How to Sign for a Family Member’s Real Estate (in Texas) If They Die Without a Will

 

Overview

This purpose of this blog post is to provide a sample case study of how to get signing authority over real estate when a loved one dies with a Will.

There are a lot of possible results so this blog post will focus on a simplified case and will try to avoid a lot of the exceptions to the general rule.

What Does This Blog Post NOT Cover?

There is more than one way to skin a cat!

This blog post will NOT cover some of the more specialized ways of getting signing authority over real estate such as:

  1. Small estates affidavit (very limited usefulness for real estate in Texas, typically only useful if person inheriting real estate lived in the house of the deceased person)
  2. Affidavits of heirship (title companies may refuse to honor affidavits of heirship for fear of fraud on the affidavit)
  3. Will (in our example, the deceased person died without a Will)
  4. Trusts or LLCs (Trusts and LLCs are often a great way to avoid losing signing authority over real estate when someone dies if they are drafted and set up properly).

Case Study

Georgia, dies single and WITHOUT a Will. In legal jargon this is called dying “intestate.” Her only substantial asset is her home which is in her sole name.

Georgia is survived by her only son, Ray.

Ray was a good son and was told several times by his Mom to sell her house after her death and that everything should go to Ray.

Can Ray sell his Mother’s house? If not, what does he need in order to sell his house?

Title Company Unlikely to Approve Sale of House

Assume Ray finds a realtor for the house and the realtor finds a Buyer for the house.

Ray and the Buyer agree on a sales prices for the house

In almost every case, a title company is involved in the sale of the house.

A title company is typically concerned with issues such as:

  1. Does Ray have legal authority to sign for the sale of the house?
  2. Are there title issues with the house, for example is the house subject to a mortgage or unpaid real estate taxes?

In this case, Ray explains that his Mother died without a Will and that under the default rules of the State of Texas, when an individual dies single without a Will, their real estate goes to an only child.

The Title Company will almost certainly not be willing to take Ray’s word for it.

Reason: the Title Company is potentially liable for the entire value of the house if Ray is not the person who inherits from Georgia.

There are a lot of “what ifs” that could cause Georgia’s house to pass to someone besides Ray, 100%:

  1. What if Georgia had a common law spouse?
  2. What if Georgia had other kids besides Ray?
  3. Does the title company really know that Ray is Georgia’s daughter?

If any of these “what if” scenarios come to pass, the title company could be on the hook for the full value of the house because they are issuing title insurance that protects the buyer from title defects on the house.

To quote Rick Blaine of Casablanca: “I stick my neck out for nobody.”

A prudent title company would say that they cannot take Ray’s word for it that he inherits everything from his Mother. There are too many unknowns.

A prudent title company would demand to see a court order signed by a judge declaring that Ray has signing authority for the house.

What is the Process to Get a Judge to Sign an Order Giving Ray Signing Authority Over His Mother’s House?

The formal court process to get a judge to grant signing authority for the house to Ray is typically called a “Determination of Heirship” here in Travis County, Texas.

Benefit of process:

  1. A judge’s order is the gold standard that gives the title company the protection they need to know that Ray has legal authority to sign for his Mother’s house

Downside of process:

  1. Ray needs an attorney to take him through the court process
  2. Ray needs to find two credible witnesses who can testify to Georgia’s family and marital history
  3. Ray needs to pay for an independent attorney (called an “attorney ad litem”) who makes sure that the family history that Ray submits in his pleadings is not missing anyone such as an unknown sibling, spouse, or other family member who also inherits from Georgia.
  4. Timeline for process can vary wildly depending on complexity of family tree and workload of the attorney ad litem to verify the family tree. The process could easily take 3 months or more if the family tree is complicated.
  5. In a very simple case with no complications, could still cost $6,000 or more due to filing fees, publication fees, cost for attorney ad litem, and attorney’s fees for pleadings and court hearing.

We hope to have a webinar up soon that goes through the Determination of Heirship process in more detail so you have a better idea of how the process works.

What Could Georgia Have Done to Save Ray the Time and Expense of the Determination of Heirship Process?

Common strategies to make a child’s life easier after the parent dies:

  1. Will – good baseline. Although a Will typically requires a judge’s signature to be accepted by a title company, the process to get a judge to declare a Will valid is typically much easier than the Determination of Heirship process described above, provided the Will is well drafted.
  2. Trust – gold standard. A well drafted trust with all the trust assets in the name of the trust typically avoids the court process altogether. In the best case, Ray simply shows a copy of the trust instrument to the title company after Georgia dies. The title company verifies the Ray has signing authority for the trust assets after Georgia dies and allows him to sign for the sale of Georgia’s house without needing a judge’s signature. Savings to Ray: at least 2 months of work and possibly $5,000 or more in court and attorney expenses.

 Call To Action – Make Sure You Have a Good Estate Plan in Place for Your Loved Ones

            A good estate plan (e.g., a Will or Will + Trust estate plan) is a big gift to children because it clearly lays out what should happen after death and gives the kids the legal tools they need to carry out your wishes after death.

In the example above, even though Georgia’s wishes are clear and her estate is limited to a single house, Georgia’s lack of a Will or Trust means that Ray is likely to have to go through a detailed Determination of Heirship process before he can get signing authority for the house.

We strongly recommend that parents with children have an estate plan in place as a gift to their children in the event they pass unexpectedly.

We hope this helps. Please let us know if you have any questions!

 

Christopher Ha, Attorney

TCV Law Group