Episode 316: Intestate in Texas: Succession and Property Considerations

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If an estate owner dies intestate (legalese for dying without a will), the state’s intestate succession laws determine who the beneficiaries are, and what they are entitled to receive. This is also the case in Texas, which has its own intestate succession order. Further, because Texas is a community property state, there are additional provisions dictating how a decedent’s property is to be divided among beneficiaries.

However, the state’s intestate succession order may not be considered ideal. If this is the case, it’s essential for the estate owner to author a will prior to death. Wills are used to name beneficiaries and allocate assets to those beneficiaries as the estate owner sees fit. In effect, they replace the state’s judgment regarding who receives what.

With a will, the estate owner can ensure their loved ones are sufficiently provided for, and that difficult decisions regarding property division are answered.

What Assets are Passed Through the Intestate Succession Process?

The assets that pass through intestate succession are the same assets that pass through probate. Probate is the court-mandated and guided process during which an estate’s assets are gathered, inventoried, and allocated to beneficiaries. Probate assets are a matter of public record, and it can take months (even years) before everything is resolved through the court. As such, estate planning attorneys will frequently develop trusts and other instruments that allow the estate’s assets to pass outside of probate and directly to beneficiaries.

Non-probate assets – and therefore assets not affected by intestate succession – include the following:

• Any property placed in a trust
• Life insurance policies
• Retirement investment policies, such as 401(k)s and IRAs
• Payable-on-death or joint owned bank or brokerage accounts
• Any property that is jointly owned, including vehicles and real estate

Assets that cannot be placed in one of the above categories will be subject to intestate succession.

Intestate Succession in Texas – Who Gets a Share of the Decedent’s Property?

Let’s say an estate owner dies without a will in Texas. What happens then? The Texas succession laws take over. This law determines who the estate’s beneficiaries will be – and what share each beneficiary is entitled to.

In Texas, this is what the succession order looks like:

• If there is a surviving spouse, but no children, parents, or siblings – The spouse inherits everything.
  
• If there are children, but no surviving spouse – The children inherit everything.
• If there are surviving parents, but no spouse, children, or siblings – The parents inherit everything.
• If there are surviving siblings, but no spouse, children, or parents – The siblings inherit everything.

If there are multiple children or siblings, they receive equal shares of the decedent’s estate. That may spark some spirited conversations about who receives what, but the above scenarios are fairly simple. It gets more complicated when there is a surviving spouse (or more than one), children, grandchildren, parents, and other relatives all involved in succession.

Here are what those scenarios look like, from a succession standpoint:

• If there is a surviving spouse and children, and the children are also the children of the surviving spouse – The surviving spouse inherits all community property and 1/3 of the decedent’s personal property. The spouse also retains the right to use any shared real property (the family home, most notably) for the remainder of their life, or until they move out of the property or abandon it. The children get everything else.
• If there is a surviving spouse and children, but the children are not the children of the surviving spouse – The surviving spouse inherits 1/2 of all community property and 1/3 of the decedent’s personal property. They also retain the right to use any shared real property for life. The children get everything else, including the other half of the decedent’s community property.
• If there is a surviving spouse and parents – The surviving spouse inherits all community property and the decedent’s personal property. They also receive 1/2 of the decedent’s real property. The parents get everything else.
• If there is a surviving spouse and parents – The surviving spouse inherits all community property and all of the decedent’s personal property. They also receive half of the decedent’s real property. The parents get everything else.
• If there is no surviving spouse, but a surviving parent and siblings – The parent receives 1/2 of the decedent’s personal property, and the siblings receive the rest.
• If there is a surviving spouse and siblings, but no parents – The surviving spouse receives all community property and all of the decedent’s personal property. They also receive 1/2 of the decedent’s real property. The siblings get everything else.

What If There Isn’t a Surviving Close Relative?

If the estate owner dies intestate and has no living close relative, the decedent’s property may be claimed by the state to use as it sees fit. This is only the case if an heir cannot be identified through genealogical research. As you might expect, though, states differ greatly in how much effort they’ll put forth in tracking down beneficiaries.

However, Texas stands out in this regard. While some states won’t track a decedent’s genealogy beyond cousins, Texas courts tend to recognize very distant relatives when naming beneficiaries. These could be heirs completely unknown to the decedent, which may influence estate planning. Again, a will can be used to halt this process and dictate how the estate’s assets will be distributed – which may be to close friends, charity, or other institutions, as the estate owner sees fit.

How Is Community Property Handled During Intestate Succession?

As a community property state, Texas courts consider timing when determining whether an asset is owned by a single spouse, or jointly owned by both. As already detailed, community property is categorized differently during intestate succession.

The question is, what qualifies as community property? It comes down to timing.

Any assets owned by one of the spouses prior to marriage retains sole ownership over those assets following marriage. If the asset is acquired following marriage (even if both spouses are not named on the title, in some cases), it’s considered community property and belongs to both spouses.

Assets governed by community property laws include:

• A primary residence and any other real property
• Vehicles, including boats and aircraft
• Personal and household items, like clothing, furniture, and jewelry
• Life insurance policies
• Retirement and employment benefits, including pensions
• Bank and brokerage accounts

Because Texas is a community property state, the above assets are largely passed on to the spouse, as described above. In addition to pre-marriage property, the only exceptions to the state’s community property provisions are gifts, inheritances, and certain funds awarded from legal judgments, such as personal injury awards.

Community property provisions can be nullified through a prenuptial or postnuptial agreement. In effect, such an agreement can be used to define who owns what assets, and any assets defined as personal property in this way will not be considered community property for the purposes of intestate succession.

Wills Overrule Intestate Succession

If an estate owner dies without a will, the situation can quickly escalate into an expensive, drawn out, and often emotionally charged process. We’ve seen it happen plenty of times – family members that get along just fine are suddenly embroiled in arguments over inheritance rights.

If you own significant assets, this all-too-common outcome can be avoided by authoring a will. Fortunately, it’s not difficult to put a will together, but it may be difficult to ensure everything is covered by your will. This is where an estate planning attorney can help. An experienced attorney can identify the best estate planning tools to ensure your assets are handled the way you want them to be handled – without the confusion and conflict that often accompanies estate divisions.

By Harold "Hap" May, P.C. on January 12, 2024   /   The Legal Play Podcast   /   Leave a comment