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The Shocking Truth about Who Gets Your Kids, Your House, Car, and Money When You Die

Posted by TaQuita M. Hogan-Claiborne on December 12, 2013 at 12:25 AM Comments comments (0)


The Shocking Truth about Who Gets Your Kids, Your House, Car, and Money When You Die

By: TaQuita M. Hogan-Claiborne, Esq.



It’s the law. If you die without a will, your house, your car, your kids, your money and everything else you own will go where you may not want it.

 

What does that mean?  That your wife or husband may not get everything or may not get anything!  Or that your kids may compete with your parents for your property.  Or that the State of Texas, instead of your favorite charity, may get it all. 

 

If your children are small (and your spouse has passed before you), the State will choose their guardian.  And what if you don’t want a child or a cousin (yes, it can happen) to get what you’ve taken years to achieve?  It’s too bad-there’s nothing you can do!

 

What else can happen when you don’t have a will?  A real mess!  Bad feelings between your spouse and your kids.  Or between your spouse and your parents.  A “will” that you never wrote may “suddenly” appear, making your family miserable-but some lawyers very happy.

 

I know thinking about a will is upsetting.  It means admitting we won’t be around forever, accepting we are mortals.  Death affects us in many ways.  It never is timely.  Death confronts the family with bereavement, with the need to readjust emotionally and financially, and often with an unknown future.  This is why many people put off making a will, sometimes until it’s too late.  But, by then it’s no longer up to them. 

 

If you own anything-a car, a house, bank accounts or jewelry-and care about your family-you should have a will. 

 

Let me begin with an explanation of what happens to the property of a person in Texas who has a will at the time of their death.  That person, through his or her will, have left evidence of how he or she wishes his or her estate to be distributed, and will have named an “executor,” a person designated to be in charge of carrying out those wishes. In a process known as an “independent administration,” the executor will attend a short hearing at the probate court to “prove up “ the will, accomplished by showing the court the will document and answering some basic questions.  They will then receive “letters testamentary” that allow them to manipulate the estate holding so that they may gather the assets of the estate, pay the debts of the estate, and distribute the remainder in the manner detained in the will.  Finally, the executor will file an “inventory” detailing their activities.  This is a simplified version of the probate process, but these are essentially the steps involved.  If the estate is complicated, the estate can reasonably compensate the executor for their time and expenses. 

 

Now, I know you are wondering what happens to your property if you die without a will?

 

Well, let me break it down for you.  When someone dies without a will, the state of Texas has a form of will for him or her.  In a process know as “dependent administration,” Texas statutes and laws determine how such estate will be distributed.  Thereby, if you have not left instructions on how you want your estate distributed and who will administer or supervise that process, the probate court will supervise the process.  Each step of the gathering of assets, payment of debts, distribution of remaining assets, and other details of administration of the estate will need to be formally presented for the judge’s approval.  This could incur costs to the estate in the administrative process and the delays in distributing the estate proceeds to the children and heirs.  

 

Or if he has surviving family members, someone must assume responsibility of administering and distributing without any instructions or directions and with little or no regard to the deceased wishes. 

 

I know I know. Now, you are wondering why should you bother?

 

Let me tell you why…

 

1. You have minor children.

 

You should write a will in order to appoint guardians for your minor children, and trustees to manage their property.  If you do not leave a will, the court may appoint a guardian whom you would not have chosen. (Upon the death of only one parent, the surviving parent obviously continues as the natural guardian, so the problem only arises if both parents die in a common accident, or if one parent has already died.)  Or one of your family members may chose to take over your property and refuse to implement a fair division between your children and any of your other family members. 

 

You also need to write a will in order to prevent minor children from inheriting real estate outright.  Although minors have the legal capacity to own property, they do not have legal capacity to manage it, if your children inherit a share of your house, your spouse would not be able to sell it, rent it out, or even refinance the mortgage without a  court order.  Getting court orders are expensive and time consuming. 

 

2. You have no children.

 

You might be surprised that your spouse might not inherit everything.  If you and your spouse have no children, your parents or siblings might inherit part of your home and become co-owners with your spouse.  Your spouse would not be able to sell the house or other property without their permission, and vice versa.  With a will, if you want to remember your parents or siblings, it is best to leave them specific pieces of property that they will not have to share with your spouse.  A will can accomplish this.

