Over the years the idea of Probate has gained a reputation as a blood sucking administrative process that delays and depletes the rightful inheritance of widows and orphans. As a result, a culture of probate avoidance has arisen, which is often ill advised fostering sometimes tragic results as noted in a series of companion articles “Avoiding Probate – Getting Bad Advice”.
However, there is good news in Texas – under the proper circumstances “Independent Administration” creates one of the most family friendly and inexpensive probate processes in the country. Although there are justifiable planning strategies that may include bypassing the probate process, one should not seek to avoid probate simply out of a fear of expense and delays caused by old courts, old judges, and old lawyers.
Texas Probate Code Section 145 permits “Independent Administration” of an estate without court supervision, if a person provides for this streamlined process in their Will, or in some circumstances if agreed to by the beneficiaries of the estate. The most common and preferred method is a clear statement within the Will that expresses the intent of the following statutory language:
“Any person capable of making a will may provide in his will that no other action shall be had in the county court in relation to the settlement of his estate than the probating and recording of his will, and the return of an inventory, appraisement, and list of claims of his estate.”
In essence, once these administrative items are filed and the executor is appointed, the court says, “go take care of business and tell us when you are done”. In 2011 the Texas Legislature simplified the process even further by permitting an Independent Executor to file an affidavit in lieu of the inventory, appraisement, and list of claims if there are “no unpaid debts, except for secured debts, taxes, and administrative expenses, at the time the inventory is due”. Texas Probate Code Section 250(c) An inventory is generally due ninety (90) days after the executor is appointed, giving the executor sufficient time to pay unsecured debts and take advantage of this additional administrative benefit.
Notwithstanding this administratively simple and cost savings approach to probate there are circumstances when the more traditionally burdensome and expensive “Dependent Administration, must be undertaken. I call this the “mother may I administration” because the court closely supervises the probate process and court approval is required for virtually every action to be taken, thereby greatly increasing the costs and delays. “May I sell the house” – “Yes you may sell the house” – “May I sell it for this price” – “Yes you may sell it for that price” – “May I sell it to this person” – “Yes you may sell it to that person” – “May I fix the roof” – “Yes you may fix the roof” - “I sold it to that person, will you approve” – “Yes I will approve”-
While most executors and beneficiaries appreciate the freedom afforded by Independent Administration, in some instances an executor may actually prefer the specific court approval of every action taken by the executor as a protection from the heirs, beneficiaries, and creditors of the estate. This is particularly true when the beneficiaries are hostile to each other, there are difficult and conflicting claims of creditors, there is a risk that the estate could become insolvent, or there are disputes among beneficiaries or creditors about certain property.
It should also be noted that although a Will executed in another State will be admitted to Probate in Texas, it usually lacks the magic language providing for Independent Administration, and may therefore be burdened by the “mother may I” process. A new Texas resident should have their Will reviewed by a Texas attorney and discuss the advantages of Independent Administration.
Texas wants to make things simple for families who have lost a loved one, so the loved one should not screw it up by falling prey to the mantra of avoiding probate. A close friend recently bragged of his self created probate avoidance strategy, to which I commented - “John, your plan could result in you losing everything you have during your lifetime, and/or disinheriting your grandchildren forever – BUT you will successfully avoid probate”. His plan has been revised to include Independent Administration.
If you don’t know the law – know a lawyer.
© Will Morris, JD, LLM 2014