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Life Estate Inheritance Brings Complications

Dear Mr. Premack: My husband left a Will that said, “To my wife, I devise and bequeath a life estate in my home”. It gave all the rest of his estate to his three children from his first marriage. He named me as Executor of the estate. My questions: What do I have the right to do? Can I have a garage sale for income to help pay his debts? Who pays the insurance, taxes and upkeep on the house? In whose name will title to the home be held? I am over 65. I still get the 65 discount on the property taxes? Thank you. – MF

The first thing that you need to do is activate the Will by having your attorney present it to the court for probate. After notice and review, the court should approve it and should authorize letters testamentary for you as Executrix.

Part of “what you have the right to do” depends on you first obtaining letters testamentary as Executrix. Then, in order to comply with the requirements in his Will and with the requirements of Texas law, you must handle payment of his legitimate debts and taxes. There is a process to follow: the creditors must present their claims, which can be accepted as valid or rejected as invalid. If rejected, a creditor may file suit to allow the judge to review the claim and rule on its legitimacy.

When all the legitimate claims are received, they are classified by priority (the statute gives priority to funeral expenses, medical bills, family allowances and secured debts). If the available funds he left behind are inadequate to pay the claims, can you have a garage sale to raise money for his debts? The answer is “no” if his personal effects were given to 1) you as surviving spouse, 2) to his minor children, or 3) to any adult children who are unmarried and living at home. This is because the personal effects are then legally exempt from creditor’s claims. You can only sell them if the heirs all give you their permission.

On the other hand, the answer is “yes” if the personal effects were given to anyone other than those three categories (for instance, to adult children who have their own homes). The personal effects are then not legally exempt and may be sold to pay the decedent’s debts.

You ask, “In whose name will title to the home be held?” The attorney who helps you probate the Will should also draft an Executrix’s Deed for you to sign. Ownership is split, and all of your names appear on the new deed (but with the interests in the property showing that you own life estate and that his children own the remainder interest). As owner of the life estate you have the right to occupy it and to claim all economic benefits from it during your entire lifetime. If you move out, you have the right to lease the house and enjoy the profit from the rent received.

Your next question was, “Who pays the insurance, taxes and upkeep on the house”? Since title is split, how are the expenses split? The Will made by your husband may expressly give directions about how to share these expenses, and those instructions must be followed. But if the Will does not give directions then you are bound by Texas law to pay the taxes, maintenance and repairs while his children are bound by Texas law to pay the insurance premiums.

Do you still receive the 65+ exemption for your local property taxes? Yes. The property still qualifies as your homestead so long as you reside in the home, even though your interest is classified as a life estate. If your spouse qualified for the 65+ exemption and you are 55 or older (which you are) then the exemption is granted to you as well. You may need to reapply in writing for the exemption through your local Appraisal District, and should phone them to be sure that you know what steps to take to be granted the exemption.

Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.

Original Publication: San Antonio Express News, August 13, 2010


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