 

3. A will protects your spouse.

 

Most people assume that, if a husband or wife dies, everything goes to the survivor of them.  Yes, this is true of community property (jointly owned property; all property acquired during marriage), but in Texas, your children will inherit a two-thirds interest in every item of your separate property (property owned before marriage or acquired during marriage by gift or inheritance).  The remaining 1/3 of each item of separate property will go to you spouse, but if the item is real estate, it returns to your children upon the death of your spouse. 

 

If you have children from a previous marriage, those children will inherit your entire half of the community property.  Your spouse will keep his/her half of the community property.  Your separate property will be distributed the same way as in the previous paragraph. 

 

If you have no children, your spouse will inherit all of your community property.  Separate property that is not real estate will also go to your spouse.  Separate real estate will go half to your spouse, ¼ to your mother, and ¼ to your father.  If either parent is deceased, that parent’s share will be inherited by your siblings if they survive you.  If none of your parents or siblings (or their descendants) survives, you, THEN your spouse will inherit all of your separate real estate.

 

So, if you are married and want your spouse to own everything after your death, it is usually a good idea to have a will that says that and avoid any possible confusion or surprise. 

 

4. You have a pretty large family.

 

All of your heirs will become co-owners of every asset your own, and will have to manage all the property together.  They may not live in the same state, or they may not be able to agree on what should be done with the property.  The more heirs you have, the more money and effort they will have to spend trying to get organized.  Someone always take more or receive less that attended. With a will, you could leave specific assets to specific heirs, or put one heir in charge as trustee for the others.  Either way, writing a will would save your heirs significant hassle and expense.  It could also prevent major feuding.

 

5. You are not married (this includes being widowed or divorce).

 

Your children will inherit all of your property equally.  If any child has died before you, his share will go to his children.  If he has no children, it will go to your surviving children.  If a child of a deceased child is also deceased but has left a child of his own (your great-grandchild), that great-grandchild will get its parent’s share of your estate, and so on. 

 

If you have no children, your father will inherit half of your property, and your mother will inherit the other half.  If either parent is deceased, your siblings will inherit that parent’s share.  If a sibling is deceased but has left a child (your niece or nephew), that child will inherit its parent’s share, and so on.  If a sibling is deceases and has left no children, the surviving siblings will take that sibling’s share.  If neither of your parents nor any of their descendants survives you, your grandparents will inherit your estate equally.  If either grandparent has died before you, their descendants (your aunts, uncles, and cousins) will inherit your estate. 

 

6.  None of the above.

 

Even if you do not think you need a will, you should still consider estate planning to draw up powers of attorney for health care and financial matters.  If you became incapacitated by illness or accident, a power of attorney will be critical to allow a friend or loved one to pay your bills and make health care decisions for you.  These simple documents not only save money later, but they give you the security of knowing things will be taken care of in your absence.

 

It is only fair to explain to you when a will does not help?

 

There are some situations in which having a will won’t necessarily change anything.  A will only controls the assets in your name that are part of your estate, and there are many types of assets which are not part of your estate and do not pass under a will.  For example, life insurance, annuities, retirement benefits, and individual retirement accounts are usually payable to a named beneficiary, so they are not part of the estate and are not controlled by the will.  Also, property owned by a husband and wife as tenants by the entireties, or by one or more persons as joint tenants with rights of survivorship, automatically passes to the surviving owner, regardless of what is said in a will.  If all of your assets are jointly owned with your husband or wife, life insurance, and retirement benefits, a will may not be needed if your husband or wife survives you, but may be needed if you both die together. 

 

You may benefit more into looking into other estate planning devices such as living wills, living trusts, or other devices specifically tailored to suit your needs.

 

If a will is not properly executed, it may not be upheld in court.  A will that is not upheld or proved in court is denied probate.  In this event, the decedent’s property passes to his or her heirs as if he or she died without a will.  I personally witnessed such an event when my father passed away.  The court ruled that part of his will was invalid because it did not meet all the basic requirements of a properly executed holographic (handwritten) will.  Also, his unadvised decision to appoint two executrixes of his estate caused confusion and family feuds among his children and siblings.  Only a very small percentage of the things he requested were ever implemented according to his handwritten will.  Again, this further emphasizes how important it is to execute a will that meets all legal requirements so that property will pass as you wish.  

