Understanding Probate Inventory Filing and the Affidavit in Lieu

If you’re the personal representative for a loved one’s estate in Texas, one of your more challenging responsibilities is filing the probate inventory. This document, which lists all of the deceased person’s assets and debts, is an important part of ensuring that everything is properly managed and distributed according to the terms of the will (or laws of intestate succession if there is no will).

In some cases, an affidavit in lieu of inventory can be filed as an alternative. This option can simplify the steps involved with smaller estates or when privacy is a concern. Understanding the differences between these options and the deadlines for filing can help ensure a smoother probate.

What Must Be Included in the Inventory?

The inventory is created as part of the probate process, which distributes the decedent’s property and assets to beneficiaries. It typically includes:

  • Any real property located in Texas.
  • All personal assets, regardless of location, such as cars, furniture, jewelry, bank accounts, stocks, bonds, life insurance policies, retirement accounts, and other assets.
  • Claims owed to the estate.  This can include various types of receivables such as refunds, final paychecks, employee benefits, promissory notes, or lawsuit awards that the decedent was entitled to receive.

Once all information about assets and potential claims have been collected, the probate inventory must: 

  • Specify whether the property is separate or community property and include the fair market value of each item as of the decedent’s death.
  • Be accompanied by an affidavit from the personal representative stating that the inventory is true and complete. 
  • Be filed with the probate court within 90 days of the personal representative’s appointment. 

It is important to note that only probate assets are included in the inventory. The following are typically excluded:

    • Jointly-owned Property: Property owned with rights of survivorship (e.g., joint tenants or tenants by the entirety) transfers directly to the surviving co-owner(s) and avoids probate.
    • Payable-on-death (POD) Accounts: Financial accounts with POD or TOD designations pass directly to the named beneficiary without entering probate.
    • Trust Assets: Property held in a trust is excluded from the probate inventory. However, if the trust was not properly funded or contains assets subject to probate, those assets might need to be included.
    • Life Insurance Policies: Policies with designated beneficiaries transfer directly to those recipients without probate involvement.
    • Retirement Accounts: Accounts such as 401(k)s and IRAs with named beneficiaries bypass probate and go directly to the beneficiaries.
    • Transfer-on-death (TOD) Designations: Certain assets, like motor vehicles, manufactured homes, and specific vessels, can have TOD designations that allow them to transfer directly to the designated beneficiary without going through probate.
  • Out-of-State Property: The inventory does not include real property in another state or even a different country. Such assets, when found, should be excluded.

Tips for a Smoother Inventory

A well-documented inventory minimizes errors during probate and protects beneficiaries from potential financial losses. Here are some tips for a smooth inventory:

  • Start Early and Stay Organized: Begin compiling the inventory immediately after assuming the role of personal representative. Use spreadsheets or inventory software to keep track of assets and documentation systematically.
  • Communicate with Family and Financial Institutions: Speak with the deceased person’s family members to gather information on potential assets. Contact banks, investment firms, and other financial institutions to identify all accounts and safe deposit boxes.
  • Seek Professional Assistance: An estate planning attorney can help you ensure that all legal requirements are met for the inventory. Their expertise can prevent mistakes that could delay the legal process.
  • Keep the Inventory Updated: Update the inventory as new assets are discovered or as the value of existing assets changes. This ensures that the inventory remains accurate and reflects the current contents of the estate.
  • Provide Detailed Descriptions: Be specific in your descriptions of assets. Instead of a vague entry like “jewelry,” list items as “diamond earrings” or “gold wedding band” and include any identifying marks, serial numbers, or other distinguishing features.
  • Strive for Accurate Valuations: Aim for fair market values when listing assets. While professional appraisals are not always necessary, they can be helpful for high-value items. Use recent receipts, and online valuation tools, or consult professionals for accurate estimates.

Are Claims and Debts the Same Thing?

It should be noted that the claims are different from debts and liabilities. Claims are amounts owed to the deceased person, whereas debts and liabilities are amounts the person owed at the time of their death, such as mortgages, loans, or credit card balances. While outstanding debts must be settled before distributing the estate’s assets to beneficiaries, they are not included in the inventory.

