Texas Estate Planning Laws

If you don’t have an estate plan, the Texas Estates Code has a plan for you in the form of intestacy laws. What does that mean?

Your “estate” is all of the assets that you own at the time of your death, including personal property and “real property” (real estate). An estate plan is the set of legal estate planning documents you prepare to provide your family members and loved ones with instructions about how you want your assets distributed at your death.

Your estate plan can also include instructions about how you want your financial matters and healthcare decisions handled if you become incapacitated. If you die “intestate” (without an estate plan), the probate court will distribute your assets according to the state intestate succession laws.

This article explores what happens if you die without an estate plan, the probate process in Texas, and the legal documents that make up a comprehensive estate plan.

What Happens if You Die Without an Estate Plan?

If you die without an estate plan in place, your assets will likely pass according to the Texas intestacy laws under the probate court’s supervision. Incapacity planning, which includes durable powers of attorney and a living will, is also an important part of a comprehensive estate plan. Without the right legal documents in place, the court will likely get involved in the important decisions that must be made on your behalf during your incapacity.

Texas Intestacy Laws

The Texas intestacy laws are the state’s best guess at how you would want your assets distributed at your death. It is a one-size-fits-all plan. Generally, the order of priority is:

• Surviving spouse
• If your child predeceases you, their children (your grandchildren) will inherit their parent’s share
• Parents
• Siblings
• More distant relatives

If no surviving relative is found, the assets will go to (escheat) the state of Texas.

Potential Unintended Consequences of Intestate Succession

Under Texas intestacy laws, your assets will only pass to family members. The type of assets you have and your family makeup will have a significant impact on how much passes to your surviving spouse and children. These unexpected results can cause conflict and heartbreak. There are a couple of possible outcomes for intestate succession:

No One Outside Your Family Inherits:

If the loved ones you want to leave your assets to are also family members, the state’s plan may work for you. For assets intended for cherished friends, a lifelong partner, or even a charity, intestate succession will not reflect your wishes. Your assets will pass only to family members, regardless of how close your relationship was.

Surviving Spouse’s Share:

As a community property state, Texas intestacy laws treat community property (assets acquired during the marriage) and separate property (assets owned before the marriage or acquired by gift or inheritance during the marriage) differently. The entire half of your community property will pass to your surviving spouse only if you don’t have any children with anyone other than your surviving spouse. If you do have children outside of your marriage, such as children from a prior relationship, your half of the community estate passes to them. This can result in an uneven distribution of your assets among your children.

The result is even more dire for your surviving spouse with regard to your separate property. If you are survived by any children, grandchildren, parents, or siblings, your surviving spouse will only receive a portion of your separate property and may end up only with a life estate in any real property.

The Texas Probate Process Overview

Regardless of whether you have a will when you die, your assets (except assets subject to beneficiary designations, such as bank account beneficiaries) don’t pass automatically to your loved ones. In most instances, they go through the court-supervised process known as probate. The probate process includes validating the will if one exists, appointing the administrator or executor, gathering and inventorying assets, paying debts, and transferring the remaining assets to your heirs or beneficiaries. How well that reflects your wishes depends on whether you have an estate plan in place.

Without an Estate Plan

Without a will in place, state law directs how an estate is distributed at death. The probate court appoints an administrator in accordance with the order of priority set by statute. The court’s involvement in the administration is significant, with court approval required for every significant action the administrator takes.

The court must also determine who the heirs are under the intestacy laws. If you leave minor children, the court will appoint a guardian and likely supervise their distribution, turning it over in full as the children reach age 18. Together, these factors contribute to both the higher cost of intestate administration and its longer timeline.

With an Estate Plan

Instead of leaving it up to state law, you can decide who will inherit your assets and who will administer your estate by creating a valid will. The probate court typically appoints the person you name as executor to oversee the estate’s administration. Your executor can often act with more autonomy than an administrator if your will provides for independent (unsupervised) estate administration or if your heirs agree to it.

