Glossary of Terms
Many people believe that a will takes effect on the day it is drafted or, if not, on the date of death of the drafter of the will (called the “testator”). Although Texas law provides that title to the decedent’s property “vests” in his will beneficiaries or, if there is no will, his heirs on the date of the decedent’s death, the beneficiary’s right to take possession of the property is subject to the administration of the estate. Probate is the process wherby a will is recognized as the valid last will of the testator and, in many cases, facilitates the appointment of an executor or administrator to administer the estate. The process involves the filing of an application by an interested party, usually the named executor, and a hearing after which the court will enter an order admitting the will to probate if the court is satisfied that the applicant has met his burden of proof. The order becomes a part of the county records. Once the executor or administrator is appointed, they will then administer the estate.
Some people believe that when a person dies without a will the “state” gets the property. This is not true. However, the state does determine who gets the decedent’s property if the decedent dies without a valid will. The process involves the filing of a sworn application to determine heirship which lists, among other things, the names of all heirs and the percentage of the estate to which they are entitled. Upon the filing of the application, the court appoints an attorney ad litem to represent any other heirs who may exist but are not listed on the application, including any heirs that are minors or suffer some legal disability. After the investigation by the attorney ad litem, the court conducts an oral hearing at which time the applicant brings forth disinterested witnesses to testify to the identity of the heirs. If the court is satisfied that the applicant has met her burden of proof, the court will enter a judgment declaring the identity of the decedent’s heirs and their percentage of the estate. The judgment declaring heirs is essentially the equivalent of the order admitting the will to probate since both documents establish the identity of the beneficiaries of the decedent’s estate. Like the order admitting will to probate, the heirship judgment also becomes a part of the county records.
In most cases, a decedent’s last will appoints an executor to serve as the legal representative of the decedent’s estate. Many times, the testator will name the executor as “independent executor” which means that the executor administers the estate without court oversight or supervision. If the executor is not appointed as the independent executor, then the executor will be subject to court supervision in the handling of the estate.
If a will does not name an executor, or if the person named, or his alternate, cannot or do not serve, or a person dies without a will altogether, the court will appoint an administrator of the estate assuming there is a need for an administration of the estate. An administrator is essentially the same as an executor. Just as in the case of an executor, the administration can be dependent or independent of court supervision.
A trustee is a person named to administer a trust. The trust may be established during the life of the person who forms the trust (a “living trust”), or the trust may be created in the will itself (a “testamentary trust”). Regardless of how it was formed, the trust is administered by a trustee who is required to follow the terms of the trust in carrying out her duties. Just as a deceased person names beneficiaries of his estate in his last will, the settlor of a trust names beneficiaries of the trust. The trustee handles the trust for the benefit of those beneficiaries.
The probate process also includes estate administration which involves activity by the executor or administrator including, among other things, collecting the decedent’s property, collecting claims owed to the decedent’s estate, addressing creditor claims against the estate, addressing unpaid debts and taxes, funding any trusts that may be set up in the will, and distributing the property.
Creditors are persons or entities who have a claim against the decedent’s estate. The claim may arise from many sources including loans, mortgages, credit card bills, judgments against the decedent, child support orders or other debts that were still due and owing by the decedent at the time of his death. The Texas Probate Code outlines procedures for the handling of claims which both the creditor and estate representative must follow in resolving the claims against the estate.
Beneficiaries are those that are entitled to receive the estate either under a will, a trust, or by intestacy (when a person dies without a valid will). The beneficiaries have certain rights, most of which are set out in the will or the trust. The Texas Probate Code also gives beneficiaries certain rights such as the right to an accounting and distribution of the estate after certain deadlines have passed. Sometimes beneficiaries are in a dispute with the executor, administer, or trustee. Other times beneficiaries may be at odds with each other, many times over the distribution of personal property.
Any interested party has two years from the date the will is admitted to probate to contest the probate of the will. Sometimes a contest is filed after the will is filed but before it is admitted to probate. Other times, the contest is filed after the will is admitted to probate. A will contest involves claims that the will is invalid for certain reasons. A contestant may question whether the formalities in executing the will were met, whether the decedent had sufficient mental capacity to execute the will, or whether someone unduly influenced the decedent to draft the will or certain provisions in the will. Normally, the named executor or administrator will “defend” the will to attempt to carry out the decedent’s wishes as set forth in the will. If the will is successfully set aside, the decedent’s property will pass under a previous will, if such will is located and if it is valid. Otherwise, the decedent’s property will pass by intestacy pursuant to a judgment declaring heirs.
A will is a legal declaration of your wishes upon your death. Generally, a will disposes of your property or gives directions as to how you want your property to be handled. A will normally appoints an executor to oversee the administration of your estate. Since a will does not take effect until death, the will can be changed any time prior to death so long as the testator is mentally competent and the basic legal requirements are satisfied.
