When someone in your family dies, you will begin the legal process of transferring assets out of their name and into the names of their beneficiaries. You will also need to identify debts owed by the decedent and determine which of those debts needs to be and when the payment should be made.
The Executor under the Will has the duty of marshaling the assets of the decedent, paying debts of the decedent and distributing the assets to the beneficiaries named under the Will. You will need to engage the services of a lawyer to help you with this process; and this is especially true for those folks who have a large net worth.
Let’s assume that the deceased loved one has a Last Will and Testament (a “Will”); and let’s assume he/she named you as the Independent Executor of his/her Will.
Here are most of the important things you will need to do:
1. Death Certificates Ask the funeral home to provide you with as many Death Certificates as there are known accounts or life insurance policies plus about 5 extra Death Certificates. If the funeral home is in Travis County, it will be able to provide you as many Death Certificates as you request. Expect the funeral home to deliver the Death Certificates to you in about 2 weeks.
2. Probate Information Contact a lawyer to help you probate the Will. The Travis County Probate Court requires each estate to be represented by a lawyer. Many other surrounding counties do not have this requirement. Generally, you will want to engage the lawyer who was the loved one’s lawyer or the lawyer who prepared the Will. Here is a list of information the lawyer (and the accountant) will need to assist you in administering the estate:
a. You need to get the names, addresses (and dates of birth if the beneficiary is under age 18) and social security numbers of all of the beneficiaries named in the Will.
b. You need to identify all known creditors. If a creditor is a “secured creditor”, then you will need to have the loan number and the legal description of the collateral for the loan. (E.G., your mortgage information or your car loan information).
c. You will need to make a list of all bank and brokerage accounts (including account numbers and addresses of the bank/brokerage company).
d. You will also need to prepare a list of all of the assets the decedent owned including joint ownership or community property assets. The more complete the description, the better it will be. (Note: you ordinarily do not need to make a list of furniture, inexpensive jewelry, or other personal effects.)
e. You will also need to provide information regarding prior marriages including names of former spouses and dates of divorce or death of former spouses.
f. It is always helpful (and often required) to provide the lawyer with the names of all children by each marriage including dates of birth (and death of children, if applicable) and names of grandchildren and dates of birth in the event a child has predeceased the decedent and has surviving grandchildren of the decedent.
3. Probate Proceedings You will need to “probate” the Will IF the decedent owned real estate or held other assets in his/her name. Probating the Will acts to transfer the ownership of these assets to the beneficiaries named in the Will. Probate proceedings in Texas are quite simple and inexpensive when (a) there is a Will, (b) the Will appoints an “independent executor” and (c) the Will has a good “self-proving affidavit”. All of these provisions are routine in most lawyers’ wills. A Will executed out of state may not conform with Texas requirements for execution; so, it is a good idea to have out of state wills reviewed by a lawyer for Texas law compliance.
a. The probate of a Will ordinarily is accomplished within 30 days from the date the Application for Probate is filed with the Probate Court. You will ordinarily appear in court just 1 time; and your appearance and testimony will ordinarily require less than 5 minutes before the judge.
b. You will be required to file an Inventory and Appraisement within 90 days from the day you are appointed as the Independent Executor. Your lawyer will prepare these documents based upon the information you have provided to him/her.
c. There are “notices” you will be required to give to creditors (especially secured creditors–e.g. your mortgage lender). Your lawyer will prepare these notices with your help.
d. There are “notices” that must be given to every beneficiary. Your lawyer will prepare and send those notices for you.
e. If the decedent owned property located outside of Texas, you will probably be required to have an “Ancillary Probate” proceeding in those states where the properties are located in order to get title transferred into the names of the beneficiaries.
4. Life Insurance Policies If there was life insurance insuring the life in the decedent, then you will have to file a claim with the life insurance company to receive the death benefits. Each company has a claim form; and you can obtain the forms by calling the companies.
a. Every insurance company will require you provide it with a Death Certificate.
b. Every insurance company will require you provide the names, addresses and social security numbers of the beneficiaries.
c. You should ask the life insurance company to give you a Form 712–this is an IRS form; and if you have to file a Federal Estate Tax Return, you will have to have the Forms 712 for every policy. So, best advice is to ask for the form when you file the claim. It is no big deal for the life insurance company to give you this form.
5. Retirement Plan Accounts If the decedent owned IRAs, then you need to know who are the beneficiaries of the IRAs. The beneficiaries are the ones who contact the IRA sponsor to obtain the sponsor’s forms for payment of the benefits. You need the advice of your lawyer or your accountant regarding “rollover rights” and “inherited IRA” issues. You can save significant amounts of income taxes with good advice.
If there is an “individual account retirement plan” (e.g. a 401(k) plan), then the beneficiaries will need to contact the plan administrator to get the plan’s forms to apply to receive the account balance.
If the plan is a “defined benefit pension plan”, the beneficiaries will also need to discuss death benefits under the plan .
You may need the assistance of a “benefits lawyer” to help you with making these claims. If you do not know the name of the beneficiaries under the Plan documents, then the Executor can request that information from the plan administrators.
6. Estate Tax Returns If the estate exceeds $5,000,000 (for those who die in 2011 and 2012), a Federal Estate Tax Return will be required. Your lawyer or your accountant or both of them can help you with this filing. All of the information set out in the paragraphs above will be required to complete this tax return.
7. Joint Tenants with Right of Survivorship If the decedent owned accounts which have the words “joint tenants with right of survivorship”, those accounts or assets automatically are owned by the other joint tenant(s) and no probate is required. However, these accounts/assets are part of the decedent’s “estate tax estate”–and so are retirement plan accounts and life insurance policies. Many folks are under a misunderstanding of what assets are included in the “estate tax estate” for estate tax purposes.
8. Intestate Proceedings When a person dies without a Will, he/she is called an “intestate”. If he/she owns assets that need to be administered, then the administration of that person’s estate becomes much more complex (and more expensive). You will need to contact a lawyer immediately following that person’s death in order to get the legal processes started in the administration of that persons’ estate.
9. Lost Wills If you cannot find the original will, then the Texas law presumes that the decedent destroyed the Will and thereby cancelled it. This presumption can be rebutted and a copy can be proved an admitted to probate. The cooperation of the entire family is extremely helpful. The point of this is: keep the original Will in a place where it can be found once the testator dies.
* The information presented in this section is not intended as legal advice in regard to any individual’s particular situation. It is intended only as an overview of legal concerns at the time of death. Please consult an attorney for advice in regard to your specific situation.