Affidavit or Probate

Should I Sign an Affidavit?

A common question I receive in my probate practice is whether inherited property can be transferred with an affidavit. I often get this question from potential clients who have either been approached by a family member about signing one, or who scoured the Internet for advice on “how to avoid probate“. In Texas, we have two types of affidavits authorized by law, the “Affidavit of Heirship” and the “Small Estate Affidavit”. Before explaining these affidavits, it’s important to first understand what is an Affidavit.

What is an Affidavit?

An Affidavit is a recital of statements and facts about a person, place, and events. An “Affiant” is a person who signs an Affidavit. When an Affiant signs an Affidavit, they are swearing to all the facts and statements in the Affidavit. This sworn signature is generally done in the presence of a notary after the notary has administered the Affiant an “oath”, for example: “do you swear under penalty of perjury that the statements you are making and the documents you are signing are true and within your personal knowledge?”

Should I Swear to an Affidavit If I’m Not Sure?

The oath the notary administers, and before an Affiant signs, asks whether the individual has personal knowledge of the facts stated or knows it to be true. That means first-hand knowledge, i.e. information known by direct means and not by second-hand reports from someone else. For example, if the Affidavit states that a person was married three times, but the potential Affiant only knew about one marriage, then they lack personal knowledge of all facts stated and should not sign the Affidavit.

Can I Transfer Property With an Affidavit?

The short answer is “No”. An Affidavit is merely a sworn statement of facts. When discussing Affidavits in the context of inheritance and probate avoidance in Texas, we are referring to the “Affidavit of Heirship” and the “Small Estate Affidavit”. But these Affidavits are no more than a sworn statement of facts concerning a deceased person’s property and family tree. The Affidavit does not actually transfer property, but is a document that a third party may rely on to transfer or convey property to the heirs listed in the Affidavit.

Therefore, whether a third party will rely on the Affidavit determines its usefulness. For example, many title companies are willing to rely on an Affidavit of Heirship to transfer title in a home sales transaction. Likewise, the Texas DMV recognizes Affidavits of Heirship as a means for transferring title to a vehicle. However, banks and other financial institutions are very reluctant to accept an affidavit as a basis for transferring account balances. Generally, banks prefer court orders that specifically direct who can receive the money in the account.

In Texas, a Small Estate Affidavit is filed with the court, and if the Small Estate Affidavit meets certain legal requirements, a judge will sign a court order on the Small Estate Affidavit. Some banks, recognizing the legal authority in the court’s signed order, may accept this form of Affidavit to transfer account balances to the heirs named in the affidavit. But most financial institutions are uncomfortable with this and generally prefer dealing with an authorized estate representative, instead. This is a person who has “Letters Testamentary” or “Letters of Administration“; documents that can only be obtained through formal probate proceedings.

Consequences of Transferring Property Without Probate

Not all decisional “consequences” are bad. If a third party is willing to accept an affidavit, then great! It’s simple and cost-effective. But, caveat emptor (buyer, beware!). Once property is transferred without probate, estate creditors may sue the heirs directly. Additionally, omitted heirs could sue for their share. Therefore, when a person dies with debt, or complex family situations, a formal Probate is a better solution for shielding heirs from creditor claims and delivering finality from family dynamics.

Adriane S. Grace is an attorney in Frisco, Texas. If you have questions about the probate process or an inheritance Affidavit you have been asked to sign in the Frisco, Prosper, Allen, McKinney, Richardson, Dallas, Carrollton, The Colony, or Denton area, please complete the contact form to request a meeting.

Estate Planning for Co-Parents

Estate Planning for Co-Parents

“Co-parenting”, “platonic parenting”, and “parallel parenting”–social terms to describe the reality of many modern families– is becoming the norm. But what happens when one of the co-parents dies?

When a Co-Parent Dies

As devastating as this is for the child, the hardship to a platonic co-parent is just as profound. Where there were two wage earners and two caregivers, there is now only one. The burden is greatest when a co-parent dies without an estate plan. Not only must the surviving co-parent comfort a mourning child, they must also figure out how to collect, and protect, their child’s inheritance.

However, under Texas inheritance laws, when a co-parent dies without an estate plan, the surviving parent may find themselves either (1) unable to access their child’s inheritance because they cannot afford the legal proceedings, or (2) with strictly limited access to this inheritance.

