What Happens if I Die Without a Will?

When someone dies without a will, they die intestate. The practical effect of an intestate estate is that the state laws will apply to inheritance instead of passing the estate as directed in the will.

TEXAS INHERITANCE LAWS - The Laws of Descent and Distribution

In Texas, intestate succession can be simple or complicated depending on your personal situation. If you are married (just once) with children that are born of the marriage and no other children, and ALL of your property is community property, then your estate will probably pass how you think it will: first to your wife and then to your children.

However we live in the modern world and people have many different situations in life. For example, many people are getting married later and acquire significant separate property prior to marriage. If you have separate property that only belongs to you, then it won't all go to your spouse. Also, if there are children from a previous marriage, then the law actually protects those children by allowing the children to completely inherit the deceased parent's share of community property. In fact, the scenarios have become so complicated that practitioners like myself use charts to figure out who will inherit, like this chart from the Harris County Probate Court No. 1.

Not only that, there are many reasons why you do not want your heirs to receive their share of the estate immediately, so a system of wills and trusts would be preferable. For example, if your child is a minor or even a young adult, you do not want them to directly inherit any assets and setting up a court ordered trust to manage their money might take a long time and cost a lot of money. In addition, if your child or spouse is qualified for Medicaid (the medical insurance program for poor Americans) then by giving them an inheritance out of a trust, it could kick them off of Medicaid until all of their assets are spent down. It could cause a lot of problems in the future.

In addition, I tell my clients that dying without a will for lawyers is a "pay me now or pay me later" situation. My typical straightforward intestate probate with a full administration will START at around $8,000 and will take a minimum of 12 months to finish. If there are any hiccups or complications, it will take longer and cost more money. As I said previously, a straightforward estate with a will usually costs around $4,000 to probate and will take around 6 months to settle from start to finish.

In my opinion, the only person who benefits from dying without a will are the attorneys who get more money to probate an intestate estate! The only way to reduce costs to the estate and to ensure that your loved ones receive their inheritance how you want them to receive it is by having a will.

If you are ready to protect your loved ones by drafting your will, you can call Chiang Law Firm at 713-568-9206 to set up an appointment to talk to an attorney today!

Benefits of a Non-Probate Estate

For most of our clients, they want to have a non-probate estate. There are lots of benefits to non-probate estates. Namely, probate can be long and expensive due to court intervention and non-probate estates avoid that by staying out of probate.

WHAT IS A NON-PROBATE ESTATE?

Non-probate estates are estates that can pass entirely to your beneficiaries without any formal probate action in the courts. Most of my clients that come in who want non-probate estates went through the probate process recently with a loved one and realized that even simple probates can be cumbersome and expensive. The most basic probate that I do with a will can still cost around $4,000 to $5,000 and will take 6-9 months to complete. A properly set up non-probate estate will cost maybe $1,000 in legal fees and advice, and might take 3-4 weeks just to draft and file any additional documents that might be needed.

The average person might have 6 kinds of assets that pass to their loved ones. A house, a car, a bank account, a retirement account like a 401k or IRA, a brokerage account, and life insurance. You can pass your bank account, IRA, 401K, or life insurance through something called a PAYABLE ON DEATH BENEFICIARY or TRANSFER ON DEATH BENEFICIARY. Meaning, you heir would supply a death certificate to the bank/insurance company, and they’ll just write a check to whoever is the beneficiary.

HOW DO I CREATE A NON-PROBATE ESTATE?

For the assets that do not transfer automatically, we will have to do something else. For example, you can execute a transfer on death deed for your house or transfer on death title for your car. Transfer on Death processes for your house and car are similar to the payable on death beneficiary, so once you pass all 6 assets to your heirs, there’s no real reason to do a probate unless there’s an asset that still needs to be passed. These examples could be something that doesn’t have a POD beneficiary like real estate, oil and gas interests, business interests, intellectual property interests, a bank account or life insurance policy with a blank beneficiary designation or even newer assets like NFT’s and crypto.

You can also achieve a non-probate estate using a properly structured and funded revocable trust. At Chiang Law Firm we regularly use a combination of trusts, Beneficiary designations and Transfer on Death deeds/titles to create a non-probate estate for our clients.

DRAWBACKS

There are some shortcomings to this “easy“ form of probate. For example, if you name a minor as a beneficiary or someone who is disabled and is receiving Medicaid benefits as the outright beneficiary, you might have done more harm than good. For those estates we recommend using a system of transfer on death beneficiaries and trusts to make sure that those beneficiaries receive the benefit of their gifts, without causing future trouble for them. In addition, if you have heirs that should not have access to their money, such as those with substance abuse problems, or you want to do sophisticated tax planning you will need to reconsider this approach.

WHERE DO I START?

Call us so we can help guide you through this process! If you think you or someone you love has any questions about estate planning, give us a call at Chiang Law Firm at 713-568-9206, we would love to hear from you!

Happy Independence Day!

We will be closed for the Independence Day holiday on July 4. We will be open July 5 to serve you!