One frequent query I address concerns the expenses associated with estate administration. Given the intricate and time-consuming nature of the process, it can become costly. My clients often find themselves compensating various professionals to navigate through the probate journey. To give you an idea, attorney fees can range from $3,000 to $20,000, varying with the complexity of the estate.
Although this may seem steep, it's typically on the lower end of the cost spectrum. For instance, real estate agent commissions usually claim 6% of a home's selling price, averaging approximately $28,000. Additionally, tax obligations must be met, with the IRS claiming a portion of the estate based on applicable taxes.


Probate Fees in Texas: An Overview
Probate fees in Texas refer to the costs associated with filing for probate, attorney fees, court costs, appraisal fees, and other expenses incurred during the probate process. These fees can vary significantly based on the complexity of the estate, the presence of a will, and any contests or legal challenges that arise.

Estate administration fees are fees incurred in the process of managing and settling an estate. These can include executor or administrator fees, legal fees, court costs, appraisal fees, and other expenses necessary for the proper administration of the estate.


Tax Deductibility of Probate Fees

The Internal Revenue Service (IRS) provides guidelines on the deductibility of certain expenses associated with the administration of an estate. According to these guidelines, many probate fees and expenses can be deductible on the estate’s federal tax return, specifically on the United States Estate (and Generation Skipping Transfer) Tax Return (Form 706), if applicable.

However, it's crucial to differentiate between the types of taxes and deductions available:

Estate Tax Deduction: Probate fees related to the administration of the estate, including executor fees, attorney fees, court costs, and other expenses directly related to the management and distribution of the estate, can be deducted on Form 706 as part of the estate's administration expenses. This deduction can reduce the overall estate tax liability if the estate exceeds the federal estate tax exemption threshold.

Income Tax Deduction.: On individual income tax returns (Form 1040), the deductibility of estate administration fees is more restricted. The Tax Cuts and Jobs Act of 2017 suspended miscellaneous itemized deductions, including legal and professional fees associated with estate administration, for tax years 2018 through 2025. Therefore, these fees are generally not deductible on the beneficiaries' personal income tax returns during this period.

Estate's Income Tax Deduction: If the estate generates income during the administration process, certain
expenses directly related to the production of that income may be deductible on the estate’s income tax return (Form 1041). This can include administrative expenses that are necessary for managing the estate's income-producing assets.


Texas-Specific Considerations
It's important to note that tax laws are complex and subject to change. The deductibility of probate fees and other estate-related expenses can depend on the specific circumstances of each estate and ongoing
changes in tax legislation. Additionally, Texas does not impose a state estate tax, which means the tax implications discussed here pertain primarily to federal taxes.



Seeking Professional Guidance
Given the complexities surrounding the tax deductibility of probate and estate administration fees and the ever-evolving nature of tax laws, consulting with a tax professional or an estate planning attorney is advisable. These experts can provide personalized advice based on the latest tax regulations and the specific details of the estate in question.


Conclusion
In summary, while many probate fees are potentially tax deductible on the estate’s federal tax return, the specifics can vary depending on numerous factors, including the nature of the expenses and the income generated by the estate. Understanding these distinctions is crucial for effectively managing the financial aspects of estate administration in Texas.
Executors and administrators are encouraged to consult with legal and tax professionals to navigate these complex issues successfully, ensuring a smooth and compliant administration process.

Gather Documents (see Form #1).
Completed:________

File Small Estate Affidavit Requires a licensed attorney in Texas.
Completed: ________

Attend Hearing and Sign: Order Approving Small Estate Affidavit
Completed: ________


Distribute Assets to Beneficiaries
Completed: ________


File IRS Form 1041 for the Estate
Completed: ________


File Affidavit Fulfillment of Terms of Will (if necessary)
Completed: ________


Each checklist provides a structured approach to its respective estate management process, ensuring all necessary steps and document filings are covered to comply with Texas probate law.

