The Probate Process
The probate process, is the legal process that a will goes through to determine whether it is a valid will or it is not. Once a judge declares the will is valid, then an executor or administrator is appointed. Upon appointing an executor or administrator a person’s (decedent) debts are paid and assets are distributed upon his or her death. Individual state laws direct the probate court how to distribute the deceased’s estate. State laws and procedures vary greatly, so it is important to consult a firm with expertise in this area of the law to ensure that the deceased’s assets are distributed correctly. Probate consists of laws dealing with the validity of wills, administration of estates and sometimes over the affairs of minors and persons adjudged incompetent. Texas has a simple and cost effective process to probate a properly drafted will.
Types of Probate:
Probate Administration Issues:
The independent executor is going to have the same responsibilities to the heirs and beneficiaries of the estate as any executor or administrator—he will be required to 1) collect the assets, 2) pay off any debts, and 3) distribute the assets according to the Will or according to Texas law if the Decedent did not leave a Will. As part of this process, the independent executor is also required to satisfy a couple of requirements to the Court — 1) to publish a notice to potential creditors in a newspaper and 2) to file an inventory with the Court showing the assets of the estate.
The Executor or Administrator has essentially 3 functions, which are as follows:
- Identify and Collect the assets of the Decedent’s estate;
- Pay any debts that the Decedent owes at the time of his or her death; and
- Distribute the remaining assets according to either the Will or pursuant to Texas law if the Decedent died without a Will.
The executor or administrator bears a substantial responsibility to the heirs and beneficiaries of the Estate, as well as a corresponding duty owed to Probate Court. Prior to agreeing to serve as the Executor, you should fully understand the responsibilities of doing so. Failure to fulfill those obligations may subject the executor to being sued by the heirs. If you are have been nominated to be an executor or are considering applying to be the Administrator of an estate or have questions about your responsibilities for serving in that position, please feel free to contact the Mora Law Firm, who will be glad to assist you in understanding these duties.
Tax issues an executor or administrator may consist of:
- Issues related to the Decedent's final tax return
- The Estate tax return
- Income tax returns for the Estate
- Income tax consequences to the beneficiaries of the Estate
Special Power of Attorney
This authority is for a particular purpose only and does not give authority for any act not specifically listed. An example of a special power of attorney might be used to authorize someone (your attorney-in-fact) to perform real property transactions. Under this power, they might buy, sell, lease or otherwise acquire or pass a right incident to real property. Under this special power, your attorney-in-fact could not perform other business transactions such as conducting stock or bond transactions, operating a business owned by you, engaging in insurance transactions on your part or any other activity not specifically related to the exact power that you offered.
General Power of Attorney
Under a general power of attorney, you are giving your attorney-in-fact broad authority to transact all of the duties conferred by you of a particular kind or at a particular place.
A document creating a power of attorney may convey general powers, special powers or a combination of both.
A power of attorney may be for a finite and defined period of time or it may contain no such provision and may continue until it is revoked by the principal.
What happens when a principal advises his/her attorney-in-fact that the authority to act is revoked, but the agent/attorney-in-fact continues to deal with third parties as if the revocation had not been made?
The revocation does not automatically terminate the apparent authority of the agent/attorney-in-fact to deal with third parties. The third party who does not receive actual notice from the principal of a revocation may be justified in relying upon the document and past dealings between the parties. If a revocation is necessary, it is recommended that you notify all persons who have dealt with the attorney-in-fact, demand return of documents from the attorney-in-fact and file a formal revocation of record in the county records of each county where the power of attorney has been used or might be used.
What happens if a principal marries?
As with the death of the principal, the marriage of the principal subsequent to the transfer of power will automatically terminate that power.
What is a Durable Power of Attorney?
A durable power of attorney survives the disability or incapacity of the principal, but, as with any instrument requiring informed consent, cannot be executed after a mental disability occurs. This instrument is particularly useful to persons who are concerned or may have reason to become concerned about possible diminished mental or physical capabilities in the future (i.e. all of us). Example: If one spouse suffers from any level of diminished capacity, it may be very helpful to give power of attorney to the unaffected spouse. A durable power of attorney is so called because it survives the change in abilities and will contain words similar to the following:
“This Power of Attorney is not affected by subsequent disability or incapacity of the principal.”
“This Power of Attorney becomes effective on the disability or incapacity of the principal.”
When you give a power of attorney, do you give that person superior rights to make decisions for you?
The answer is NO. Unless you have become incapacitated, you as the principal can almost always revoke the power of attorney. (The cases where a power of attorney cannot be revoked are few, very special and far too complex to cover in this writing.) In all but the rarest of situations, a power of attorney can be revoked by the principal at any time.
A common misconception by many in the public is that an attorney-in-fact exercises some sort of authority over the person who is the principal. It should be understood without equivocation that this is not true. Giving another person your power of attorney merely gives them the right to act for you in specific situations. It does not reduce your power to act on your own behalf.
Authority over a person which is deemed to be superior over the rights of that individual is not the subject matter of a power of attorney. Such authority over another person would be subject matter in a guardianship proceeding and should only be attainable after a hearing on the merits by a court of competent jurisdiction. A power of attorney does not equate to a guardianship and should never be confused.
Persons who assist us by acting as our agent/attorney-in-fact can serve a very useful purpose in handling certain designated tasks for us. Great care should always be taken when selecting such a person.
Healthcare Power of Attorney
A very special type of power is the healthcare power of attorney. This instrument does not authorize anyone else to make medical decisions for you until and unless you are unable to do so for yourself.
It is almost certain that each of us will need to have another person act for us for some purpose at some time in our lives. If you wish to decide for yourself who that person should be and to what extent they may act or not act, then you may wish to designate your attorney-in-fact and dictate what powers they may exercise on your behalf.