Please remember that this answer is provided in the spirit of public education, not as legal advice. If you require legal advice for a particular situation, you should consult an attorney.

Why do I need a will?

Is probate really that bad?

Do I need a Living trust?
Can my estate avoid paying an executor's fee?
How can I save taxes?
What is a bypass trust?
What is a life insurance trust?
What is a Crummey trust?
What is the difference between community property and separate property?
What taxes will the beneficiary of my life insurance policy have to pay?
What's the difference between an inheritance tax and an estate tax?
Who will get my property if I die without a will?

Copyright 1998-2022 by Dianne Reis.

Is probate really that bad?

"I've heard horror stories about a probate court that tied up the estate's assets for years. How can I make sure that my estate does not go through probate?"

Probate laws differ from state to state. The following discussion applies to residents of Texas.

First of all, you should remember that the horror stories are just that -- horror stories. They are the most grievous examples from among many different experiences. If you leave no will and your heirs all hate each other, the probate of your estate will very likely be a nightmare. But in Texas, probate can be very simple if you leave a properly drafted will.

You may have heard that a living trust can avoid probate. A living trust works because none of your assets are in your name at death. If you have vigilantly transferred everything you own to the trust, the distribution of your assets at death will be handled under trust law, instead of under probate law. In some states, such as California and Ohio, trust law is much simpler than probate law for this purpose. But in many states, including Texas, the differences are minor. The state of Texas is not interested in tying up your assets. Indeed, probate isn't even mandatory in Texas. It should be thought of more as a service that the state offers to help the heirs clear title to assets. Most banks and other institutions will not release assets or funds to the heirs of the account owner, because they are afraid of being sued if someone lies to them about being an heir. An order from a probate court will protect them from this liability. The Texas probate system is designed to help the rightful heirs obtain such an order as easily as possible, while still preventing fraud by impostors. For information on my fees for handling various probate procedures, please Click Here.

Even if you have a fully-funded living trust, the distribution of your assets can still be delayed if your estate is large enough to owe estate taxes. Federal law holds your successor trustee and executor personally liable for any unpaid estate tax. Therefore it would be foolish for the successor trustee of your living trust to distribute the trust assets before making sure the IRS is satisfied with the amount of estate taxes paid. The IRS will, upon request, issue a "closing letter" which provides some protection to the trustee or executor, but the process of requesting and obtaining the closing letter can easily take over a year. If you have ever been told that an estate is tied up in probate, it is entirely possible that the probate court is not to blame at all; it's really the fault of the estate tax system. And avoiding estate tax, while a worthy goal, is very different from avoiding probate. A living trust does nothing to avoid estate tax that a properly drafted will cannot also do. (For more information on this topic, you may wish to read the online brochure published by the State Bar of Texas.)

Probate horror stories are often caused by events outside the probate system. Estate taxes, will contests, poorly drafted wills or trust documents, family members who are unhappily surprised by the contents of a will or trust -- all of these things can and do make the process of distributing your assets long and expensive. Simply setting up a living trust to avoid probate without dealing with these other issues will not prevent your estate from suffering the expense and delay of the worst horror stories you've heard.