 

What does all this really mean?  You know, I am glad you asked. 

 

You need an estate plan!  A properly prepared plan that meets your goals.  It allows you to plan for your disability and direct the distribution of your property.  It saves tax dollars, professional fees and court costs.  And, most importantly, it keeps you in control of your own affairs.  A properly designed estate plan can… provide instructions for your care and that of your loved ones in the event of your disability.  Be effective if you move to or own property in another state.  Avoid probate and its associated legal costs.  Keep your affairs private and confidential.  Control all your property, including pensions and life insurance.  Allow you to leave explicit instructions for the care of your love ones.  Create protective trusts for your young children, disadvantaged children, adult children, and grandchildren. 

 

So, why am I willing to invest my time, effort and money in helping you?

 

I still hurt after what occurred to my father.  All that time and effort he put into trying to protect his estate that he worked many years, diminished just within a couple of months.  None of that would have happened if my father had the information and advice I am willing to provide you.  Thereby, my goal is to make sure that none of my family, friends and love ones ever has to go through what my siblings, aunts, and uncles, and I went through after my own father’s untimely death.  Also, I know if you can benefit from instituting a will and other estate planning instruments and the protection each provide, you’ll do it with me—assuming I have done a good job of explaining everything to you.  Maybe you do not want it immediately, but chances are you will sooner of later.  So that’s why I am willing to invest in you first. 

 

What all this really means to you is that I am offering my services for you to receive a “no obligation” education and evaluation of your estate which includes a FREE Estate Planning Kit (checklists, questionnaires, forms, etc.) for you to use to personally evaluate your current situation, understand your options, and plan your future. 

 

And, as a special incentive for you to act now, I will provide you a “$250 Estate Planning Discount!”  All you have to do is to call me at 281.340.2054 and schedule an appointment for the FREE evaluation and let me know you want your “$250 Estate Planning Discount".

 

Call Now, this way you will get the protection you need so you and your loved ones can have the peace of mind you deserve.

 

I look forward to speaking with you.


P.S.  Maybe you are considering my complete “Estate Plan Package” for a just a nominal fee, just let me know!  This package includes your Estate Plan Kit (checklists, questionnaires, forms), Last Will and Testament, Living Will, Self Prove Affidavit, Health/Medical Power of Attorney (Proxy), Trusts, Schedule of Assets, Insurance/Pension Data, Document Locator Form, Notification List, and Funeral Requests, and much more.

 

Property Basics

Posted by TaQuita M. Hogan-Claiborne on November 27, 2013 at 1:15 PM Comments comments (0)

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Property is defined as anything that can be owned.


There are two categories of property:


1.                 REAL PROPERTY

2.                 PERSONAL PROPERTY 


Real Property, which is property that is immovable, land and things permanently attached to the land.  The ownership of real property is transferred from one person to another by a DEED, in which the seller of the land is referred to and the GRANTOR and the buyer is the GRANTEE. 

 

Personal Property, which is property that is not land or attached to land. Personal property may be classified into two categories.

 

1.                 TANGIBLE – you can touch it (car, furniture, etc.)

2.                 INTANGIBLE – you cannot touch it (stock certificate, promissory note)

 

Tangible things have a “face” value.  Example, a car’s value comes from the fact that it is a car (make/model).  Intangible things are inherently worth very little, like a piece of paper, but they represent something much more significant.  (stock certificate, $10 bill, promissory note, etc.)

 

Why is this important?  There may be some items on the land or realty that become attached but still are not considered a part of the realty. 

 

How would you define a 1970 Sedan that has remained parked on your neighbor's front lawn for 10 years?  We will address this a little later. 


FIXTURES:  Now you could take something that is moveable, is not attached to land, like a dishwasher, or a rosebush in a pot, and attach it to the land.  That would change its character from personal to real.  An object whose character has been changed in this way is a FIXTURE, and once the fixture has been attached to the land it usually becomes part of the realty.  However, if you are renting an apartment and you install a ceiling fan, doe the ceiling fan become owned by the owner of the apartment building?