Why Co-Parents Should Estate Plan

Texas has probate and guardianship laws that address a parent’s failure to estate plan, but these laws are not always helpful. Additionally, the legal proceedings involved are costly. This is especially true in the case of co-parents who are not married to each other.

For starters, under Texas inheritances laws, minor children must share their deceased parent’s estate with that parent’s spouse. This is an uncomfortable situation for the surviving co-parent: to collect an inheritance for their child, they must initiate an adversarial legal proceeding against the deceased parent’s spouse.

Even where there is no spouse involved, the surviving parent will have another dilemma when there is no estate plan: asking a court’s permission to access their child’s inheritance. That’s because Texas default inheritance laws have only one goal–to protect the child’s best interest. The state “protects” this interest by strictly limiting a guardian’s access to the child’s funds. Further, Texas family laws unequivocally state that parents have a duty of support. And this duty is not eliminated or minimized when one of the child’s parents dies. In other words, under these laws, the surviving parent is 100% responsible for their child’s financial needs and the child’s inheritance may only be accessed under the most extraordinary circumstances.

How Co-Parents can Estate Plan, Successfully

Whether you are co-parenting, parallel parenting, or platonic parenting, you need a contingency plan. If you are parallel parenting, you probably have no influence over what your co-parent does. But, you can use these same guidelines to protect what your child inherits from you, while making sure they never lack what they need.

First, consult your financial advisors about life insurance. The best way to replace lost earning potential is through life insurance. And the best time to buy life insurance is when you are young and healthiest and can pass the medical underwriting process. If your employer offers life insurance, consider paying for additional coverage. In sum, life insurance is the cheapest and most effective way to provide for a young family at a time when “lifetime” savings may be minimal.

Second, consult with your estate planner about creating a trust for your child’s benefit. These trusts can be as simple as a testamentary trust; a trust in your Will that is effective only at your death. When you create a trust, you get to choose the trustee who will manage your child’s money. You also determine the age your child will be allowed to manage their own money (whereas, state law presumes everyone is responsible at 18). You can also choose how this money will be distributed. In the case of a spendthrift co-parent, or one who has a spouse you don’t trust, you can choose, instead, to have the trustee make distributions directly to the institutions providing for your child’s needs rather than to the co-parent. In doing so, you can achieve the same goals as state law, but without the financial hardship to your child.

Third, verify that all beneficiary designations on your financial accounts are payable to the trustee of your child’s trust and NOT the child or some other individual (if you have a spouse, there may be other considerations there). A beneficiary designation is a contract and contracts are highly regarded in Texas. Meaning, if you choose someone other than your child, or your child’s trustee, that beneficiary will have an absolute right to those funds and owes no duty to your child. Alternatively, if you name your child as beneficiary, the contract usually requires a caregiver to initiate a guardianship proceeding if they need to access the funds prior to the child turning 18.

Finally, if you are successfully co-parenting, you can talk to your co-parent about your contingency plan. These conversations should emphasize the shared goal of providing for the child’s financial and emotional needs. Stick with goal-oriented, non-judgmental words. If you need assistance with how to approach these conversations, contact your estate planner.

If you would like legal assistance creating a trust for your child, or advice on how to estate plan in a co-parenting situation here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and probate attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.

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Are Handwritten Wills Legal?: A Discussion of Holographic Wills

“Holograph” is a fancy term for a document written entirely in the author’s handwriting. A “Holographic Will”, therefore, is a Will written entirely in the handwriting of the person making the Will. These Wills are also referred to as a “Dying Man’s Will” because they are sometimes written when death is imminent and without the assistance of an attorney.

Are Holographic Wills Legal?

Yes, a Holographic Will is valid in Texas if the document is wholly in the handwriting of the person making the Will and is signed by them. The policy behind requiring the Will to be “wholly” in a person’s handwriting is to safeguard against fraud and forgery. Like formal typed-written Wills, the Holographic Will must have “testamentary intent”. That means the person making the handwritten document intended it to be a Will—a document that disposes of property after death.

Are Witnesses Required for a Holographic Will?

Witnesses are not required to make a handwritten Will valid. Additionally, a person making a handwritten Will can include a self-proving affidavit with the Will. This affidavit can be signed at the time the Will is made, or later, during the person’s lifetime. A self-proving affidavit must be made before an officer authorized to administer oaths, such as a notary or judge. There are several things the person making a handwritten Will must swear to in this affidavit, including that they were of “sound mind” when they made their Will.