Gather Documents (see Form #1).
Completed: ________

File Application for Probate of Will as Muniment of Title in Requires a licensed attorney in Texas.
Completed: ________

If Will is not self proved, Have Proof by Subscribing Witnesses Signed
Completed: ________

Attend Prove up Hearing and Sign: Proof of Death and Other Facts
Order Admitting Will to Probate as Muniment of Title Oath
Completed: ________

Distribute Assets to Beneficiaries
Completed: ________

File IRS Form 1041 for the Estate
Completed: ________

File Affidavit Fulfillment of Terms of Will (if necessary)
Completed: ________

Gather Documents (see Form #1).
Document gathering is often challenging due to need for more organization.
Completed: ________

File Application to Determine Heirship within Administration Requires a licensed attorney in Texas. Involves the court hiring an Attorney Add item who may file an answer and report.
Completed: ________

Obtain a Bond of Personal Representative It is avoidable if the will or judge permits proceeding without a bond.
Completed: ________

Provide Notice to Beneficiaries (see Form #2) File Waiver of Service if beneficiaries agree or an Affidavit of Service of Citation.
Completed: ________

If the Administrator lives outside Texas, Execute the Appointment of Resident Agent.
Completed: ________

Attend Prove up Hearing and Sign: Proof of Death and Other Facts
Order Granting Letters of Administration Oath of Administrator
Completed: ________

Publish Notice to Creditors
Notices are filed in newspapers; direct notice to creditors is optional.
Completed: ________

Prepare and File IRS Forms: Notice Concerning Fiduciary Relationship (IRS Form 56)
Application for Taxpayer Identification Number (IRS Form SS4)
Completed: ________


Open a Checking Account (if needed) Necessary for transferring assets to the court. Requires Letters of Administration/Testamentary and Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #3)
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days
Completed: ________

File Applications and Orders for Various Estate Management Tasks
Completed: ________

Determine How to Handle Creditors Options include paying creditors, negotiating debt, and notifying creditors as required.
Completed: ________

File Affidavit of Compliance Notify beneficiaries of legal compliance and file with the court.
Completed: ________

File Federal Estate Tax Return (if necessary)
Completed: ________

File IRS Form 1041 for the Estate
Completed: ________

File Accountings Includes annual accounting and final settlement among other documents.
Completed: ________

Cancel Bond (if necessary)
Completed: ________

Closing an Estate File necessary documents for estate closure and administrator discharge.
Completed: ________

Gather Documents (see Form #1).
Document gathering is often a challenging task that needs to be addressed.
Completed: ________


File Application to Determine Heirship
This process requires a licensed attorney in Texas. Include a Waiver of Service if beneficiaries agree or
an Affidavit of Service of Citation. The court will appoint an Attorney Ad Litem who may file an answer and a report.
Completed: ________

Provide Notice to Beneficiaries (see Form #2).
File a Waiver of Service if beneficiaries agree or an Affidavit of Service of Citation.
Completed: ________

File Application for Independent Administration of Intestate Estate
There are strict rules for approval. Your attorney will guide you through this process.
Completed: ________

If a Bond is Required, Contact the Court, Insurance Company, or Bonding Agency
This step can be avoided if the will states no bond is needed or if the probate judge allows probate without a bond because all heirs agree.
Completed: ________

If the Administrator Lives Outside Texas, Execute Appointment of Resident Agent
Completed: ________

Attend Prove up Hearing and Sign Required Documents
Note: Some probate courts require two hearings; the first is to determine heirs, and the second is to approve an independent administrator.
This includes Judgement Declaring Heirship, Affidavit of Heirship, Order Admitting Will to Probate, and Oath.
Completed: ________

Publish Notice to Creditors
Notices are filed in newspapers; direct notice to creditors is optional but not required.
Completed: ________

Prepare and File IRS Forms
Notice Concerning Fiduciary Relationship (IRS Form 56) and Application for Taxpayer Identification
Number (IRS Form SS4).
Completed: ________

Open a Checking Account (if needed)
Necessary documents include Letters of Administration/Testamentary and Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #3)
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days of receiving Letters.
Completed: ________

Sell Assets Owned by the Estate as Needed
Caution is advised. Assets can be given to individuals if all beneficiaries agree in writing.
Completed: ________

