What Happens If Someone Dies Without a Will in Texas
If you’re settling the estate of a deceased person who didn’t have a will, the family and loved ones often want to know what happens if someone dies without a will. In this situation, the distribution of the estate is governed by Texas intestacy laws, which determine who will inherit, how much will they inherit and in what order. Understanding how these laws work can help reduce confusion and prevent disputes during an already difficult time. What Types of Property Aren’t Passed by a Will Not all property is handled through intestate succession laws. Certain types of property pass directly to beneficiaries when designated, bypassing probate. Examples include: Life insurance proceeds Transfer on death real property deeds Payable on death bank accounts IRA, 401(k), or retirement plan where the beneficiary is named Stocks or other securities held in a transfer-on-death (TOD) account Who Becomes Executor if There Is No Will When there is no will, there is also no named executor to handle the deceased person’s estate. In this case, the probate court will follow Texas law, which sets out a specific order of priority for appointing someone to serve as the estate’s personal representative. This person is often called an administrator rather than an executor. The list in the Texas Estates Code generally begins with the surviving spouse, followed by the principal heirs, and then other eligible family members. If none of these individuals are willing or able to serve, the court may appoint another qualified person, such as a creditor or even a public administrator. Understanding Intestate Succession in Texas In Texas, intestate succession determines how an estate is divided when someone dies without a will. Who inherits depends on whether the deceased had a surviving spouse, living children, parents, or other close relatives. If you die without a will, determining where your property will go can be complicated and stressful for the family. In Texas, your family must first determine if the property is community property or separate property. We help our clients to make this determination. What Happens When a Married Person Dies Without a Will? In Texas, the spouse’s share of the property is determined based on whether the property is separate property or community property and whether the deceased spouse had children outside of the current marriage. Community property: This is property acquired during the marriage. The spouse will inherit all community property if there are no other children outside the marriage. If there are children outside the marriage, the surviving spouse does not inherit any of the deceased spouse’s community property, and the children split the deceased spouse’s share of community property. Separate personal and real property: This is property acquired before marriage or by gift or inheritance. This is divided according to Texas intestate succession laws which can be confusing and complicated. Our firm assists clients before death in preparing their estate planning documents so that they are not surprised. What Happens When a Parent Dies Without a Will? In Texas, your children may receive a share of your property when you die without a will. The size of the child’s share […]
Read moreDo I Need a Trust?
Frequently, my clients ask, “Do I need a trust?” and wonder how to avoid probate. My answer is that it depends but there is a good chance that a trust is not what you need. There are times when a revocable living trust is an effective estate planning tool, but for many clients, it is a waste of money. Trusts are promoted by many websites and literature that the public receives. Trusts are not a solution for all. To determine if a trust is a good idea for you, it should be discussed with an estate planning attorney. Please call our office to set up a free consultation. What Is a Trust? A trust is a legal arrangement where one party (the trustee) holds and manages assets for the benefit of another party (the beneficiary). Trusts are often used in estate planning to ensure the assets are distributed according to your wishes, both during your lifetime and after death. Trusts can also be used to manage assets in the event you become incapacitated. There are different types of trusts, such as: Revocable trust: Can be changed or revoked during your lifetime. Irrevocable trust: Cannot be altered after it is created. Testamentary trust: Created through your will and takes effect after your death. Reasons A Living Trust Might Not Be Necessary 1. Probate is Not Complicated or Expensive with Proper Planning The price for creating a revocable living trust, funding it, making transfers into the trust, and related documents may exceed the cost of probate for a will that is properly drawn up to provide for independent administration. 2. Probate Under a Well-Drafted Will is Timely and Efficient Texas law streamlines the probate process, and there are rarely long delays when there is a properly drafted will. An independent administration under a valid will requires only one hearing and minimal court involvement in the process. A competent and conscientious executor will move the process along quickly unless there are unusual complications. 3. Avoiding Probate Without a Trust You can avoid probate of many assets by placing them in a transfer on death deed or account with the right of survivorship, beneficiary designation, or payable on death designations. This may be a simpler way of passing on many assets upon death rather than spending the money to place assets in a living trust. If beneficiaries are minors or have special needs, you may require a trust, but maybe a will can also accomplish these desires. 4. Estate Tax Planning is Not Needed for Most People Under current estate tax regulations, unless you have an estate worth well more than $12 million per person, you have no need for a living trust to avoid estate taxes. This could change in the future if Congress changes the estate tax laws. 5. A Trust Is Only Effective If Properly Funded If assets are not properly funded to the trust, the value of the trust is void, and probate is still required. When a person has a revocable living trust, all assets must be properly titled. If this is not done, there may still be a […]
Read moreWhat Happens When There is No Will?