To be valid, the will must satisfy the following requirements:
– It must be in writing;
– the testator must be identified;
-the testator must have the desire for the document to govern the disposition of her property upon her death;
– the testator must be of sound mind and over eighteen years of age at the time the will is executed; and
-two credible witnesses over the age of 14 years of age must attest to it and sign it in your presence.
Texas also allows “holographic” wills. A holographic will must be wholly in the handwriting of the testator.
One of the primary reasons for a will is to prevent dying intestate so that your property can pass how you want it to pass rather than how the state legislature sets out if you die without a will. A will can also be used as a tax-planning device to save on estate taxes that may be due and owing in the case of married couples. A will may also set up a trust to hold property for your beneficiary. A will may also name a guardian for your minor children (This can also be accomplished by a separate designation of guardian form.)
The Statutory Durable Power of Attorney establishes an agency relationship between the principal and the agent who acts on the principal’s behalf with respect to property and financial matters.
A non-durable power of attorney terminates upon a person’s disability or incapacity. The Texas legislature has introduced a form of “durable” power of attorney wherein the powers of the agent do not terminate on the principal’s disability or incapacity.
The statutory form lists the powers of the agent and allows the principal to “strike out” powers he does not want the agent to have. If nothing is stricken, the agent shall have all of the listed powers.
The statutory Durable Power of Attorney also allows for the consent to make gifts. This may be an important estate-planning mechanism if the principal may have a taxable estate upon death. It would allow the agent to gift the annual exclusion .The statutory Durable Power of Attorney also gives the principal the option of making the agent’s powers effective only when the principal becomes incapacitated. These are known as “springing powers.”
The statutory Durable Power of Attorney must be signed while the declarant has mental capacity and it must be notarized.
The Durable Power of Attorney for Health Care is the legal empowerment of a person other than the principal to make decisions for the principal when the principal becomes incapacitated. The Durable Power of Attorney for Health Care enables a person to appoint a representative to assume responsibility for health related decisions in the event of future incapacity.
Health care decisions include consenting or not consenting to treatment, withdrawing treatment, services or procedures, or withholding medical treatment. Essentially, the agent may make any health care decision on the principal’s behalf that the principal could make if the principal were competent with some exceptions.
An agent may exercise authority only if the principal’s attending physician certifies in writing and files the certification in the principal’s medical record that, based on the attending physician’s reasonable medical judgment, the principal is incompetent.
The Durable Power of Attorney for Health Care is effective upon its execution and delivery to the agent, unless it is otherwise revoked or the principal regains the capacity to make health care decisions.
The term “living will” has been a cause of great confusion. A “living will” is not a will in the traditional sense. In a nutshell, this simple yet extremely important document informs medical providers of your wishes about whether your life should be sustained artificially.
“Living wills” are now known as a Written Directive to Physicians. It is intended to document in advance a patient’s preferences concerning administration of mechanical or artificial means of life support in the event of a terminal or irreversible condition.
“Terminal condition” means an incurable condition caused by injury, disease, or illness that according to reasonable medical judgment will produce death within six months, even with available life-sustaining treatment provided in accordance with the prevailing standard of medical care.
“Irreversible condition” means a condition, injury, or illness:
(1) that may be treated, but is never cured or eliminated;
(2) that leaves a person unable to care for or make decisions for the person’s own self; and
(3) that, without life-sustaining treatment provided in accordance with the prevailing standard of medical care, is fatal.
Many serious illnesses such as cancer, failure of major organs (kidney, heart, liver, or lung), and serious brain disease such as Alzheimer’s dementia may be considered irreversible early on. There is no cure, but the patient may be kept alive for prolonged periods of time if the patient receives life-sustaining treatments. Late in the course of the same illness, the disease may be considered terminal when, even with treatment, the patient is expected to die. You may wish to consider which burdens of treatment you would be willing to accept in an effort to achieve a particular outcome. This is a very personal decision that you may wish to discuss with your physician, family, or other important persons in your life.
“Life-sustaining treatment” means treatment that, based on reasonable medical judgment, sustains the life of a patient and without which the patient will die. The term includes both life-sustaining medications and artificial life support such as mechanical breathing machines, kidney dialysis treatment, and artificial hydration and nutrition. The term does not include the administration of pain management medication, the performance of a medical procedure necessary to provide comfort care, or any other medical care provided to alleviate a patient’s pain.
In spite of the existence of powers of attorney or written directives, one may nonetheless become the subject of a guardianship proceeding. The filing of a guardianship proceeding alone does not guarantee that a guardian will, in fact, be appointed. However, in the event there is medical evidence of your incapacity, and the Court finds that there are no less-restrictive alternatives, a guardian may be appointed. You may, despite your incapacity, have a say on WHO is appointed as your guardian.