Distribute Assets to Beneficiaries After Notice to Creditor Period
Ensure enough assets are retained to cover debts and taxes owed.
Completed: ________

Determine How to Handle Creditors
Options include paying creditors, negotiating debt, permissive notice to unsecured creditors, and notice to secured creditors by mail.
Completed: ________

File Federal Estate Tax Return (if necessary)
Completed: ________

File IRS Form 1041 for the Estate
Completed: ________

Cancel Bond (if necessary)
Completed: ________

Closing an Estate
File Application Requesting Closing of Independent Administration, Affidavit Regarding Debts and
Taxes, and optionally, a Closing Report or Notice of Closing Estate.
The estate closes 30 days after filing a verified affidavit.
Completed: ________


This checklist provides a structured approach for determining heirship and transitioning to independent administration, guiding through each necessary step and document filing to comply with Texas probate law.

Gather Documents (see Form #1).
Document gathering can be challenging as it's often overlooked.
Completed: ________

File Application for Letters of Administration
Requires a licensed attorney in Texas.
Completed: ________

Obtain a Bond of Personal Representative It is avoidable if the will or judge permits proceeding without a bond.
Completed: ________

Provide Notice to Beneficiaries (see Form #2)
Completed: ________

If the Administrator resides outside Texas, execute the Appointment of Resident Agent.
Completed: ________

Attend Prove up Hearing and Sign:
Proof of Death and Other Facts
Order Granting Letters of Administration Oath of Administrator
Completed: ________

Publish Notice to Creditors Notices are filed in newspapers; direct notice is optional.
Completed: ________

Prepare and File IRS Forms:
Notice Concerning Fiduciary Relationship (IRS Form 56) Application for Taxpayer Identification Number (IRS Form SS4)
Completed: ________

Open a Checking Account (if needed)Necessary documents include Letters of Administration/Testamentary and Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #3)
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days.
Completed: ________

File Applications and Orders for: Disposing of Personal Effects Selling Personal and Real Property Setting Aside Exempt Property Authorizing Reimbursements and Attorney Fees Partition and Distribution
Completed: ________

Determine How to Handle Creditors Pay, negotiate, or notify creditors as applicable.
Completed: ________

File Affidavit of Compliance Notify beneficiaries of legal compliance and file with the court.
Completed: ________

File Federal Estate Tax Return (if necessary)
Completed: ________

File IRS Form 1041 for the Estate
Completed: ________

File Accountings Include annual and final accountings, along with compliance certificates.
Completed: ________

Cancel Bond (if necessary)
Completed: ________

Closing an Estate File necessary documents to close the estate and discharge the administrator.
Completed: ________

This structured checklist ensures a comprehensive approach to Dependent Administration, guiding through each necessary step and document filing to comply with Texas probate law.

Gather Documents (see Form #1).
Document gathering can be challenging as it's often overlooked.
Completed: ________

File Application for Probate of Will and Issuance of Letters Testamentary with Will Annexed Requires a licensed attorney in Texas.
Completed: ________

If Will is not self-proved, have Proof by Subscribing Witnesses signed
A self-approved will includes two witness signatures, notarization, and self-proving language.
Completed: ________

Obtain a Bond It is avoidable if the will or judge permits proceeding without a bond.
Completed: ________

If the executor lives outside Texas, execute the Appointment of Resident Agent
Completed: ________

Attend Prove up Hearing and Sign: Proof of Death and Other Facts
Order Admitting Will to Probate and Authorizing Letters Testamentary Oath
Completed: ________

Publish Notice to Creditors Notices are filed in newspapers; direct notice is optional.
Completed: ________

Prepare and File IRS Forms: Notice Concerning Fiduciary Relationship (IRS Form 56)
Application for Taxpayer Identification Number (IRS Form SS4)
Completed: ________

Open a Checking Account (if needed)
Necessary documents include Letters of Administration/Testamentary and Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #2)
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days
Completed: ________

Sell Assets Owned by the Estate as Needed
Exercise caution. Items may be given to individuals if all beneficiaries agree in writing.
Completed: ________

