy is going to apply, what’s going to happen?
Understanding the Estate
Only assets that are part of your estate are subject to probate. Some of these assets are not your estate and pass outside of probate. For example, if you have a life insurance policy, you’ve probably named a beneficiary. Upon your death, the beneficiary (usually a spouse or child) receives the money from the policy, so the policy is not part of your estate. Similarly, if you have an IRA or 401(k), you may have named the beneficiary of that policy, and if so, that asset passes outside of probate. Failing to keep those documents up to date can be disastrous. For example, failing to update a policy from an ex-spouse to a current one can have a very unintended consequence.
Your probate estate will distribute according to the intestacy rules. While these rules vary depending on your family tree, as a general rule, surviving spouses and children tend to inherit the lion’s share of the estate. For an unmarried person without kids, generally, parents and siblings tend to benefit.
If you die intestate, the price for probating your estate may be substantially higher than it would if you had a Will in place. In an intestate probate, the Courts are required to appoint an attorney ad litem to represent your unborn or unknown heirs. The Court will formally declare your heirship (meaning, have a judicial finding of who is in your family tree and thus who inherits) and there are numerous other legal hoops to jump through – which cost time and money, which will come out of your estate.
If you leave behind a minor child, and that child lacks a living parent, then a Court will select a guardian for the child based on what the Court determines is in that child’s “best interest.” The child’s inheritance will be managed by a conservator or a trustee until the child is 18, upon which time, the child will have permission to manage his or her inheritance. The Court will do its best to defer to your preference as expressed in a Will or other legal document. That is what a formal Will or trust will do if intestacy is avoided: it specifies not only who gets the estate, but who manages it for minor children.
What’s in the child’s “best interest” as guardian? A Judge is going to have to decide, and even though there are rules and guidelines in place that Courts follow, they’re not going to know everything that you knew. The Judge will have no idea what your wishes were because you didn’t write them down. They may or may not learn of things that happened over decades of family history, including all the skeletons in the closet. What’s worse, if your family decides to fight over who does or doesn’t become the guardian, they will burn through a good deal of the estate in legal fees in order to make that determination. All of these things practically guarantee a worse and more expensive outcome than would have been had by having your own estate plan done in the first place.
In conclusion, a Will and other legal documents are likely to reduce the overall cost of probating your estate, protect your children, exclude people from your estate who you don’t want involved, and even protect your children’s estates after they turn 18. As part of the process, you are likely to review those assets that will automatically transfer on your death, such as life insurance, and ensure that your estate is going to those who you intend to receive it.
Contact An Experienced Dallas Estate Planning Attorney
Whether you're planning your own estate, trying to understand a parent's estate plan, caring for an aging relative or facing probate, our experienced Dallas estate planning and probate attorney can help you navigate the process and safeguard your family's future. Contact Colin Smith Law today to schedule an appointment for a free initial consultation.