Setting Aside Exempt Property

In dealing with the decedent’s property, the personal representative should consider setting aside exempt property.  The phrase “setting aside exempt property” refers to making certain property available to the surviving spouse and/or dependent children.  While this exempt property is made available to others, it does not mean that the others have an ownership interest in the property. They merely have a right to use the property.  This right is temporary.

What is Exempt Property?

Generally, exempt property includes the decedent’s homestead and certain personal property.  We have previously covered the homestead rules (click here to go back to that section). Recall that the surviving spouse typically enjoys a life estate (or right to occupy and use) the homestead for his or her lifetime.  

For exempt personal property, the Estates Code provides a list of items that are exempt.  These items include up to $50,000 worth of:

  1. Home furnishings and heirlooms.
  2. Farming or ranching vehicles.
  3. Tools, etc. used in business.
  4. Jewelery.
  5. Two firearms.
  6. One or more cars.  

There are several other items set out in the Code, which should be consulted to see what property qualifies.  

When and How to Set Aside Exempt Property

For dependent administrations (here is our prior articles on dependent and independent administrations), the personal representative is to set aside exempt property after the inventory is filed.  The surviving spouse and/or dependent children can speed this up by filing an application with the court prior to the inventory being filed.

For independent administrations, the personal representative can set aside exempt property at any time.  The surviving spouse and/or dependent child can file an application with the court to request a set aside if the personal representative does not do so voluntarily or timely.

Setting aside exempt property does not mean transferring ownership or legal title to the surviving spouse and/or dependent child.  Rather, the personal representative only has to make the property available for their use. It is advisable for the parties to document what is and is not being made available and to whom and when.  This can head off disputes.

The surviving spouse and/or dependent children can also ask for an allowance in lieu of exempt property.  This is our next topic. Click here to continue reading.  >>>>

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