Whether a person had the necessary mental capacity to make a Will is one of the top reasons Wills are contested in court. Although witnesses are not required to make a handwritten Will valid, having witnesses who can swear to the person’s state of mind at the time they made their Holographic Will, could prove useful.

Problems with Holographic Wills

Handwritten Wills are admitted to probate in the same way as typed-written, attorney-assisted Wills. However, these Holographic Wills can cause problems for beneficiaries and heirs. The biggest problem heirs and beneficiaries face is how to interpret instructions in a handwritten Will. Frequently missing from these handwritten Wills is the correct terminology needed to appoint an executor or create an independent administration. Additionally, handwritten Wills are typically written in “stream of consciousness” form, creating instructions that are open to more than one interpretation.

Thus, even if a handwritten Will successfully names an Independent Executor, the executor faces a tough job if their instructions are unclear. In these cases, an additional probate proceeding called a “declaratory judgment” may be required to aid the executor in their job. With a declaratory judgment, the executor obtains a court order construing the terms/instructions in the Will. This order allows the executor to carry out the Will’s instructions under court authority, thereby minimizing or eliminating their personal liability. However, such proceedings increase the costs of probate.

Sometimes a handwritten Will is better than no Will. But for individuals who have time to make an estate plan, consideration should be given to hiring an estate planning attorney. Getting formal legal assistance with making a Will is the best way to ensure a person’s wishes are correctly carried out.

If you would like legal assistance with making a Will, or probating a handwritten Will, here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me , an estate planning attorney and probate attorney for a consultation. In addition to in-person consultations, I am also available by teleconference and videoconference.

Social Security Benefits

A Guide to Social Security Survivors Benefits

What are Survivors Benefits: A Brief History

Economic insecurity was a social issue our nation addressed over 80 years ago with the enactment of the Social Security Act in 1935. What most people don’t realize is that the Act also provides survivors benefits: spouses, children, and dependent parents of a deceased worker can receive survivors benefits. Yet, few people understand the program rules for eligibility and may be reluctant to ask.

How to Become Insured for Survivors Benefits

Eligibility for Social Security survivors benefits is a matter of insured status. With few exceptions, a worker can insure his or her family for Social Security survivors benefits once the worker has 40 quarters of covered earnings. Breaking this down more simply: that’s 10 years of employment where the worker earned at least $5,640 per year, or $1,410 per quarter (2020 required amounts—prior years may be lower), in wages or self-employment income. The actual benefit amount will vary depending on the worker’s individual earnings and the number of quarters of taxes paid on those earnings, and can be greater for a family with more than one survivor (e.g. surviving spouse with surviving minor children in the care of a surviving spouse).

However, if the worker had income or wages not subject to the FICA tax then the worker will not be insured. Some examples are (1) state employees or public school teachers who pay into a state-sponsored, exempt retirement system, or (2) self-employed workers who fail to report their earnings to the IRS. 

Who Can Receive Survivors Benefits?

This is a 2-part question. First, is the question of the worker’s insured status (see above). Second, is the question of the survivor’s relationship to the deceased worker. Spouses and children may be eligible to claim on their deceased spouse or parent’s work record, but they must be able to prove their legal relationship to the deceased spouse/parent. Social Security follows state laws concerning the family relationship. For a child, this could become an issue if parentage was never established during the worker’s lifetime. For spouses that were “common law” married to the worker, but were never married in a civil ceremony, this could also pose a problem. A probate attorney can counsel and assist the family with the necessary state court proceedings to establish these family relationships. 

When Should You Apply for Survivors Benefits?

Application should be made as soon as you learn of the worker’s death, or otherwise become eligible under Social Security rules. Social Security will not pay more than 6 months of retroactive benefits for a minor child and 12 months for an eligible surviving spouse. Additionally, it’s important to understand that only eligible survivors can receive Social Security survivors benefits. Children can receive survivors benefits, but only until they are 18 years old and have graduated high school. Additionally, the living parent caring for a surviving minor child under the age of 16 may be eligible for Social Security survivors benefits if that parent had been married to the worker. This is true even if the surviving parent was divorced from the worker before the death occurred. An adult child who became disabled prior to the age of 22 may be eligible to receive survivors benefits into adulthood.

