This is the third blog in a three-part series that describes alternatives available in Texas when a full, formal probate either isn’t possible or necessary. Today, we’ll discuss the “Family Settlement Agreement.”
The Family Settlement Agreement is an agreement among all persons entitled to a portion of the decedent’s estate (i.e. the “distributees”) about how the estate will be divided. A Family Settlement Agreement is available for use whether or not the decedent died intestate (i.e. without a Will) or having left a Will.
An often-asked question is how can persons forge an agreement that is contrary to the decedent’s intention as expressed in the Will? A contrary outcome is made possible by two tenets of law. First, it is the policy of the State of Texas to encourage resolution of disputes through means that avoid litigation. Second, and when a Will exists, the Estates Code Section 101.001 provides that the decedent’s estate vests immediately in the Will’s distributees– subject to payment of valid debts. It is this immediate vesting of title that provides the authority for the distributees to craft their own agreement that might alter the Will (and avoid litigation).
This blog post will not attempt a full description of the process for creating a Family Settlement Agreement. The reality is that the process can change based on the players and interests involved. For our purposes, it will be sufficient to note that anyone having a property interest in the estate is a necessary party to the Family Settlement Agreement. It’s also important to note two entities that have no standing to object to a Family Settlement Agreement: (1) a Will’s Executor, since he or she has no property interest in the estate; and, (2) the decedent’s Creditors, as long as payment of their claims is unaffected by the agreement. Beyond those quick notes, a qualified probate attorney can advise on the potential benefits and pitfalls of the Family Settlement Agreement alternative.
Author Jim Cramp is the founder and principal attorney at the Cramp Law Firm. The Cramp Law Firm provides a spectrum of family-related legal services in the greater San Antonio Region.