Dealing with creditors has the potential to completely take over the probate process in Texas. Depending on the deceased, there are no limits to the number of claims or their amounts that can be presented to a probate estate in hopes of collecting out of the estate’s assets. Unfortunately, in some situations, an estate can easily find itself in a situation where the debts against it are larger than the value of the estate assets. Regardless of how many claims are presented to a probate estate or how much the claims are for, there are some general statutory protections for personal property and real estate that may protect estate assets from creditors’ sticky fingers.
What personal property is exempt from probate?
One such protection is a statutory list of personal property exempt from creditor’s claims found in Texas Property Code. The code section contains an exhaustive (albeit somewhat outdated) list of personal property that is generally exempt from garnishment, attachment, execution, or other seizure. The only limitation to the items on the list is that the aggregate fair market value of the property is limited to $50,000.00 for property owned by a single adult and $100,000.00 if the property is provided for a family.
The items included on this list are:
- home furnishings and heirlooms
- provisions for consumption (a/k/a food and ingredients)
- farming or ranching vehicles or implements
- tools, equipment, books, and apparatus, including boats and motor vehicles, used in a trade or profession
clothes - jewelry (in an amount not to exceed 25% of the $100,000.00 and $50,000.00 limits above)
- two guns
- athletic and sporting equipment, including bicycles
- a vehicle for each member of the family or a single adult who holds a driver’s license (or someone who relies on somebody with a driver’s license)
- two horses, mules, or donkeys with a saddle, blanket, and bridle for each, 12 head of cattle, 60 head of other livestock, 120 fowl
- household pets
Yes, you read the part about the farm animals correctly! Don’t forget that our great state has its economic and social roots in the agriculture business – something our lawmakers intended to provide for.
What else may be considered exempt property in probate?
Outside of the above property, there are other types of property that generally cannot be seized that don’t have value limits, such as current wages for personal services (except for court-ordered child support), alimony/maintenance, and religious writings.
What’s the catch?
Of course, it wouldn’t be interesting if there wasn’t a loophole for everything. Despite all of the property above being generally protected from seizure by creditors, an exception exists if property listed above is used for a contractual landlord’s lien or as a security interest. For example, if a farmer owns a large amount of tractors and equipment that he uses for his farming business and uses those items as collateral in a loan contract and grants a security interest in that property to the bank lending them the money, then the bank has a right to collect on that interest, if able. On the other hand, if that same farmer instead accumulated a large amount of unsecured credit card debt, the credit card companies would not be able to come after his farming equipment to satisfy the debt.
What about the Homestead Exemption?
Another well known protection is the homestead exemption. Texas has a long and rich history of protecting the rights of homeowners, and has provisions in the Texas Property Code and the Texas Constitution protecting the homestead from forced sale by creditors. It goes without saying, but there are a few exemptions to this rule, the most common being liens resulting from taxes, divorce actions, home equity loans, reverse mortgages, and refinancing loans, among others. Although it may seem obvious, another thing to be mindful of is to be certain that the property you want to have the homestead protection actually meets the definition of and qualifies for the exemption. There are highly specific requirements of what it means to be a “homestead” depending on the location of the property (rural or urban), and it is imperative that you be sure that your property meets the standard before relying on the law for protection.
Questions about exempt property in probate? Lovelace Law, P.C. Can Help
If you find yourself in a situation where a probate estate is drowning in debt or the estate is insolvent, it helps to know your options and statutory rights to protection for personal property and homesteads. The attorneys at Lovelace Law are highly experienced in navigating the probate process, including dealing with estate creditors. If you are trying to probate a will or estate of a loved one and want to know your options, contact us. Our Fort Worth estate attorneys would be happy to sit down with you and explore all of your options.