Determine How to Handle Creditors Options include paying creditors, negotiating debt, permissive notice to unsecured creditors, and notice to secured creditors by mail.
Completed: ________

Distribute Assets to Beneficiaries After Notice to Creditor Period Retain enough assets to cover debts and taxes owed.
Completed: ________

File Federal Estate Tax Return (if necessary)
Completed: ________

File IRS Form 1041 for the Estate
Completed: ________

Cancel Bond (if necessary)
Completed: ________

Closing an Estate It is not always required but may be needed if the estate was bonded. File necessary
documents to close the estate and discharge the executor.
Completed: ________

Gather Documents (see Form #1).
Gathering documents can be challenging, as most people need to take the time to collect and organize documents.
Completed: ________

File Application for Probate of Will and Issuance of Letters Testamentary with Will Annexed. A licensed attorney in Texas must do this.
Completed: ________

If Will is not self proved, have Proof by Subscribing Witnesses signed.
Two witnesses sign a Self Proved Will, notarized, and contain the self proving language within the witnessing section.
Completed: ________

If a bond is required, contact the court, insurance company, or a bonding agency.
This can be avoided if the will states no bond is needed or if the probate judge allows probate without bond because all heirs agree.
Completed: ________

If the executor lives outside the State of Texas, then execute Appointment of Resident Agent.
Completed: ________

Attend the Prove up Hearing and Sign the Following Documents: Proof of Death and Other Facts
Order Admitting Will to Probate and Authorizing Letters Testamentary Oath.
Completed: ________

Publish Notice to Creditors. This notice is filed in a newspaper and not directly to the creditors.
Direct notice to creditors can be given but is not required.
Completed: ________

Prepare and File IRS Forms: Notice Concerning Fiduciary Relationship (See IRS Form 56)
Application for Taxpayer Identification Number (See IRS Form SS4).
Completed: ________

Open a Checking Account (if needed).
Documents needed: Letters of Administration/Testamentary, Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #3).
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days of receiving Letters.
Completed: ________

Sell Assets Owned by the Estate Which Need to Be Sold.
Be cautious! Sometimes, an individual will want an item owned by the estate.
It can be given to the individual if all beneficiaries agree IN WRITING.
Completed: ________

Determine How to Handle Creditors: Pay Creditor Negotiate Debt Permissive Notice to Unsecured Creditors
Notice to Secured Creditors by Mail
Completed: ________

Distribute Assets to Beneficiary After the Notice to Creditor Period Has Run.
Retain enough assets to pay debts and taxes owed.
Completed: ________

File Federal Estate Tax Return, if Necessary.
Completed: ________

File IRS Form 1041 for the Estate.
Completed: ________

Cancel Bond, if Necessary.
Completed: ________

Closing an Estate:
Closing an estate is optional, and sometimes it can be impractical.
However, if the estate was bonded, you might be required to close the estate by the court or insurance company.
Completed: ________

Closing an Estate:
File Affidavit Regarding Debts and Taxes You can also file a Closing Report or Notice of Closing Estate.
The estate will be closed 30 days after a verified affidavit has been filed.
Completed: ________

Gather Documents (see Form #1).
Gathering documents can be a challenging task, as most people need to take the time to collect and organize documents.
Completed: ________

File Application for Probate of Will and Issuance of Letters Testamentary.
A licensed attorney in the State of Texas must do this.
Completed: ________

If Will is not self-proved, have Proof by Subscribing Witnesses signed.
Two witnesses sign a self-approved will, notarized, and contain the self-proving language within the witnessing section.
Completed: ________

If a bond is required, contact the court, insurance company, or a bonding agency.
This can be avoided if the will states no bond is needed or if the probate judge allows probate without bond because all heirs agree.
Completed: ________

If the executor lives outside the State of Texas, execute the Appointment of Resident Agent.
Completed: ________

Attend the Prove up Hearing and Sign the Following Documents: Proof of Death and Other Facts
Order Admitting Will to Probate and Authorizing Letters Testamentary Oath.
Completed: ________

Publish Notice to Creditors (see Form #2). This notice is filed in a newspaper and not directly to the creditors.
Direct notice to creditors can be given but is not required.
Completed: ________

