When someone dies without a Will, the State of Texas becomes the legal entity to determine the disposition of your worldly possessions. Although the distribution plan laid out by Texas law may not differ from what many people would normally choose for themselves, Texas law offers little flexibility. For example, the law may split certain real estate between a surviving spouse and children. If no children exist, then the law may split real estate between the surviving spouse and the decedent’s parents.

One of the most important reasons for executing a Will is to avoid the costs incurred to the estate. Basically, without a Will stating your instructions on how you want your estate distributed and who you want supervising the distribution, the Probate Court will supervise the process. This process is known as “dependent administration” and each step made, such as gathering assets, paying debts, distributing assets, etc., must be formally presented to the Probate Court for the judge’s approval. The judge may also need to appoint attorneys to administer the estate, to protect the interests of “unknown heirs”, and to represent the interests of minors. All of these requirements protect the decedent’s estate but they also become expensive and time consuming. If your thought is that your estate is too small for a Will, then please rethink your decision. Medium or smaller size estates can often be eaten up or significantly affected by the costs related to a “dependent administration.” By providing a Will to handle your estate, many costs can be avoided.

Additionally, children can be taken care of more specifically. For example, a Will can nominate guardians for their minor children. Also, a “Contingent Minority Trust” can be included in the Will dictating who will be the caretaker (trustee) of the funds left a child, and at what age the funds should go to the child. Otherwise, the funds will go to the child at eighteen as dictated by Texas law.

At a reasonable cost, many matters can be handled by putting a Will in place. For more information, please see our Wills page.

This situation is not hypothetical; it is quite common in the real estate market today. It is important for real estate agents, loan officers, title companies, and others within to the housing market to educate buyers and sellers of their inherent rights: community, separate and homestead.

Community property is property that is acquired while you are married, unless that property is attained through inheritance or as a gift. Even if the property is only in the wife’s name, if she bought it while she was married, it is considered community property. The State of Texas is a community property state; any property acquired, especially with “community funds” i.e. funds that are earned by either husband or wife and are used jointly, is considered the right of both spouses.

Separate property is property acquired prior to marriage, or through inheritance or as a gift. It is considered separate from the community because it was acquired outside of the community, either before or through no direct relation to the community. The property is considered the right of the single person.

Homestead rights co-exist with either community or separate property. Homestead rights are earned by living in a property and considering it a place of residence. The best item to determine the intent of a homestead is the address listed on a driver’s license or identification card. A person can claim homestead of a property they do not own as long as they live in it and claim it as their place of residence.

For our example above, the property is considered the husband’s separate property, since he bought it prior to his marriage. However, the wife lives in the home, so she has homestead rights to the home. She must sign that she acknowledges the sale of the home and that she gives up her homestead rights. This is to prevent any issues in transferring title to the new owners.

When selling your home, let your real estate agent and title company know who owns the property on title, and if any additional adults claim the property as their homestead, such as a spouse or partner.

TRANSCRIPT | DEATH AND DIVORCE: COMMUNITY, SEPARATE, AND HOMESTEAD PROPERTY

Kellie F. Stokes | Stokes Law Office, PLLC| www.kstokeslaw.com

We have community property…we all familiar with that term? Separate property, and we have homestead. So what’s the difference between all of this? Because I’m certain at some point in your all’s career you probably have the title company say, “Oh because it’s homestead…” and it’s like, well what does that mean? Or you know, it’s community property and you get these lingos thrown at you. But why exactly is that the case? And so… Community property, basically by definition in Texas is the bias is that basically anything acquired during marriage is community property. And what that means is that the husband and wife both have a right to the property. Ok, that is the presumption.

Alright, then, separate property, then, by definition, is any property acquired before the person got married, or acquired after marriage by inheritance or gift. So, mom dies, leaves the house to daughter who’s married, that’s daughter’s house, okay? Cause she inherited it while she was married, however, she inherited it. Or, mom’s going into a nursing home, we hear that one, and she gifts the home to the daughter. Then again, that is daughter’s separate property, okay?

So, then we have homestead rights. Homestead rights are possessory, I can’t even say that word very well, can I? They mean possession. So, community property and separate property is how we title the name of the, uh, the style of a property. Homestead rights have to do with, “Do I have a right to live here”. And in Texas, out of any other state in the United States, we have what’s called the strongest homestead rights. We give people a right to stay in that house. And I tell you what, these banks are hating it, because they are foreclosing and they are seeing where it’s a pain because of these homestead rights when it comes to what our eviction rules are and all that. What they do love is that foreclosure is very easy in Texas, so we kind of, you know, weigh, er, even the scales out by doing, by making it that way.

