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A “Ladybird Deed” is used to protect a house from a Medicaid claim after a patient on Medicaid dies. Law School professors call them contingent, defeasible deeds. This means that the homeowner transfers his house by deed to his children or whomever he wants to have the house after his death. However, the deed has some very big “but only ifs”. The homeowner keeps the right to sell the house, to take out a mortgage on the house, to lease the property or just do whatever he or she wants to do with the house. The person giving the house is called a “grantor”. The person(s) receiving the house is called a “grantee”. The grantee does not receive ownership of the house until the grantor dies. The grantee only gets ownership if the grantor does not sell the house or otherwise dispose of it. All in all it is very simple. There are some problems with Ladybird deeds. Because these deeds are used so rarely many title companies do not like them and throw up road blocks to granting title insurance on the sale of a house by the grantee. Elder law attorneys in the State Bar and in the National Academy of Elder Law Attorneys (NAELA) are doing much to provide information to the Real Property section of the Bar to create greater understanding and acceptance of Ladybird deeds. Many Texas counties do not yet have front line staff that understands what a Ladybird deed is. It is often necessary to correct line staff denial of a homestead exemption by calling the supervisors to correct the misclassification of the deed.

It is not unusual that an estate that seems to have an overwhelming amount of debt turns out to have enough assets to pay the valid debts and distribute funds to the heirs or beneficiaries. The process for dealing with a creditor varies based on the type of administration and the type of debt. A Dependent Administration is an administration in which all actions by the administrator must be approved by the Court. An independent administration means that the Judge has little or no control over the actions of the administrator except for admitting the estate to probate, qualifying the personal representative of the estate (usually a person named in a will– who is called an executor) and approving the Inventory, Appraisement and List of Claims. Assuming the Administrator in a Dependent Estate gives proper notice to the creditor, the creditor only has four months to file its claim once it is given notice of the administration by certified mail. Failure to file its claim with the Court Clerk within four months of notice by certified mail is also a bar to later assertion of the claim for payment. In a Dependent Administration a creditor must file its claim with the Court Clerk and serve it on the attorney for the administrator. The Administrator has 30 days to allow it or deny it. If it is not allowed, it is automatically deemed denied. At that point the creditor has 90 days to file suit in the probate court or the claim is barred for failure to prosecute the claim in a timely manner. The claim must be verified (sworn) and based on personal knowledge with all credits, offsets, charges, payments set forth. Failure by the creditor to provide adequate information to determine the validity of the debt is a good reason to deny the claim. If the creditor does not have the required information it cannot prove its claim at trial. One point that secured creditors frequently forget is that the creditor is forced to choose between asserting its claim to the secured asset on which its lien is based or the right to payment of the claim and waiver of the lien on the asset. In other words, do not let the debt collector take the car before the administration is opened. If they take the car beforehand the creditor will come back for payment of the loss on the sale of the car. If the creditor takes the car during probate that is all it gets, it loses its right to be paid on any loss on sale of the vehicle. The process in an independent administration is not as formal. The claim does not have to be presented through the Court Clerk. There is disagreement as to whether the four month bar to the claim after notice applies. This is definitely one area of the law where it pays to consult your attorney and to follow the attorney’s advice. The amount and type of debt is an important factor in choosing which type of administration will be used. I will write about how “exempt” assets are treated in probate in a later article.