Prepare and File IRS Forms:
Notice Concerning Fiduciary Relationship (See IRS Form 56)
Application for Taxpayer Identification Number (See IRS Form SS4).
Completed: ________

Open a Checking Account (if needed).
Documents needed: Letters of Administration/Testamentary, Taxpayer Identification Number.
Completed: ________

Gather Assets (See Form #3).
Completed: ________

File Inventory, Appraisement, and List of Claims within 90 days of receiving Letters.
Completed: ________

Sell Assets Owned by the Estate Which Need to Be Sold.
Be cautious! Sometimes an individual will want an item owned by the estate.
It can be given to the individual if all beneficiaries agree IN WRITING.
Completed: ________

Determine How to Handle Creditors:
Pay Creditor
Negotiate Debt
Permissive Notice to Unsecured Creditors Notice to Secured Creditors by Mail
Completed: ________

Distribute Assets to Beneficiary After the Notice to Creditor Period Has Run.
Retain enough assets to pay debts and taxes owed.
Completed: ________

File Federal Estate Tax Return, if Necessary.
Completed: ________

File IRS Form 1041 for the Estate.
Completed: ________

Cancel Bond, if Necessary.
Completed: ________

Closing an Estate:
It is only sometimes required to close an estate, and sometimes it can be impractical. However, if the estate was bonded, you might be required to close the estate by the court or insurance company.
Completed: ________

Closing an Estate:
File Application Requesting Closing of Independent Administration
File Affidavit Regarding Debts and Taxes

In addition, you can file a Closing Report or Notice of Closing Estate.
The estate will be closed 30 days after a verified affidavit has been filed.
Completed: ________

Question 1: Has the decedent's will been probated in another state, and is there property in Texas?
Yes: Contact an attorney about conducting an Ancillary Probate.
No: Proceed to Question 2.

Question 2: Is there an urgent need to probate the estate?
Yes: Contact an attorney to initiate a Temporary Dependent Administration.
No: Proceed to Question 3.


Question 3: Did the decedent have a WILL?
Yes: Proceed to Question 4.
No: Proceed to Question 9.


Question 4: Is there a need to collect assets or pay estate debts? (e.g., requests for letters, need to sell real estate, debts to be settled)
Yes: Proceed to Question 5.
No: You might be able to avoid probate or do a simplified probate like a Muniment of Title. You are done if there are no assets to transfer or debts to be paid.


Question 5: Does the will name an “Independent Executor” who is alive, willing, and qualified to serve without bond?
Yes: Consult with an attorney for an Independent Administration (see Checklist #1).
No: Proceed to Question 6.


Question 6: Do all beneficiaries agree for someone to serve as an Independent Administrator?
Yes: Consult with an attorney for an Independent Administration (see Checklist #1).
No: Proceed to Question 7.


Question 7: Is there an executor named in the will but not as an “Independent Executor without Bond”?
Yes: For executors not named as “Independent Executor without Bond,” contact an attorney for an Administration with Will Annexed (see Checklist #2) or for an Administration with a Dependent Executor (see Checklist #3).


Question 9: Are you familiar with proceedings in lieu of administration?
Yes: Proceed to Question 10.
No: Options include a Small Estate Affidavit, Determination of Heirship, or Heirship Affidavit. Proceed to Question 10 for details.


Question 10: Do the estate's assets, excluding eligible homestead and exempt property, exceed $75,000?
Yes: Proceed to Question 12.
No: Proceed to Question 11.


Question 11: Do the known liabilities of the estate, excluding those secured by eligible homestead and exempt property, exceed the estate's assets, also excluding the eligible homestead and exempt property?
**Yes:** Proceed to Question 12.
**No:** Consult an attorney for a Small Estate Affidavit (See Checklist #8).

Question 12: Is there a need for an administration? This may require an attorney's guidance.
Yes: Contact an attorney for a Dependent Administration (see Checklist #4).
No: Contact an attorney for a Proceeding to Declare Heirship (see Checklist #5 or #6).


Question 13: Are you confused?
Yes: Contact an attorney for guidance.
No: You’re finished!