Estate Accounting Is Vital

When a loved one passes away, the task of managing their assets and settling their debts can feel overwhelming as a Houston, TX estate tax lawyer who has been with our firm since its founding in 2021 knows all too well. For Texas residents, the process of estate administration, including the critical step of estate accounting, ensures that the deceased’s wishes are honored, while protecting the interests of heirs and beneficiaries. Let’s explore estate accounting from a Texas perspective and why it’s an essential part of the probate process in the Lone Star State.

What Is Estate Accounting?

Estate accounting involves creating a detailed financial tax record of all activities related to a deceased person’s estate. This process ensures transparency and compliance with Texas probate laws, which vary slightly from those in other states. Estate accounting includes:

1. Assets: Listing all property owned by the deceased, such as Texas real estate, vehicles, bank accounts, investments, and personal belongings.
2. Liabilities: Identifying debts like mortgages, loans, credit cards, and unpaid bills.
3. Income: Tracking any earnings of the estate, such as rental income from Texas properties or interest from accounts.
4. Expenses: Documenting costs related to estate administration, including attorney fees, taxes, and property upkeep.
5. Distributions: Recording what is given to beneficiaries or heirs as outlined in the will or by Texas intestacy laws if there is no will.

Why Is Estate Accounting Important For Texans?

Texans benefit from estate accounting in several important ways:

1. Transparency For Beneficiaries: Estate accounting provides beneficiaries with a clear understanding of how the executor is managing the estate. This transparency helps build trust and prevents disputes.
2. Compliance With Texas Probate Laws: In Texas, the executor (or administrator if there is no will) is legally obligated to provide a thorough accounting of the estate. Failure to comply can result in legal challenges or removal from the role.
3. Simplified Property Management: Texas is known for its diverse property holdings, from family ranches to urban real estate. Estate accounting ensures all assets are accounted for and managed efficiently.
4. Avoiding Family Disputes: Texans value family unity. By maintaining accurate records, estate accounting minimizes misunderstandings among heirs, reducing the risk of conflicts.
5. Tax Compliance: While Texas doesn’t have a state inheritance tax, federal estate taxes may apply, especially for estates exceeding the exemption amount. Estate accounting ensures all necessary taxes are accurately calculated and paid.

What An Executor Does In Texas

In Texas, the person responsible for estate accounting is the executor, named in the deceased’s will, or an administrator, appointed by the court if no will exists. This individual carries a fiduciary duty, meaning they must act in the best interest of the estate and its beneficiaries. Executors in Texas are often required to file a sworn inventory, appraisement, and list of claims within 90 days of appointment, making timely and accurate record-keeping crucial.

Components Of Estate Accounting In Texas

A complete estate accounting for a Texas estate includes:

1. Inventory Of Assets: The executor compiles a list of all assets, including Texas-specific properties like oil and gas royalties, family ranches, and business interests. Valuations may require appraisals to determine fair market value.
2. Income Earned By The Estate: Any income generated by the estate, such as rent from Texas real estate or dividends from investments, must be recorded.
3. Debts And Expenses: Debts, such as outstanding medical bills or loans, are paid off first. Expenses related to estate administration, including legal fees and maintenance costs for properties, are also documented.
4. Taxes: While Texas doesn’t impose estate taxes, the executor must ensure federal estate taxes are addressed if applicable. Additionally, property taxes on Texas real estate must be paid.
5. Distribution Of Assets: Once debts and expenses are settled, the remaining assets are distributed to beneficiaries according to the will or Texas’ intestate succession laws. Each distribution is recorded to ensure fairness.
6. Final Balance: The accounting concludes with a final balance, showing that all assets have been properly distributed and the estate is settled.

Dealing With Challenges In Texas Estate Accounting

While estate accounting might sound straightforward, unique challenges can arise for Texas residents:

• Large Or Complex Estates: Estates with diverse holdings, such as Texas ranches or multiple properties, require additional effort to appraise and manage.
• Family Disputes: With Texas being a state where family ties run deep, disputes among heirs can complicate the process.
• Missing Documents: Locating all assets and liabilities can be difficult, particularly for estates involving out-of-state assets or older records.

To overcome these challenges, Texas executors often rely on professionals such as estate attorneys, CPAs, and appraisers familiar with Texas laws and property nuances.

Why Estate Accounting Matters For Texas Families

For families across Texas, estate accounting isn’t just a legal requirement; it’s a way to honor the legacy of the deceased while protecting the future of beneficiaries. By providing a transparent and accurate record of the estate’s management, executors ensure fairness and compliance with Texas’ probate laws. Whether dealing with a small estate in a Texas suburb or a sprawling ranch in West Texas, estate accounting is a vital step in preserving family harmony and fulfilling the deceased’s wishes.

Estate accounting plays a critical role in estate administration for Texas residents. It ensures transparency, compliance, and fairness, while addressing the unique challenges of managing estates in Texas. By understanding and embracing this process, Texans can navigate probate with confidence, ensuring their loved ones’ legacies are honored and their families’ futures are secure. For several years, Stuart Green Law, PLLC has been working on estate plans for families and businesses that protect assets. We are licensed in Texas, Kentucky, Pennsylvania, and South Dakota, so contact us for help today.