In your will, you can nominate a guardian for your minor children and create a testamentary trust to hold their inheritance rather than distribute it immediately when they reach age 18. With overall reduced court involvement, the probate process for an estate with a valid will can be less costly and more streamlined.

Learn More About Texas Estate Planning Tools

Texans can create a will-based or trust-based estate plan to provide instructions for after they’re gone. Additional legal documents, such as durable powers of attorney and a living will, can be used for incapacity planning.

Texas Wills Laws

A will must meet specific requirements to be valid and admitted to probate. Failing to meet a requirement could mean your estate will pass under the intestacy laws instead of under your will. The basic statutory requirements are:

• The testator (person making the will) has testamentary capacity, which means they are of sound mind and either 18 years old or older, married, or a member of the armed forces
• The will must be in writing
• The testator must sign (or direct the signing of) the will
• The will must be attested by two qualified witnesses in the testator’s presence (A “holographic” or hand-written will does not require witnesses)

While not required, it’s helpful to speak with a Texas estate planning attorney when drafting a will.

Texas Trust Laws

While a will-based estate plan is more familiar to most, a revocable living trust-based estate plan is also an option. A revocable living trust (RLT) is a legal arrangement in which you (the settlor) transfer ownership of your assets to the RLT during your lifetime. As the initial trustee, you retain full control over your assets. You can change or even revoke the trust at any time.

At your death, the successor trustee you named steps in and distributes the trust assets to your beneficiaries according to your instructions. This happens without probate or court oversight, unless there is a dispute. This can hasten the process significantly.

Incapacity Planning in Texas

In addition to planning for your estate after your death, you can prepare for your potential incapacity. If you become incapacitated, the legal documents you prepare in advance will guide how you want important decisions made on your behalf during your incapacity. Let’s examine a few of them.

Texas Durable Power of Attorney for Financial Matters

With a Durable Power of Attorney for Financial Matters, you can appoint someone you trust as your agent and specify their authority to handle your financial matters. The agent’s authority can either be immediate or only “spring” into effect upon your disability. It is important to note that the document must include “durability” language. Without it, the agent’s power ends if you become incapacitated, defeating the purpose of incapacity planning.

While Texas law does not require witnesses, you do need to sign the document in front of a notary public. The Texas Statutory Durable Power of Attorney is legally valid if properly executed.

You can also look into online document services for more do-it-yourself options. In addition, you have the option of speaking with a Texas estate planning attorney for a Durable Power of Attorney drafted to meet your specific needs.

Texas Medical Power of Attorney

A Medical Power of Attorney allows you to appoint someone you trust as your agent to make health care decisions on your behalf while you are incapacitated. Texas law requires the document to be either notarized or signed by two adults who witnessed your signature, with several restrictions on who may serve as a witness. Texas provides a Medical Power of Attorney statutory form. You can also create your own document online or work with an attorney.

Texas Living Wills Laws

With a living will, you can express your medical care wishes. These can include whether you want life-sustaining treatment continued, withheld, or withdrawn, and under what circumstances. Although more commonly known as a living will, the Texas term is “Directive to Physicians.”

You must sign your living will in front of two witnesses. You can use the statutory form, an online do-it-yourself Directive, or an attorney-drafted document. Like a Medical Power of Attorney, either two qualified witnesses must watch you sign your Directive, or it must be acknowledged by a notary public.

Work With an Experienced Estate Planning Attorney

Today is a good day to get your financial affairs in order. Creating an estate plan can bring you valuable peace of mind and make things easier for your family members and loved ones. Your instructions will provide guidance and comfort at their time of loss.

Many do-it-yourself estate planning tools are available. These lower-cost options meet the estate planning needs of some. For others, consulting with a Texas estate planning lawyer is often the best option. An attorney can help create a customized plan tailored to your specific situation. This can be especially beneficial if your situation includes a second marriage, a blended family, high net worth, real estate holdings in different states, special needs planning for adult dependents, family business considerations, or concerns about estate taxes.