What happens when there is no will? If you fail to make a living will before you die, your estate will be distributed according to the Texas Law outlined in the Texas Estates Code. What Is Intestate Succession? Intestate succession refers to the process by which Texas law distributes a person’s assets when they die without a will. The law prioritizes heirs based on their familial relationship to the deceased, with surviving spouses, children, and other close relatives generally receiving the estate. However, this process may not align with your personal preferences, which is why an estate plan and properly drafted will is essential. What Property Is Affected by Intestate Succession? Not all assets are handled by intestacy law. Some properties may bypass probate and go directly to beneficiaries (e.g. life insurance, retirement accounts, transfer on death deeds, transfer‑on‑death accounts). Different Types of Property: Community Property vs Separate Property In Texas, state law classifies assets into two primary categories: community property and separate property. These classifications impact how your estate is divided when you die without a will. Community Property Acquired during marriage (except gifts or inheritance) Typically includes income, real estate, and joint purchases made while married Separate Property Acquired before marriage Inherited or gifted property Real estate or other assets clearly designated as separate The classification of property will affect the division of the estate in the Court when someone dies without a will. How Is the Property Distributed From a Person Who Dies Without a Will? Below are possible scenarios under Texas Estates Code: Scenario 1: Surviving Spouse & Children (All children are children of surviving spouse). Surviving spouse inherits all of the community property. Surviving spouse inherits 1/3 of separate personal property and a 1/3 life estate in separate real property. The remaining 2/3 of the separate personal property is divided among the children. Scenario 2: Surviving Spouse & Children from Another Relationship (Blended Family) The surviving spouse retains his/her 1/2 interest in community property. The deceased spouse’s 1/2 interest in the community real property and personal property goes directly to decedent’s children. The spouse inherits 1/3 of separate personal property and a 1/3 life estate in separate real property. The remaining 2/3 of the separate personal property is divided among the children and all separate real property subject to the surviving spouse’s 1/3 life estate goes to children. Scenario 3: Not Married with Children All probate property passes to children or to children’s descendants by representation. Scenario 4: Married Person, No Children The spouse inherits all of the community property. Separate property is distributed differently if parents or siblings are living of the deceased spouse. The Risks of Dying Intestate When a person dies without a Will, Texas probate law determines: Who gets what Who inherits pursuant to the Texas Estate Code Who manages the estate In many cases, meeting with a lawyer is helpful to understand the results of not having a will and the benefits of having a will. How to Avoid These Risks: Planning With a Will Creating an estate plan and drafting a will ensures that your assets are distributed according […]
Read moreHow Cryptocurrency and NFTs Fit into Your Estate Plan
Five years ago, cryptocurrency was probably not on your radar. Today, it may be an important investment in your portfolio. You could even own some nonfungible tokens (NFTs), which are powered by the same blockchain-based technology. Despite the dizzying fluctuations in the value of these assets, you should ensure that they are included in your estate plan so you can preserve them for your heirs. Preserving Cryptocurrency: Now and Later Cryptocurrency, which is digital money, is exhibiting stability as part of the global financial landscape, even though the value of individual coins (units of cryptocurrency) has been notoriously volatile. The overall market hit $3 trillion in value in 2021, only to lose $2 trillion in value so far in 2022. Emerging from the ashes of the 2008 financial disaster, cryptocurrency is likely to retain its status as an investment option because its holders enjoy freedom from government and bank control. This advantage can become a drawback when it comes to preserving cryptocurrency. Before you consider including cryptocurrency in an estate plan, it is imperative that you hang on to your digital cash on a day-to-day basis. This involves preserving the passwords and digital wallets (storage units) connected to your cryptocurrency. This will avoid a disastrous situation like the one that befell a Welsh man who accidentally threw away half a billion dollars’ worth of Bitcoin.