It is easy to forget or not realize some very important points about probate. Probate is a process that only occurs in Court. A Will is just a piece of paper until someone dies and a Probate Court decides that it is valid. Once in probate, only the personal representative of the Estate has the authority to make decisions about property in the estate. Sometimes even the personal representative (also called executor or administrator sometimes) does not have the authority until the Judge says he does. An estate is not in “probate” until an application is made to a Court with the proper authority and a person is appointed to manage the estate. If you are named as Executor in a Will you have no authority to do anything until a Judge says you do. So to be safe, take the Will to an attorney and find out what needs to be done. This means that frequently no one should pay bills outside the probate process, release control of assets to a creditor or third party or make other decisions about the estate until a competent attorney has been consulted and a probate estate opened. To do any of the above actions outside probate could create financial liability to the creditors and/or beneficiaries of the estate by the person acting without authority. If you are not the Executor or Administrator, even if you are named as Executor in a Will but have not yet been to Court, do not take actions that cannot be changed later. Only the person named by the Court to manage an estate has the authority to make decisions about an estate. Often the Executor will only make those decisions after careful consultation with an attorney, discussion with the beneficiaries and sometimes not until the issue is presented to a Court. If you are the named executor and the only beneficiary you can probably act without liability to anyone but a creditor, but acting without legal advice could cost you money you do not have to spend. If you are appointed as the personal representative of an estate you have special duties that are called fiduciary duties to the heirs/beneficiaries of the estate. You must be fair to all of the beneficiaries; you must be loyal to their interests–even possibly to the harm of your own interests; you must provide all necessary information to the beneficiaries so that they can make any necessary decisions about their interests; and you must be competent in managing the estate. These fiduciary duties are often what makes being an executor so difficult because your duty to one person may conflict with your duty to someone else. Creditors also have rights regarding assets within an estate and the claims must be dealt with according to the Texas Estates Code. It is not uncommon that a creditor will make a demand that it be paid when if payment is left to the probate process it will be denied payment because another party will have superior right to the proceeds or assets of the estate. Do not assume that because someone is an heir or believed to be an heir or beneficiary that the person has the right to do things with assets of the estate outside the probate process. Hopefully, this provides more light than heat. The blogs about creditors should be read with this one to have a better understanding of the pitfalls a personal representative faces.

I am often called and asked if someone needs to probate a Will. The legal answer is that the person named as executor has a duty to present the will for probate by the Probate Court. The practical answer depends on the circumstances. A Will has several functions or purposes. The primary purpose for most people is to pass ownership or title to the persons named in the Will. By presenting the Will to a Court the Will is determined to be valid. A Will has no legal effect until a Court makes the required determinations that it was properly signed and witnessed, makes a full distribution of the estate, is accepted by the Court as valid and decides if there is a need for administration. This last phrase is the real question that most people are asking. One reason to present the Will for probate is that there is land in Texas that is conveyed by the Will, or that there is other property that the executor/administrator can collect and distribute more easily than the individual beneficiaries (heirs). Stock is one such asset. Sometimes a Will can be probated without the necessity of an administration, merely a simple hearing and everything is done. Sometimes the collection of the assets and the sale of those assets is more simply done by having one person to be responsible for doing the various tasks that need to be done. Instead of five or six people attempting to work out their schedules to sign documents, meet the various attorneys, accountants, realtors, contractors and other persons and agree on the price, etc. the executor makes the decisions and gets the work done so the money and other property can be distributed. Another reason to probate is that if the Will is not probated the property passes to persons other than those named in the Will. If there is no Will, Texas has a law that defines who receives the dead person’s property. These persons are called “heirs”. This determination can become very complicated and expensive. Sometimes the heirs and beneficiaries are the same. If the person who died was married more than once the results are frequently different. A third reason to probate is because there a debts owed that need to be paid out of the estate. Frequently many of the assets owned by the person who died ( this property is called the estate) can be protected from creditors as “exempt” property by use of the Texas Estates Code. A “Dependent” Administration is a very effective form of asset protection. This is not a complete explanation, but hopefully it gives you a good idea of the information that must be considered when deciding if probate is necessary or not. It is usually a good idea to consult an attorney experienced in probate to find out the best choice.