 

The law uses a three-way test to determine if the fan is now part of the real estate.  These are annexation, adaptation and intention.


1.                 ANNEXATION asks to question, how is it attached?  Is it meant to be permanent? Nailing something to the wall is a lot different than scotch taping it.

2.                 ADAPTATION asks the question, was this item of person property modified to fit in this particular space, like the wooden shelves cut a certain length to fit in a built-in bookcase.

3.                 INTENTION asks the question, what did the person installing the item intend? If the owner of the apartment installed the ceiling fan, clearly he intended the fan to be a permanent part of the apartment. IF it was the tenant installed the fan, however, he probably meant for the fan to be temporary. 


If the answers to these three questions show that the item of personal property was permanently attached, then it’s now part of the real property.


The law divides property into two categories for the purpose of inheritance:


          Probate and non-probate


PROBATE ASSETS are those items of real and personal property that can be passed to another person either by will or by the laws of intestacy.  While NON-PROBATE assets are those items of property that transfer to someone else at the death of the decedent, by some law other than the laws of inheritance.  In fact, non-probate assets cannot be transferred by will or inheritance. 

One thing that determines whether an item of property is a probate or non-probate asset is how that asset is owned.  In other words, it is important to determine how title to the property is held.

Let’s review the various ways a piece of property can be owned:  

 

1.                 IN SEVERALTY – owned by 1 person

          The sole owner of the property owns all the rights, privileges and interests that go with that property.

2.                 CONCURRENT OWNERSHIP – owned by more than 1 person at the same time

          There are several types of concurrent ownership:

a.                 joint tenancy

b.                 tenancy in common

c.                  tenancy by the entirety

d.                 community property

e.                  tenancy in partnership 


(a)     JOINT TENANCY


In joint tenancy, two or more people acquire interests in one piece of property.  The unique thing about joint tenancy is that ownership carried with it the right of survivorship, which means that when one of the joint tenants dies, his share does not go to his heirs or beneficiaries.  Rather, his interest goes to the other surviving joint tenants. While a joint tenant is alive, he can sell or give away his interest in the property, and when he does, the joint tenancy ends as to him.   In other words, a Joint Tenant can sever a joint tenancy by conveyance but not by will. 


Example:

 Amy & Bob & Chris & Dave joint tenants

Amy sells to Emily

Bob & Chris & Dave are Joint Tenants as to ¾ of the property and Emily is a Tenant in Common as to the other ¼.


In Texas, persons wishing to be jts must sign a written document in which they recite that they are to be joint tenants with right of survivorship.  If you do not do this, you do not have a joint tenancy, but a tenancy in common.      


To create a joint tenancy four events must happen:

1.     Unity of time – the joint owners acquire their interest in the property at the same time.

2.    Unity of title – the joint owners acquired their interest from the same transaction and on the same dealing/or source, the same deed or will.

3.  Unity of interest – the joint owners’ interests are identical in nature, extent, and duration.

4.     Unity of possession – Each joint owner as an equal right to possession to the whole of the property, but not a right to exclusion of any part.  This means that they all constitute a single “person” – “oneness”. 


(b)     TENANCY IN COMMON:

 

In a tenancy in common two or more person each owns a fractional share of a single piece of property, but they do not divide the property. Rather, each person owns an undivided fractional share of the whole.

 

Example:  Farmer Brown dies, leaving farm to his two sons, Tom and Ben.

 

In a tenancy in common, each co-tenant, Tom and Ben has an equal right to possess or utilize all of the property along with the other co-tenants, but other than that, they each own their own interest and can do with it whatever they wish, without the permission of the other co-tenants and without destroying the tenancy in common.

 

There is no right of survivorship in a tenancy in common; when one co-tenant dies, his interest goes to his heirs, with each of them receiving his proportionate share, and all the heirs become co-tenants.

 

Example:  Ben dies, leaving 8 kids.

 

Since Ben’s heirs inherited through him, we would say that Ben’s interest in the tenancy in common was a probate asset. 