Homestead rights, they arise by virtue of you living on a piece of property. They are independent of ownership status, okay? They are designed to protect family assets from forced sale and give a fresh start to a debtor. So what does all that mean? Basically a homestead right is, I own a property, okay, and my mom comes to live with me. My mom’s not on title, I own that property, but my mom lives there, okay. My mom has a homestead right. She has a right, and certain laws then get triggered of what her rights are in terms of that property and living on that property, okay. Why is that important? It is important because my mom calls that her homestead, that’s where she lives, alright? It’s her homestead. Well, my mom goes on a crazy spending spree, racks up a bunch a debt, her creditors can’t come and attach to her homestead, okay. So they can’t come and put a lien on my property because it’s my mom’s homestead. Does that make sense?

Now, let’s say that I own a piece of rental property, and I leased it, uh, to Luis. So Luis is my tenant and he’s renting this house from me, okay, and I go and get in a lot of trouble, and debtors want to come after me. They can put a lien on that property that I own as a real, as a rental property, okay? Because I’m not living in there.  Does that make sense? However, Luis goes and racks up a bunch of debt, and that sort of thing, they can’t come put a lien on my property, one, because Luis doesn’t own it, but two, because it is Luis’s homestead okay? So when this comes up is when you have, and people just, I can’t understand this, is that where someone has signed a deed over, but they still live in the house. So we get title, you know, it’s like an extended family living together, and when they bought the house three of them went on title, and over time they deeded their property, they deeded everything over to this one individual, but yet they all still live there, okay? And the title company comes in and says, “Well who lives there? We need all three to still sign because they still have what we call homestead rights.” They have a right to live there.

Um, where it’s most common is a husband and wife are getting a divorce. And they both live in the property. And the husband’s, the thought is, the husband’s going to move out and go find his own place. Well, they uh, then they decide, well, you know what let’s just sell it. And so they are trying to sell the property and part of their agreement before they’ve signed anything the wife’s going to get all the proceeds from the sale. And so the husband says, “Well I’ll just deed over the property to you since you’re gonna, then you can just handle the closing. I don’t want to have anything to do with this.” And, but the husband’s still living in that property, okay?

When a person dies without a will, there are several pieces of information a law office and/or title company needs from their family in order to settle their assets, or “estate”. One big piece is property ownership: did the person own any real estate? If that is the only asset they own, it is possible to settle the estate by filing an Affidavit of Heirship instead of going to court to appoint a specific person.

In the State of Texas, an Affidavit of Heirship is a sworn statement that lists the details of a deceased person, their heirs, like spouses and children, and property now inherited by the heirs. It is instrumental in determining who owns the property after the death, and who has a right to sign documents when the property is sold.

By law, only one person is required to swear to the Affidavit, but many title company underwriters require one disinterested affiant, one disinterested witness and one related or disinterested witness. While not required by law, this gives extra assurance that the facts of the matter are true and correct.

For example, Betty and Bill are married. Bill has three grown children from a previous marriage, Larry, Sarah, and Nick. Bill dies without a will, and Betty would like to sell the house. Under the intestate laws of Texas, Betty owns 50% of the property and Larry, Sarah and Nick own their father’s 50% of the property jointly. In order to sell the property, an Affidavit of Heirship will need to be filed, and all four, Betty, Larry, Sarah and Nick, need to sign the documents.

An Affidavit of Heirship is the cheapest and quickest way to settle an estate. However, not every situation can be resolved this way. Contact our office for us to determine the correct course for you and your loved one’s estate.

TRANSCRIPT:

KELLIE STOKES: So let me explain what an Affidavit of Heirship is. I think someone I was talking to said they did it, yeah, when we, yeah, did an Affidavit of Heirship. An Affidavit of Heirship is where people come in and swear to the facts of that person’s life and who the heirs are, a sworn statement. And so, we use Affidavit of Heirships all the time.

I do my darnest to use Affidavit of Heirships, one because it is the cheapest way for somebody to get it resolved, and it is the quickest way. I’m all about, let’s use the cheapest and quickest way. Sometimes that doesn’t always work, but if we can, that’s what I—that is always where I go first.

Um, now an Affidavit of Heirship, for a title company, in order to sell real estate, has to be signed by two disinterested people. So if you ever have a lawyer say, “That’s not what the law says,” well, yes, they’re right, the law says one person, but title companies require two. So, you know, always go to a title company to, er, an attorney with a title company that knows real estate when you’re doing these things because we know what the underwriters require, and that’s why I say it expedites the process, and that’s why I like doing it, is because I can tell people, you know we all have to have our sale pitch, spiel, and that’s kinda what I try to sell, is hey, you have these situations, I know we’re going to do these documents in the way the need, the way, appealing to the title companies, so that we can get it through the process quicker.

An example of that is the Affidavit of Heirship. I mean, I had to fix a number of Affidavit of Heirships over the years that were valid, but not – they didn’t qualify for the title company. Um, but it’s basically a sworn statement that, um, it’s a sworn statement where people are swearing who the heirs are, and then we file that of record and then we work with those heirs. So, understand that under an Affidavit of Heirship, no one has been appointed by the Court to be the person in charge. Does that make sense? We’re just making an affidavit saying this person died, they had these kids, and these kids inherited this property. So now who are you working with?

GROUP: These kids.

KELLIE STOKES: These kids.