When a Texas resident passes away, their estate usually has to go through the probate process.
This process ensures that creditors (if any) are paid and it facilitates the distribution of their assets to their beneficiaries. As part of this process, an inventory of the decedent’s assets must be created and filed with the court.
This inventory is an important document that lists all of the assets that the decedent owned at the time of their death. It does not necessarily list all of the assets and, as such, it cannot be used to determine how the assets of the estate will be distributed.
This is a common misconception that we see. Beneficiaries review the inventory and think that this is all of the assets, when that may not be the case.
This leads to the question, “What do I include in the inventory?”
About the Inventory
In the context of an estate, an inventory is a detailed list of all the assets and property that a deceased person (decedent) owned at the time of their death and claims owed to the decedent.
This list is created as part of the probate process, which is the legal process of distributing a deceased person’s assets and property to their beneficiaries.
The inventory typically includes a description of the asset, its value, and any relevant information such as location, serial numbers, etc. It includes all kinds of assets, such as real estate, personal property, bank accounts, stocks, bonds, life insurance policies, retirement accounts, and any other assets that the decedent owned.
The List of Assets
Gathering Information About Assets
The first step in creating an inventory of a Texas decedent’s estate is to gather all of the relevant information about the decedent’s assets. We start with everything and then whittle it down from there.
So we start by gathering information about real property and personal property (such as cars, furniture, jewelry, etc.) that the decedent owned.
It is also important to gather information about any financial assets the decedent may have had, such as:
- Bank accounts
Other assets also have to be considered. This can include just about anything that can be owned, from cryptocurrencies to businesses.
Exclude Non-Probate Assets
The inventory should only address the probate assets. Not all assets are probate assets.
From the list above, we then exclude any non-bank (or similar account) asset that is not located in-state. Real estate is an example. The inventory will not include real estate that is located in another state or country. These assets should be excluded, and not reported on the inventory.
Property that passes by operation of law or contract is also excluded. This may include bank accounts that have a pay-on-death designation form filled out. It may include life insurance with a beneficiary designation form.
Here is a more comprehensive list of assets that are not considered part of an estate and therefore are not included in the inventory:
- Jointly-owned property: Property that is owned by the decedent and another person with rights of survivorship, such as joint tenants with right of survivorship or tenants by the entirety, will pass directly to the surviving co-owner(s) and will not be included in the probate process.
- Payable-on-death (POD) accounts: Bank accounts, brokerage accounts, and other financial accounts that have a payable-on-death (POD) or transfer-on-death (TOD) designation will pass directly to the designated beneficiary and will not be included in the probate process.
- Trust assets: Property that is held in a trust will not be considered part of the decedent’s estate and will not be included in the probate process. However, if the decedent was the grantor of the trust, the trust assets will be included in the probate process if the trust is not funded, or if the assets held in trust are subject to probate.
- Life insurance policies: Life insurance policies that have a named beneficiary will pass directly to that beneficiary and will not be included in the probate process.
- Retirement accounts: Retirement accounts, such as 401(k)s and IRAs, that have a named beneficiary will pass directly to that beneficiary and will not be included in the probate process.
- Certain types of property with a transfer-on-death designation: In Texas, certain types of property such as motor vehicles, manufactured homes, and certain vessels, may have a transfer-on-death designation allowing them to pass to the designated beneficiary without probate.
The inventory should include the value of each asset at the time of the decedent’s death.
The List of Claims
What is a Claim?
Next, the inventory should list all of the decedent’s claims. A claim is an amount owed to the decedent. This may include payments that have to be refunded, a last paycheck or employee benefit, or even an amount due to the decedent under a promissory note or lawsuit award they had received.
Debts and Liabilities vs. Claims
Claims are different than debts and liabilities. It is not an amount owed by the decedent.
A claim is not a mortgage, loan, or credit card balance that the decedent owed at the time of their death. Those are debts or liabilities.
While it is important to ensure that the decedent’s debts are handled or paid off before any assets are distributed, these debts and liabilities are not included in the inventory.
Organizing and Filing the Inventory
Once all of the information has been gathered, the inventory should be organized in a clear and concise manner, and filed with the probate court for approval.
The Texas Estates Code states that the personal representative must file the inventory “not later than the 90th day after the date on which the personal representative qualifies.” This means that the personal representative has 90 days from the date they are appointed by the court to file the inventory.
Is an Inventory Required for Probate?
An inventory is usually required for probate.
While an affidavit in lieu of inventory can be filed in some cases, the inventory still has to be provided to the beneficiaries or heirs. This is true even if the inventory does not have to be filed with the court.
The affidavit in lieu of inventory can be used if there are no unpaid debts, except for secured debts, taxes, and administration expenses, at the time of filing. The affidavit in lieu of the inventory, appraisement, and list of claims must be filed within the same 90-day period as the inventory would have been filed.
An inventory of a Texas decedent’s estate is an important document that lists all of the assets that the decedent owned at the time of their death. It is important that the inventory is sufficiently detailed to pass the court’s review.
The probate process in Texas can be complex, and it is recommended that you seek the advice of an attorney to ensure that the inventory and other documents are properly prepared and filed with the court.
Our Houston Probate Attorneys provide a full range of probate services to our clients, including helping with disputes between heirs. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.