Frequently the most expensive time in a person’s life is the last few months of life. Few of us stop to consider the high cost of medical care, including nursing care, that often piles tens of thousands of dollars of debt on a family. These debts combined with the high cost of a funeral, preexisting debts and the emotional devastation of a prolonged illness or sudden death can overwhelm family members. The emotional devastation is hard enough to handle without having to deal with creditors who may have little, if any, consideration of the family financial and emotional situation. Fortunately, in Texas, the Estate statutes provide substantial protections to a surviving spouse and minor children. It is critical that the spouse consider his or her budget and allocate funds to the most necessary expenses. This may seem obvious, but the surviving spouse may also be suffering from health issues that prevent him or her from thinking clearly. Often, the spouse who dies first is the spouse who took care of the family finances and the survivor may not have complete knowledge of the assets, debts and finances. Creditors may demand that a surviving spouse pay for a debt without consideration of whether the spouse has any legal duty to pay the debt. Debts are a contractual matter and the survivor may have no contractual responsibility to pay many of the dead spouse’s debts. The only responsibility may be to pay from assets within the estate that are not “exempt”. Exempt assets are those assets that may not be taken to satisfy a judgment by an unsecured creditor. The list of “exempt” assets may be found in the Texas Property Code Sections 41 and 42. You will normally see the sections written as Tex. Prop. Code §41.001 et seq. (Meaning each of the following sections in Subchapter 41 concern homestead law). A creditor is secured if the contract provides that an asset may be taken if the loan is not paid. Usually a secured lender will have provided the original funds to purchase the asset. An oversimplified list of exempt assets includes the home, one car for each person in the family who can drive, most items within the home such as furniture, furnishings, clothing, dishes, food and lawn care equipment. Pensions, life insurance, social security checks and IRA accounts are also protected to one extent or another. The exempt property law for Texas differ from those of other states and the Federal Bankruptcy exemptions. You need to consult with an experience attorney if these type of issues arise. Sometimes a creditor or it’s agent will demand payment in a manner that is harassing and abusive or by making statements as to what it can legally do that are false. Creditors do not have the right to call you multiple times a day, to make statements about the debt to anyone who is not on the contract (except for authorized agents) to threaten imprisonment or arrest, to threaten to take assets that are not actually security for the debt, to threaten to garnish your paycheck, social security check or other sources of income. If the creditor or it’s agent did any of these actions please contact me or an experienced consumer attorney. There are many options on how to proceed in probate. One option functions to an extent like a bankruptcy. In a dependent administration creditors are required, when provided proper notice, to file claims with the administrator. The administrator can require proper proof that the debt is valid. Often creditors fail to file a claim or to present the claim correctly. The Texas Property Code and Texas Estates Code work together to permit the surviving spouse to choose to live in the family homestead for life or minor children until adults. This is subject to the duty to pay the property taxes, maintain the property and pay any mortgage on the property. If other persons own an interest in the home they may have a duty to pay a proportionate part of the principal on the mortgage. The spouse can also set aside certain exempt assets including a car and the household furnishings. The survivor and/or minor children may be to set aside a fund of cash equivalent to one years support depending on the resources otherwise available to the survivor. These exempt assets can be set aside to the surviving spouse or minor children even if the Will provides for a different distribution. As in bankruptcy, debts are classified as to which debts must be paid according to a set statutory priority. In addition, many assets are not required to be available to pay debts as explained above. Secured creditors such as mortgage lenders and car lenders can be required to choose between taking the asset or accepting payment of the debt if the survivor is not able to pay the debt. Creditors may also be required to wait for at least six months once the estate is in administration before requiring possession of the property. This is a very complex area of law. Some of the above rights are available only in a probate proceeding, other rights attach even outside probate. For an understanding of how the law might affect you please call me for additional information at 817-795-8843.

