This column first appeared in the San Antonio Express News and other Hearst Newspapers on August 7, 2020.
Dear Mr. Premack: My neighbor is also a good friend, but he is rather stubborn. He was an only child, is widowed and inherited millions from his parents in ranch land, oil interests, etc. We were talking, and he wants his two sons to inherit - but just thinks it will go to them because it has been in the family for a long time. Both sons are married. What if one of the sons die without making plans? Will the inheritance go to the deceased son's spouse or to his brother? How long do beneficiaries have to live before they can inherit? Can my neighbor/friend do anything to keep the property in the bloodline family rather than having it go to the family by marriage? RR
Your stubborn friend inherited his wealth from his parents. As the beneficiary of an inheritance, he should have at least a basic understanding of the legal process that he went through to obtain ownership of his parents’ assets when they died. I am a bit concerned that he is displaying no such comprehension, because of the implication that he may not have gone through the proper legal procedures when his parents died. If he did not, there may be issues about him actually being recognized as owner of those assets. And any discrepancies for his sons in the record are just compounded if he has not fixed those legal discrepancies before he dies.
So, his first job is to consult with legal counsel to be sure that the records are clear about his ownership of the inherited assets. His second job is to work with his legal counsel to make a plan of his own, since none of us will live forever. When he signs a proper legal Will, he is called its “testator”.
What if he does no planning and fails to fix any discrepancies? He would die intestate (without a will) so the state’s laws of descent and distribution would dictate to whom his assets pass. In his fact pattern (widowed but with adult children) his assets would go to his sons in equal shares. However, they will have to go through a long, intrusive, and expensive court process to be recognized as his legal heirs. It is far faster and less expensive for him to consult with and pay legal counsel for a proper estate plan while healthy than it is to die intestate.
Under Texas law, an heir must outlive the testator by 120-hours (5 days) or, if there is a Will, whatever time period is specified in the Will. It is typical for a Will to require an heir to outlive the testator by 30 days, or until the Will is filed for probate if sooner. Some Wills expand the survival requirement to 90 or 180 days, but that was motivated by outdated tax concerns and should no longer be used.
If an heir (son) predeceases the testator (dad) or fails to outlive him by the required time period, the heir cannot receive the inheritance. If dad died intestate, that share of the estate passes by law to the son’s children. While they are in the bloodline, are they of age? Are they capable? Does the other adult son want to deal with his nieces/nephews as co-owners? Dad would leave all of those questions unanswered by dying intestate, which could lead to legal problems for the heirs which would not exist if dad had imposed answers to those issues via his Will.
Do the sons’ wives inherit? Not directly. But sons inherit the assets without any controls imposed by dad, then sons are likely to leave assets to their wives. True that the sons receive their inheritances as separate property, but if they do not make efforts to segregate the assets, they could be lumped together with community property by presumption, and pass to the wives.
Dad’s ultimate control mechanism is a trust, under which the assets do not pass to the sons but remain in trust for their benefit. The trust can require that when a son dies his interest shifts to someone of dad’s selection, perhaps son’s children. Since son never directly owned the assets, son cannot direct them to his wife and dad’s goal of keeping the assets in the bloodline is achieved. Dad must be proactive, must meet with a qualified estate planning attorney, and yes, must pay for legal advice and services. But he will keep his assets in the bloodline if that is his overriding goal.
Paul Premack is a Certified Elder Law Attorney, handling Wills and Trusts, Probate, and Elder Law issues. He is licensed to practice law in Texas and Washington. View past legal columns or submit free questions on those legal issues via www.Premack.com.