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What a Foreign Property Owner Must Know About Texas Probate Law

By Judith Snively

PrintAs a Texas REALTOR® do you know how Texas Probate Law may affect your real estate transactions and the ability to assist in the purchase and sale of property? Who really has permission to sell?

An estate consists of both real and personal property, which the decedent owns at the time of death. Whether your client is a United States Citizen or a Foreign National, if they die intestate (without a Last Will and Testament), their property cannot transfer in Texas without orders from the Probate Court pursuant to the Texas Estates Code, formally the Texas Probate Code.

I will use the example of a married couple from Mexico that owns a home in Houston. Let us presume that the couple has owned the property for many years, but do not have an executed Last Will and Testament in Texas or Mexico, or made any other arrangement to leave the property to a child or other designee.

Both husband and wife are killed in an accident. Shortly thereafter, their children agree to sell the property and contact a Texas REALTOR®. You are the REALTOR® and you want to list the property and assist in the transaction for sale. In good faith, you want to get the property listed right away, which is the desire of your clients. At this point you must determine if your clients have the right to sell the property. Can title be passed at closing? Some REALTORS® have found out the hard way by listing the property and procuring a buyer and then the title company notifies them that their clients do not own the home or have the legal authority to pass title because it is still in the names of their parents.

At this point, you must advise your clients to contact a probate attorney as to how to proceed. Until title is properly passed to the heirs at law or other individual determined by the Court, there is no legal way to pass title to a third party. The Court will look at the laws of descent and distribution under Texas Estate Code Chapter 201.

In Texas, there are the distinctions of Community Property and Separate Property.

Community property is that which is accumulated during the marriage, including real estate, income by either spouse, dividends, interest and capital gain earned on property, plus dividends and interest earned by either spouse’s separate property during the marriage.

Separate Property is that which is owned before the marriage or acquired by gift, inheritance or otherwise designated as such.

IN TEXAS, PROPERTY IS INHERITED AS FOLLOWS IN THE ABSENCE OF A WILL:

If you are married:

  1. If all of your children are with your current spouse then your spouse will inherit all of your community property. Your children will inherit a 2/3 interest in all of your separate property, if that property is real estate your spouse can have a life estate and upon the death of the that spouse it reverts to the children.
  2. If you have children from a previous marriage, your children will inherit your entire half of community property and your spouse will retain the other half.
  3. If you have no children your spouse will inherit all of your community property and non-realty separate property. Separate real estate will go half to the spouse, one forth to the mother and one forth to the father. If either parent is deceased, that share will be inherited by your siblings. If none of the above survive you, only then will that portion go to the surviving spouse.

If you are not married (widowed or divorced):

  1. Your children will inherit all of your property equally. If a child predeceases you, that child’s share will go to that child’s children. If that child has no children, that share will pass to your other surviving children. It will then pass down the line from that child to your grandchildren.
  2. If you have no children, your father will inherit half of your property and your mother the other half. If either parent predeceases you, then that share will pass evenly to your siblings or to their children if they have predeaced you. If a sibling has predeceased you and left no children, that share will be divided among your other siblings.

Absence of Texas Will but Evidence of a Foreign Will.

The Texas Estates Code does provide for Ancillary Probate of a Foreign Will under Section 501.001. In this case if the testator (maker of the Will) did recite a beneficiary regarding the property in Texas and that Will has been probated in another jurisdiction, the Texas Probate Court will consider an application to recognize this singular provision and can make a ruling that may affect the sale of the property.

Disadvantages of dying without a Will or planned Estate transfer.

Undesired results may occur when a person dies without a Will because the State of Texas will dispose of the decedent’s property. The best policy is to always make sure when listing a property whether with a U.S. citizen or foreign national that the listing agreement is entered into with the person who has the legal authority to pass title at closing. If the REALTOR® represents foreign buyers of property, it may be prudent to mention the importance of executing a simple Texas Will to include the real estate.

Judith Snively is a licensed Texas Attorney and also a member of HAR and past chair of the International Advisory Group.

 

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