What Happens After the Inventory is Filed?

Once the inventory is filed with the court clerk, the court will approve or disapprove it. If the latter occurs, the court will enter an order requiring an amended inventory to be filed within 20 days. To avoid the delay and expense of filing an amended inventory, it is recommended that you work closely with a Texas probate attorney, who can make sure that your original filing meets all legal requirements and is therefore likely to be approved by the judge.

Affidavit in Lieu of Inventory

In Texas, probate inventories are public, which can be a drawback if you want to keep the deceased person’s financial affairs private. With an affidavit of inventory, you can file an affidavit instead of a detailed inventory list, provided the following conditions are met:

  • Eligibility: The estate must be under independent administration, not dependent administration.
  • Decedent’s Death Date: The decedent must have died after September 1, 2011.
  • Debt Status: There must be no unpaid debts when the inventory is due, except for secured debts, taxes, and administration expenses. If there are unpaid unsecured debts, they must be settled before the due date of the inventory.

An Affidavit in Lieu of Inventory must confirm the following:

  • All debts, except for secured debts, taxes, and administration expenses, are paid.
  • All beneficiaries have received a full and detailed, verified inventory.

Even if an affidavit is filed, the personal representative must provide a full and detailed, verified inventory to all beneficiaries and any interested persons upon request. This ensures that while the information is kept out of the public record, it is still available to those with a legitimate interest in the estate.

What if Mistakes Were Made During the Inventory?

If the personal representative discovers that property or claims were omitted or that values are incorrect, they must file a corrected inventory. In the case of an Affidavit in Lieu of Inventory, the updated inventory must be provided to the heirs and other relevant parties.

Interested parties can contest the inventory if it omits property or claims or contains errors. This should ideally be done before property distribution. A complaint should be filed with a show cause order, prompting the court to hold a hearing to determine if the inventory needs correction.

What Happens if the Inventory is Not Filed?

Failing to file the inventory within 90 days after qualification can lead to serious consequences. The personal representative may be removed from their position and could face a fine of up to $1,000. Additionally, not filing the inventory can delay the probate process and result in extra legal costs and expenses. Ensuring the inventory is filed on time is essential to avoid these penalties and keep everything on track.

How Can a Texas Probate Lawyer Help?

If you’re a personal representative with questions or concerns about the creation or filing of estate inventory, a Texas probate lawyer can help by:

  • Identifying and Valuing Assets: The lawyer can help accurately identify and value all estate assets, including real estate, personal property, financial accounts, and claims owed to the decedent.
  • Filing the Inventory: They can ensure the inventory is filed correctly and on time, thereby meeting all legal requirements set by the Texas Estates Code. If any issues arise, they can advocate for you in probate court proceedings.
  • Correcting Mistakes: If errors or omissions are discovered, the lawyer can assist in filing a corrected inventory and ensuring all heirs and interested parties are informed.
  • Advising on Non-Probate Assets: An attorney can provide clarity on which assets are considered non-probate and thus excluded from the inventory, ensuring compliance with state laws.
  • Managing Debts and Liabilities: A lawyer can help differentiate between claims owed to the estate and debts the decedent owed, ensuring that debts are paid before asset distribution.

By handling the more complicated tasks, a probate lawyer helps ensure that the legal process proceeds smoothly and that the estate is managed and distributed according to the law and the decedent’s wishes.

Speak to a Bellaire, TX, Probate Lawyer Today

Understanding Probate Inventory Filing and the Affidavit in Lieu

Properly filing an inventory is essential to avoid delays, fines, and other legal issues, while ensuring the inventory is complete and accurate can prevent additional costs and complications. Consulting with a qualified attorney can help you act and make decisions with more confidence and peace of mind.

For more information and personalized assistance with your probate inventory, contact Norris & Golubovic, PLLC. Our experienced team can guide you through every step of the probate process, making sure you avoid common pitfalls while discharging your duties as a personal representative. To learn more, please call 713-597-7301 or schedule your free consultation online today.