Heirship & ProbateDeath in the family brings grief, a gathering of kinfolks, and the need to arrange burial, lodgings, meals. Then the real work begins. If there is a will, then the executor named in the will knows his or her duty. If there is no will, then someone in the family must step forward as fiduciary.
Our next Losses & Legacies workshop will be held on November 13.
Question: Can an executor get paid for his work on the estate?
Unless the Will prohibits it, an executor can be compensated for his services. If there is not a Will, then the estate administrator can be compensated. However, often the executor or administrator chooses not to accept compensation. This compensation is paid out of the assets of the estate.
The estates code sets out a formula for compensation of an executor or administrator. Generally, it is based on a commission. With important exceptions, the executor or administrator can take 5% of all funds received by the estate, and 5% of all funds paid out by the estate. No compensation is allowed for money already on hand in accounts at the death of the decedent, nor for life insurance proceeds collected, nor for cash payments to heirs or beneficiaries.
Often the Will provides that the executor can be compensated a reasonable amount, regardless of the formula in code. Then it is in the executor’s discretion to decide whether to take the compensation, and to determine a reasonable amount. Without a Will, the administrator must follow the formula in the code.
In many cases, the administrator must have the compensation approved by the court.
There are several reasons an executor or administrator decides not to accept compensation. If the executor or administrator is the sole beneficiary of the Will, then he or she will receive all the assets anyway, without the exercise of calculating compensation. If the executor or administrator is the surviving spouse or an adult child of the decedent, then usually he or she will perform the duties of estate administration as a gift of love to the family.
Sources: Texas Estates Code chapter 352
Question: Must the Last Will go through probate before it is used?
Answer: Yes. The Last Will is not effective until it goes through probate.
When your loved one took the time and thought to write a Last Will, he gave directions about who he wanted to settle his estate, and how to settle it. He trusted those who survived him to follow his directions. He hoped that his Last Will would make the burden of settling his estate easier.
The directions in the Last Will carry no force, however, until a Texas court admits the Will to probate. Why? Because once the Will is admitted to probate, it is enforceable by law. The executor named in the Will gains the power to compel others to surrender up property, and the power to dispose of that property by sale or gift. It makes sense then, that a court should make sure that the Will is genuine.
Probate is basically just about proof that the Will is genuine. The court hears evidence that the Will was duly executed and that it was never revoked. If satisfied, the court admits the Will to probate. The vast majority of probate hearings are short and sweet.
The other purpose of probate is to make sure that the person named as executor is worthy and carries out his duties faithfully. The deceased author of the Will has already vouched for the person by naming him executor. Unless the person is legally disqualified, the court will respect the Last Will’s direction.
Once appointed by the court, the executor will have broad power to settle the estate without court supervision. But the law imposes one more check on the executor. He must file with the court an inventory of estate assets. This inventory is then available in the county clerk’s office to be reviewed by any beneficiary of the estate.
Once the inventory has been filed and approved by the court, the executor has finished with probate and can finish his duties on his own initiative.
Sources: Texas Estates Code §§ 256.001, 256.052, 304.003, 306.007, 309.051, 351.051, & 351.052.
Question: Must the executor hire an appraiser to value estate assets?
Answer: No. Generally the executor can use his best judgment in valuing estate assets.
The executor of an estate must file an inventory of estate assets within 90 days after being appointed by the court. The executor should be reasonably accurate in valuing estate assets, because the inventory filed with the court can be used as evidence of asset values in other contexts.
Some assets are easy to place a value on, such as bank accounts and investment accounts. The balance in the account is the value of the asset. For a car, the blue book value is acceptable. For real estate, the tax value shown by the County Appraisal District will be perfectly acceptable on the inventory.
Personal and household goods, like clothing, kitchenware, appliances, and such can usually be lumped together in one figure. The executor then makes a good faith estimate of the total value. However, if there is an estate sale, then the actual proceeds from the estate sale would be the better value. Also, if some items are especially valuable, they should be listed separately.
When in doubt about valuing something like used furniture or jewelry, it would be reasonable to check prices on eBay or craigslist or another classified advertising listing. Goodwill publishes a listing of values for frequently donated items.
The time when a formal appraisal of estate assets might be necessary is when some beneficiaries disagree about the values. Then, the executor will want to have a professional opinion.
In addition to assets, the executor must list any claims the estate has against any other person. Thus, if the decedent died owning a note showing that a borrower owed a debt to the decedent, that note would represent a claim by the estate against the borrower.
Reference: Texas Estates Code § 309.
Question: Must the Executor or Administrator of an estate notify credit card companies by certified mail?
Answer: No, it is not required. But sometimes it’s a good idea.
The Personal Representative of an estate is not required to notify credit card companies directly. As a practical matter, however, the Personal Representative should notify them. In some cases, it may be wise to send the notice by certified mail.
After being appointed by the court, the Personal Representative must give notice to the world by publishing notice in the newspaper. He or she must also give direct notice to secured creditors, such as lenders on a house or car, by certified mail. That's generally all the notice to creditors that is required.
In the priority list of creditors, credit card companies come in last. They’re not entitled to direct notice. However, the Personal Representative will generally want to notify them to close the account.
It would be a good idea to give official notice to the credit card companies and other low- priority creditors in order to put a short time limit on their ability to collect. If the Personal Representative sends notice by certified mail, then the creditor must present its claim within 121 days or lose it.
The Texas Estates Code sets out requirements for how notices to creditors must be worded and when they are due. The lawyer for the Personal Representative usually handles that.
Sources: Texas Estates Code §§ 308.051, 308.053, 355.102, 308.54.