 

Each of those kids has the right to use all the property and the right to sell his own undivided share of the property.   

 

Suppose one of Ben’s kids decides to build a house on the land.

 

He has the right to do so, but the house will become co-owned just like the land.

 

Or suppose one of Ben’s kids sells his interest to his brother ex-wife Sharon. (Note:  None of the siblings ever got along with her). Too bad!  They cannot prevent the sale.  Sharon now has the same right to live in the house that any of the siblings have.  Is there any thing they can do?  Of, course.  What can they do?

 

DEMAND A PARTITION.  A partition is a division of property held in joint tenancy or tenancy in common so that each owner of an interest in the property becomes the sole owner of a separate piece of the property.

 

(c) TENANCY BY THE ENTIRETY:

 

This is a type of joint tenancy between husband and wife.  Whichever spouse outlive the other becomes the sole owner of the property.  The difference between the tenancy by the entirety and a regular joint tenancy is that the husband or wife cannot terminate the tenancy by attempting to sell his or her interest in the property.  In fact, neither spouse can mortgage, sell or give the property away whether while alive or by will, without the written consent of the other spouse.

 

One of the real advantages of this type of ownership is that a creditor who is owed money by one spouse cannot seize the tenancy by the entirety property to satisfy that debt. Exception:  only if the debt is a debt of both spouses can the property be seized.  So in other words, only death, divorce, mutual agreement, or execution of a joint creditor of BOTH the husband and wife can sever a tenancy by entirety.

In some states, when property is acquired by a married couple the property automatically becomes a tenancy by the entirety.  In other states, a written declaration their intention to hold it as a tenancy by the entirety is required. 

 

Texas does not follow either rule, because in Texas we have a different type of co-ownership between husbands and wives . . . COMMUNITY PROPERTY!!!

 

(d)     COMMUNITY PROPERTY:

 

In this type of ownership, property that a married couple purchase during their marriage is COMMUNITY PROPERTY, considered to be owned ½ by each spouse, no matter whose salary was used to purchase the property.

 

However, property each spouse owned before the marriage took place, or property either spouse received as a gift or inheritance is SEPARATE PROPERTY, owned only by that one spouse, and the other spouse has not interest in it.

 

So, if the wife works and the husband does not, the wife’s salary is owned ½ by her and ½ by her husband.  The car or house they bought with the salary is owned ½ by her, ½ by him.

 

Now the rules about the right to sell the community property are a little different.  In Texas, each spouse has the sole right to manage or sell that community property which he or she would have owned if single. 

 

Since her salary bought the house, it is subject to her control.  It is her SPECIAL community property.

 

On the other hand, if a couple went in together and each contributed a portion of their salary to the purchase of a house their two special community interests have been COMMINGLED with the result that the property is considered to be MIXED community. Therefore, if they decided to sell the house, both of them must participate; in the transfer of the property.

 

Now if the wife dies while they still owned the house or car, the husband still owns his ½ of that house or car, no matter who she gives her ½ to in her will.

 

On the other hand, let’s say the husband possesses a beautiful lake-side view vacation home.  If he owned this house before they were married, it is his separate property and his wife owns no part of it.  He can sell or give it to someone other than his wife, even if she assisted in the care of the home, or even paid parts of the mortgage on the house. This is because of the INCEPTION OF TITLE RULE, which states that the ownership of the property is determined at the moment the property is initially acquired.  So, if you know the history of a piece of property, you can determine if it is separate or community. (Attorney Note:  Wife may not own the vacation home, but she does have an interest in it . . . But we will inform her about her rights later, just in case Husband ever tries to divorce her.)

 

Question:  What if you do not know the history of a piece of land? How would you determine if it is separate of community? Texas law says if you cannot tell whether a piece of property is separate or community, you must assume it is community.

 

Additional type of community property:  QUASI-COMMUNITY PROPERTY.  Personal property acquired while a couple is living in a non-community property state, and is still owned by them when they move to a community property state is considered to be quasi (or “almost’;) community property.  If one of the couple dies while they are living in that community property state, the quasi-community property will be treated as community property for the purposes of determining who inherits it.


That's enough for today...we'll talk more later!