It is old news that we expect many more people to need help due to dementia over the next decade. One of the speakers at the 2016 Advanced Guardianship course noted that the number of guardianships in Texas has increased 60% since 2011. There has not been a similar increase in the number of Probate Judges and staff. This increase is not sustainable without change. The legislature is going to resist adding courts or court staff. Guardianship is more difficult to obtain now. The Courts and the Law commentators are stressing that alternatives other than guardianship must be considered and eliminated before a guardianship can be created. The information provided to the Court (pleadings) has just gotten much more specific. An applicant must state that lesser alternatives to guardianship have been considered and are not adequate to resolve the problems in regard to the proposed Ward. A separate article is being written on this topic. The local probate courts have always been strict about requiring the statutory proof before granting guardianship over a person. I expect that the evidence is going to be parsed even more closely. The Courts do not have the resources to supervise the likely tsunami of incapacitated persons that will need help. A ward now has a bill of rights that must be read to him by the Attorney Ad Litem appointed by the Court to represent him. A copy of the Bill of Rights is uploaded concurrently with this article. § 1151.351 . Three that stand out are: 15) that the Ward has the right to privacy in personal matters; 16) that the Ward has the right to confidential, private communications and visits with persons of the Ward’s choice; and (20) to be informed of the name, address, phone number, and purpose of Disability Rights Texas, an organization whose mission is to protect the rights of, and advocate for, persons with disabilities, and to communicate and meet with representatives of that organization; ( the Ward has the right to contact the Court and other organizations also. Wards are going to be given more opportunities to contact government and non-profit agencies to prove failures of guardians to provide proper care, breaches of civil rights lack of contact. If these rights are enforced nursing homes (skilled nursing facilities) will forced to change how they treat patients. I will also post a patient’s bill of rights that is largely ignored

CHANGES IN PROBATE LAW: CREDITORS WIN SURVIVING DIVORCEES LOSE AND SMALL ESTATE AFFIDAVIT LIMIT INCREASED There are several technical changes that will be noticed more by the lawyers who practice probate. Possibly the most important change to the ordinary Texas beneficiary is a change to how non-probate assets are treated. Beneficiaries of multi-party accounts, think Payable on Death and Joint Survivorship bank accounts must contribute to the payment of federal estate taxes and to the debts of the estate. The most likely demand from survivorship beneficiaries will be (B) if other assets of the estate are insufficient, amounts needed to pay debts, other taxes, and expenses of administration, including statutory allowances to the surviving spouse and minor children The Estate executor or administrator can pursue either the payee or a person who caused funds to be paid from a multi-person account. The personal representative of the Estate is not required to receive a demand from the decedent’s spouse or a creditor before having a duty to pursue such reimbursement to the probate estate. Previously, the personal representative had no duty to pursue such amounts until a demand was made on the representative. This action must be pursued within two years of the decedent’s (person who died) death.Gifts to Divorced Spouses Voided Multiple changes were made to the Estates Code to remove payments to divorced spouses under non-probate transactions created prior to divorce. This change is being consistently implemented in each of the relevant areas of law: Statutory Durable Powers of Attorney, Health Care Powers of Attorney, Wills, and in this instance revocable trusts. My translation of the language below is that any gift to a spouse prior to divorce in a revocable trust is voided by the divorce or annulment. In similar fashion any appointment in a Trust of a spouse later divorced (or annulled) to a position of fiduciary responsibility is voided. (a) The dissolution of the marriage revokes a provision in a trust instrument that was executed by a divorced individual as settlor before the divorced individual's marriage was dissolved and that: (1) is a revocable disposition or appointment of property made to the divorced individual's former spouse or any relative of the former spouse who is not a relative of the divorced individual; (2) revocably confers a general or special power of appointment on the divorced individual's former spouse or any relative of the former spouse who is not a relative of the divorced individual; or (3) revocably nominates the divorced individual's former spouse or any relative of the former spouse who is not a relative of the divorced individual to serve: (A) as a personal representative, trustee, conservator, agent, or guardian; or (B) in another fiduciary or representative capacity.Joint revocable trusts are common in Texas. If the divorce court fails to terminate a joint revocable trust the law now provides that when one of the two Settlors dies the Trustee is to divide the Trust property as attributable to the property contributed by the respective Settlors. Usually the property is Community property and one half will go to the estate of the Settlor who died and the other half to the surviving divorced spouse (Settlor). A Settlor is a person who signs a Trust agreement and usually provides the assets placed into the Trust. Separate property will be allocated to the spouse who owned it.However, (e) This section does not apply if one of the following provides otherwise: (1) a court order; (2) the express terms of a trust instrument executed by the two divorced individuals before their marriage was dissolved; or (3) an express provision of a contract relating to the division of the marital estate entered into between the two divorced individuals before, during, or after their marriage.Yet another Estate Code section is amended to void beneficiary designations to a divorced spouse or family member of a divorced spouse in a multi-party account.Finally, yet another statute voids gifts to a spouse who is later divorced from a Decedent. A decedent is a person who died and whose property (estate) is placed before a probate court by an application on a Will or for determination of heirs. An heir is a person who is found based on evidence in Court to be the nearest living relation to a decedent. Only certain relationship qualify under the Estate Code to be an heir.Small Estate AffidavitsA small estate affidavit is a simplified method of proving ownership of assets (passing of title). It applied to estates of $50,000.00 or less, not including the value of the homestead or non-probate assets. The limit is increased to $75,000.00 as of September 1, 2017.