Competent adults may designate a person to serve as the guardian of his estate and/or person in the event of future incapacity. The declarant may also disqualify named individuals from serving in that capacity. The desgination or disqualification must be in writing, be signed by the declarant, be attested by two witnesses, and a self-proving affidavit must be attached to the document.
The designation/disqualification is revocable and any designation favoring a spouse is void if there is a subsequent divorce.
Upon the declarant’s incapacity, the court is instructed to appoint the designee IF he is not disqualified and his appointment will serve the declarant’s best interest. Therefore, the appointment of this person is mandatory only if the court makes these two findings.
Some individuals and businesses who profit from the creation and management of trusts have done a remarkable job of convincing many people that trusts are necessary to avoid probate, as if probate were something evil. In Texas, however, avoiding probate is not necessarily a valid reason to establish a revocable living trust. Texas probate laws are fairly simple and straightforward, and the probate process is relatively quick and inexpensive (assuming there is not a contest). Texas has what is known as “independent administration” which allows the executor to manage the estate free of court supervision.
There may be legitimate reasons for creating a revocable living trust. One such reason may be to avoid the necessity of a guardian of your estate should you become incapacitated. Others may want to avoid probate for publicity reasons, to avoid delay in receiving benefits, or to avoid potential will contests.
A revocable living trust is a document or series of documents stating who controls your property while you are alive and what happens to your property when you die. While the concept of a trust is quite simple, the details involving the various types of trusts and the mechanics of their creation and management can be complex. Put simply, a trust is like suitcase which will hold all of the property you decide to put in it. Upon your death, the “suitcase” containing the trust property passes directly to the beneficiaries. However, during your life, there will be limitations on what you can remove from your suitcase. You will not be able to treat it in the same way as other property that is not in your suitcase. This is a downside of creating a trust.
A revocable living trust should not be confused with a testamentary trust. A testamentary trust is created in the will itself. This type of trust is useful when assets of a deceased person need to be managed to care for an elderly spouse or disabled person, to postpone distributions to minor children, or to protect the assets for adult children who you may not believe have the ability to manage them on their own. A testamentary trust may also be useful if you have a taxable estate. This type of trust is commonly called a “bypass” trust–you bypass Uncle Sam in favor of your loved ones. Upon your death, a trustee will be appointed to manage the trust on behalf of the beneficiaries. Because the testamentary trust is a part of the will, there will only be one document. Just as with a will, it can be modified or revoked so long as you are of sound mind.
An executor, administrator, guardian, trustee, or agent under power of attorney owes the beneficiary, ward, or principal what is known as a fiduciary duty. A failure to fulfill that duty causing legal damage to the beneficiary may subject the executor, administrator, guardian, trustee, or agent under power of attorney to liability.
Guardianship is a special type of legal proceeding involving the appointment of a legal representative to handle a person’s affairs relating to her person and estate in the event she becomes incapacitated. A person becomes “incapacitated” under Texas guardianship law when she becomes substantially unable to handle the affairs relating to her person (food, clothing, shelter, medical decisions), or her estate (property, funds, investments, business dealings). The guardianship process involves the filing of an application accompanied by a special form of physician’s letter detailing the results of a mental status examination and stating whether the proposed ward meets the definition of an incapacitated person. Upon the filing of the application, the court appoints an attorney ad litem to represent the proposed ward. The proposed ward or other interested person may contest the guardianship or the appointment of a particular person as guardian. Upon his appointment as guardian, the guardian then handles the affairs relating to the person and/or estate of the ward on her behalf.
A guardian is the person appointed by the court to oversee the affairs of a person who has become incapacitated. A guardian may be appointed over the person and/or the estate of an incapacitated person.
An attorney ad litem is the person appointed to represent the proposed ward in a guardianship proceeding. The role of the attorney ad litem is to represent the wishes of the proposed ward.
A guardian ad litem is a person appointed to represent the best interest of a proposed ward or minor. A guardian ad litem differs from an attorney ad litem in that the guardian ad litem advocates not simply for the proposed ward’s wishes, but what she believes to be in the best interest of the proposed ward, regardless of the proposed ward’s wishes.
Mediation is a non-binding process wherein the parties appear at the office of a mediator to attempt to settle the dispute without court intervention. This process is often mistaken with arbitration, which is a binding method of dispute resolution wherein an arbitrator (or panel of arbitrators) act in the role of a judge and decide the disputed matter. In a mediation, the mediator attempts to facilitate a settlement between the parties but does not and cannot impose his decision upon the parties. While the mediator cannot force the parties to settle their case, the court in which the case is pending often requires the parties to go to mediation prior to trial to at least attempt to resolve the case. If the case settles, the parties usually sign a written settlement agreement. If the case does not settle, the mediator simply notifies the court that the case did not settle. The mediator cannot reveal to the court any of the details about the mediation. The process is confidential.