Until someone has inherited something, they cannot pass it on.
Probating the estate of the person who died first
This means that the estate of the person who died first must be probated, whether or not there is a Will. If the person left no more than a homestead, $60,000 in personal property and household goods and $75,000 in the bank or elsewhere, this can be done with an Affidavit of Small Estate. But not every financial institution will accept one.
Using an Affidavit of Heirship
Using an Affidavit of Heirship generally will not work. An Affidavit of Heirship is only used to transfer real property. A court will not enforce an Affidavit of Heirship until five years after it has been recorded with the county clerk in the county where the real property is located – and no one has come forward to object that they, too, are an heir.
The five-year rule still applies for probating estates
Few people want to wait five years before probating the estate of the person who died next. To speed things up, and avoid the cost of probating an estate, some real estate attorneys try to obtain and file Affidavits of Heirship for two or more successive owners who have died and, with them, Powers of Attorney permitting the sale of the real estate. The five-year rule still applies. In addition, there is a greater risk that an heir, perhaps an unknown heir, has not signed the Affidavits of Heirship and the Powers of Attorney permitting the sale. Some title companies will not insure title. Some potential buyers will offer a lower price.
If another heir surfaces, the buyer keeps the property but the “new” heir’s share of the sale proceeds must be paid by all the other heirs. A lawsuit may be needed to get the money. One or more of the heirs may not have it and may not have the money for the lawsuit.
If the Powers of Attorney direct the agent to distribute the net proceeds from the sale of the property, together with an accounting, to all the other heirs at closing in accordance with the Texas Rules of Descent, the title company may see that this is done.
If it does not, perhaps the heirs have entered into a contract with the agent. That contract should provide for the agent to direct the title company to pay the money at closing. If it does not, it should at least provide for the agent to pay the money immediately after closing. Even then, the heirs are faced with the possibility of having to bring a lawsuit to recover their inheritance. The cost and delay may make this approach useless for heirs who inherit little and decrease the real value of the inheritance to others.
Estate Planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people administering estates.