Sometimes a person will come in and say they own a house because Mom left it to them in her Will, and then tell me the Will was never probated. Boom! The Will must be placed into the Court record before it is effective to transfer title (ownership) of property. Failure to probate a Will could result in you not getting title to the property given to you in the Will. HOW DO I PROBATE A WILL? A Will is probated when it is offered to a Court with “Probate” authority and the Judge accepts it as valid by signing an Order admitting it to probate. The Will once accepted as valid is used to determine who owns the property. DO I REALLY NEED TO HIRE AN ATTORNEY? Probate Courts do not permit a person who is not licensed as an attorney to represent anyone else. You have a right to represent yourself, but no one else. It is wise to consult a licensed attorney to determine the best alternative. Many factors such as the existence of debt, type of assets to be collected, how well the heirs or beneficiaries cooperate and other issues affect which legal options are available.What happens if a Will is not probated?If a Will is not offered to a Court within four years of the Will signer’s death, it might never be admitted to probate. A person who is at fault for not offering the Will for probate is not allowed to offer it after four years from the date of the Will signer’s (Testator) death. Most Courts only hold the named executors as responsible. An executor is the person named in the Will to offer the Will for probate and take care of the management of the probate estate: collecting assets, paying creditors and distributing the proceeds to the named beneficiaries. Sometimes people name persons who would not be “heirs” as the persons to receive their property. In most situations an heir is a spouse, child or grandchild of a person who died. Determining who the heirs are can be complicated and there can be multiple heirs. HOW DO I KNOW IF A WILL IS VALID? State law set out specific elements that must be met for a Will to be valid. A Will must be in writing; it must be witnessed by two people, the Will signer must be age 18 or older, mentally competent and signing the Will without duress. There are other requirements that must be met.Who was present when the Will was signed is important, who was not present is important, the circumstances surrounding the time of the signing are important. Having a beneficiary sign as a Witness to the Will denies the planned gift to the beneficiary. STILL HAVE QUESTIONS? You can find some answers on my Probate FAQs page. If you still have questions about Wills, probate, or estate administration I can help. Call 817-697-2507 to schedule an appointment.This is not meant to be legal advice. All of the answers above are meant to be generic and are for Texas only. Laws vary from State to State and an attorney in the State where the probate is needed should be consulted.

Texas has placed protections against creditors for married couples and families with minor children in our law. The protections are both by statute and in our Constitution. First, certain types of property are given a special status as “exempt” from creditor claims. Except for claims asserted by the Federal government, property taxes, “Repair liens”, or secured liens, exempt assets cannot be taken by a creditor. Secured liens involve the purchase of the asset being financed by the creditor and require the correct paperwork be signed as part of the purchase to permit the creditor to seize the asset or foreclose WHAT ASSETS CAN BE PROTECTED? 1. YOUR CAR Texas protects one vehicle for each family member who can drive. 2. YOUR HOME Texas law offers broad protection to your homestead. You can protect up to 10 acres inside town and up to 100 acres outside of town. 3. THE STUFF IN YOUR HOME The normal contents of the home are protected. This can include furniture, dishes, furnishings, clothing, and food. Electronic gadgets such as TVs, radios, etc are not protected. 4. YOUR SAVINGS FOR RETIREMENT Your IRA is protected, but this is not true for inherited IRAs for many people who do not live in Texas. We are special. 5. YOUR WEDDING RING Actually, you can protect personal jewelry worth up to 25% of your exemption amount. An individual can protect up to $30,000.00. A family can protect up to $60,000.00. WANT TO KNOW MORE? The list of most protected assets is found in our Property Code. There are also protections found for current wages, insurance policies and other assets in other parts of our law. This is not a complete list and should not be considered legal advice. A detailed examination of the assets owned, the debts owed and other factors should be done in each estate in order to determine the best solution in each case.