A surviving spouse is entitled to survivors benefits once they reach age 60 and as long as they have not re-married prior to then. However, if the surviving spouse is disabled, then they can apply for survivors benefits as early as age 50, but must apply within 7 years of the deceased spouse’s death. Additionally, if a surviving spouse claims the survivors benefits prior to their full retirement age, the benefit will be reduced. Finally, a divorced surviving spouse is also entitled to survivors benefits if they were married to the worker at least 10 years and did not re-marry prior to the age of 60.

Social Security survivors benefits can provide financial security during a time of loss. Understanding your benefits is a first step to preparing a lasting legacy for your family.

If you have questions about Social Security survivors benefits in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me, a Social Security Attorney, to discuss further. In addition to in-person consultations, I am also available by teleconference and videoconference. I also represent individuals in probate and guardianship proceedings needed to establish family relationships for the purpose of receiving Social Security survivors benefits.

Avoid Probate Image

7 Ways to Avoid Probate

Can I estate plan to avoid probate? In short, yes, there are some ways to exclude assets from probate.

What is Probate?

Probate refers to the legal process for distributing the assets of a deceased person, and often requires the assistance of an attorney and a court proceeding. Not only does probate come with a cost, court proceedings are a matter of public record. Privacy is also a driving factor in avoiding probate. Some of the below methods provide for the the transfer of assets without any public disclosures.

Here are a few estate planning methods for probate avoidance in Texas:

  1. Living Trust—In Texas, a fully funded Living Trust could potentially avoid the probate process. Any assets transferred to the trust can be administered and distributed according to the terms of the trust, even after the creator of the trust dies, and without the need for a court proceeding.
  2. Lifetime Gifting—Why wait until you die? You can transfer your assets during lifetime as a gift, and once that transfer is completed, the assets are not subject to probate. Gifting is also a great way to plan around potential estate taxes because certain lifetime gifts are excluded from the federal estate gift tax.
  3. Payable on Death accounts—Many financial institutions offer checking, savings, and brokerage accounts with a payable on death option. This is a contract between you and the financial institution that tells them who to pay the account balance to upon your death. The person you designate as the beneficiary of the account has no right to access account funds during lifetime. However, caution should be exercised here. Financial institutions often include terms in their depository agreements that give them the option to apply account balances at death to unpaid fees or even loan balances before distributing any funds to your designated beneficiary. Additionally, these account funds could be subject to garnishment for the payment of funeral expenses.
  4. Beneficiary Designation(s)—This method allows you to designate a beneficiary of the proceeds of a life insurance policy, or funds saved in a retirement account, upon your death.
  5. Transfer on Death Deed (TODD)—this is a Deed that providers for the transfer of real estate upon the death of the owner. If the deed is properly drafted, executed, and recorded in the deed records prior to death, the real estate will transfer to the beneficiary designated on the deed without the need for probate.
  6. “Ladybird” Deed—This is a Deed similar to a Transfer on Death Deed, because the effect of this deed is to transfer real estate to a person named on the deed without the need for probate. Users of this method should also proceed with caution and consult an estate planning attorney because this method has no statutory basis.
  7. Affidavit of Heirship—This method is used after a person dies, usually by the heirs of the deceased person’s estate during a real estate sales transaction in which all parties are agreed. An Affidavit of Heirship simply documents facts concerning the identity of the deceased person and his or her heirs and is filed in the deed records.

Plan for Avoiding Probate

As the saying goes, “the best laid plans of mice and men often go awry”, and engaging in self-help to avoid probate is no exception. Consult an estate planning attorney or probate attorney if you have any concerns about the probate process. Most of the time, probate cannot be avoided. Too often people leave behind assets that they neglect to plan for and most of the above-listed methods require careful, advance planning. Additionally, financial institutions prefer to act under court documents that appoint someone to act on behalf of the estate.

However, probate complications can be mitigated with careful estate planning. Moreover, probate can be a great tool for dealing with the debts a person leaves behind and should be carefully considered anytime someone dies with substantial debt.

If you have questions about estate planning to avoid probate here in the Dallas, Plano, McKinney, Frisco, Allen, & Prosper area, contact me to discuss further. In addition to in-person consultations, I am also available by teleconference and videoconference.