[1] Consider the following options to preserve your cryptocurrency: Hot wallet: An online app that provides convenience but is vulnerable to being hacked or stolen Cold wallet: An offline storage device that avoids hacking but is a small item and easily misplaced Custodial wallet: A third-party crypto exchange that holds your coins, avoiding the risk of losing the device, although the company could freeze your funds or be the target of a cyber attack Paper wallet: A printed list of keys and QR codes that is safe from hackers but easily misplaced Tax Consequences to Consider Another important consideration is that the Internal Revenue Service (IRS) considers cryptocurrency to be property rather than currency. That means it is subject to capital gains tax. Whether the owner holds it for longer than twelve months determines whether the IRS will assess short-term or long-term capital gains tax. Exchanging cryptocurrency for fiat currency (a country’s official money) is a taxable event, as is exchanging one kind of cryptocurrency for another (e.g., exchanging Bitcoin for Ether). If you are in the business of selling or creating cryptocurrency (called “mining”), ordinary income tax rates will apply. What about NFTs? NFTs are unique digital collectible items. They are based on the concept “I own this.” It does not matter what “this” is, just that it is valuable or may gain value someday. That is why various digital collectible assets, such as the following, can be characterized as NFTs: Digital artwork Video clips Social media posts Memes Gaming tokens Digital real estate While being the owner of the virtual Pyramid of Giza may seem silly today, who knows how much it will be worth tomorrow? This makes a little more sense when we think about emerging technologies like virtual […]
Read morePlanning for Your Digital Legacy
An estate plan often focuses on tangible property such as jewelry, artwork, money, and vehicles. However, in this age of technology, it is important to remember to include your digital assets. Digital assets consist of everything we own online. Because we spend more time on computers and smartphones than we ever did before, you may not realize how much digital stuff you own, from photos and videos to online accounts, cryptocurrency, and nonfungible tokens (NFTs). Why Is It Important to Plan for Digital Assets? Planning for digital assets is important for several reasons. First, without a plan, digital assets may get lost in the Internet ether and not pass to your loved ones after your death due to the simple fact that their existence is unknown. Second, planning now means your family will not have to worry about hunting for these items upon your death while also grieving a beloved family member. Third, like most adults (roughly 70 percent of them), you want certain aspects of your digital life to remain private. If you do not create a plan, your loved ones may learn things that you wish to keep secret. Finally, planning now can minimize the risk of identity theft, which happens to 2.4 million deceased Americans each year. Keep reading to learn more about why it is important to include digital assets in your estate plan and how to account for them. Digital Assets: What Are They? Instead of existing in photo albums and on videotapes and DVDs, most of our family photos and videos are now digital. Even if they lack commercial value, they certainly have sentimental value that you want to preserve for your family and friends. Social media accounts containing your photos and videos can also have value to your loved ones when you are gone. For example, a Facebook account can serve as a memorial after you pass away. When you consider all of the other accounts that you log into (more than 130 on average), the list becomes quite lengthy. Digital assets that you may own include the following: Social media accounts (e.g., Facebook, Twitter, LinkedIn) Financial accounts at brick-and-mortar and online institutions Business documents and other files stored in the cloud Cryptocurrency NFTs Databases Device backups Internet domain names and uniform resource locators (URLs) Streaming service accounts (e.g., Netflix, Peacock, Hulu) Merchant accounts (e.g., Amazon, Etsy, eBay) Gaming tokens Virtual avatars Points-based loyalty programs (e.g., for groceries, gas stations, airlines, and hotels) Rights to intellectual property, artwork, and literature Online betting accounts Monetized video content Including Digital Assets in Your Estate Plan Taking inventory of your digital assets may take some time, but it is worthwhile. If something were to happen to you, your estate planning attorney or another trusted person should have complete access to your online footprint. This includes usernames and passwords for all accounts. Tools such as Dashlane or the password manager integrated in your browser can be used to simplify the storage of usernames and passwords. In addition, you should continuously back up all digital assets, including photos and important documents, to the cloud, and […]
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