Apr 2017 AFR: 2.6%
Gift Annuity State Regulations

Texas


Intestacy


General Definition

Subject to payment of the debts of the decedent (except as exempted by law) and any delinquent court-ordered child support payments, the estate of a person who dies intestate vests immediately in the person's heirs at law. Secs. 101.001 and 101.051

Order of Distribution

If a person who dies intestate leaves a surviving spouse, the estate, other than a community estate, to which the person had title descends and passes as follows:

  1. If the person has one or more children or a descendant of a child the surviving spouse takes one-third of the personal estate and two-thirds of the personal estate descends to the person's child or children, and the descendants of a child or children. In addition, the surviving spouse is entitled to a life estate in one-third of the person's land, with the remainder descending to the person's child or children and the descendants of a child or children.
  2. If the person has no child and no descendant of a child the surviving spouse is entitled to all of the personal estate, one-half of the person's land without a remainder to any person and one-half of the person's land passes and is inherited according to the rules of descent and distribution.
  3. If the person has no child, no descendant of a child, no surviving parent and no surviving siblings or their descendants, the surviving spouse is entitled to the entire estate. Sec. 201.002

If a person who dies intestate does not leave a spouse, the estate to which the person had title descends and passes in parcenary to the person's kindred as follows:

  1. To the person's children and the children's descendants.
  2. If no child or child's descendant survives the person, in equal portions to the person's father and mother.
  3. If only the person's father or mother survives the person, the person's estate shall be divided into two equal portions, with one portion passing to the surviving parent and one portion passing to the person's siblings and the siblings' descendants or be inherited entirely by the surviving parent if there is no sibling of the person or siblings' descendants.
  4. If neither the person's father nor mother survives the person, the person's entire estate passes to the person's siblings and the siblings' descendants.
  5. If none of the kindred described above survive the person, the person's estate shall be divided into two moieties, with one moiety passing to the person's paternal kindred and one moiety passing to the person's maternal kindred. The moiety passing to the person's paternal or maternal kindred passes in the following order. If both paternal (or maternal) grandparents survive the person, equal portions pass to the person's paternal (or maternal) grandfather and grandmother. If only the person's paternal (or maternal) grandfather or grandmother survives the person, the person's estate shall be divided into two equal portions, with one portion passing to the surviving grandparent and one portion passing to the descendants of the deceased grandparent or pass entirely to the surviving grandparent if no descendant of the deceased grandparent survives the person. If neither the person's paternal (or maternal) grandfather nor grandmother survives the person, the moiety passing to the decedent's paternal (or maternal) kindred passes to the descendants of the person's paternal (or maternal) grandfather and grandmother, and so on without end, passing in like manner to the nearest lineal ancestors and their descendants. Sec. 201.001

If an individual dies intestate and without heirs, the title to that individual's real and personal property vests in the state. Sec. 71.001.

Will Qualifications


Common Law or Community Property

Texas is a community property state.

Capacity

A person of sound mind has the right and power to make a last will and testament if, at the time the will is made, the person is 18 years of age or older, is or has been married or is a member of the armed forces of the United States, an auxiliary of the armed forces of the United States, or the United States Maritime Service. Sec. 251.001.

Drafting

Every last will and testament must be in writing and signed by the testator in person or by another person for him by his direction and in his presence, and must, if not wholly in the handwriting of the testator, be attested by two or more credible witnesses above the age of 14 years who must subscribe their names in their own handwriting in the presence of the testator. Such a will or testament may, at the time of its execution or at any subsequent date during the lifetime of the testator and the witnesses, be made self-proved, and the testimony of the witnesses in the probate may be made unnecessary by the affidavits of the testator and the attesting witnesses made before an officer authorized to administer oaths under Texas law. Sec. 251.051 and 251.101.

Where the will is written wholly in the handwriting of the testator, the attestation of the subscribing witnesses may be dispensed with. Such a will may be made self-proved at any time during the testator's lifetime by the attachment or annexation of an affidavit by the testator to the effect that the instrument is his last will; that he was at least 18 years of age when he executed it or meets on of the defined exceptions, that he was of sound mind; and that he has not revoked such instrument. Sec. 251.052 and 251.107.

Beneficiaries

A beneficiary includes, in the case of a decedent's estate, an heir, legatee and devisee and, in the case of a trust, an income beneficiary and a remainder beneficiary.

Modifications

No will in writing, and no clause of a will or devise, will be revoked, except by a subsequent will, codicil or declaration in writing, executed with like formalities, or by the testator destroying or canceling the will or devise, or causing it to be done in his presence. Sec. 253.002.

Probate Process


Naming of Executor/Personal Representative

When a will has been probated, the court will, within 20 days, grant letters testamentary to the executor or executors appointed by such will, if any there be, or to individuals who are not disqualified and are willing to accept the trust and qualify according to law. Sec. 306.001.

Letters testamentary or of administration will be granted to persons who are qualified to act, in the following order:

  1. To the person named as executor in the will of the deceased.
  2. To the surviving husband or wife.
  3. To the principal devisee or legatee of the testator.
  4. To any devisee or legatee of the testator.
  5. To the next of kin of the deceased, the nearest in order of descent first, and so on, and next of kin includes a person and his descendants who legally adopted the deceased or who have been legally adopted by the deceased.
  6. To a creditor of the deceased.
  7. To any person of good character residing in the county who applies.
  8. To any other person not disqualified. When applicants are equally entitled, letters will be granted to the applicant who, in the judgment of the court, is most likely to administer the estate advantageously, or they may be granted to any two or more of such applicants. Sec. 304.001.
  9. To any appointed public probate administrator.

No person is qualified to serve as an executor or administrator who is:

  1. An incapacitated person;
  2. A convicted felon, under the laws either of the United States or of any state or territory of the United States, or of the District of Columbia, unless such person has been duly pardoned, or his civil rights restored, in accordance with law;
  3. A non-resident (natural person or corporation) of this State who has not appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate, and caused such appointment to be filed with the court;
  4. A corporation not authorized to act as a fiduciary in this State; or
  5. A person whom the court finds unsuitable. Sec. 304.003.

A personal representative will be deemed to have duly qualified when he has taken and filed his oath and made the required bond, had the same approved by the judge and filed it with the clerk. In case of an executor who is not required to make bond, he will be deemed to have duly qualified when he has taken and filed his oath required by law. Sec. 305.002.

Submission of Will

An executor named in a will or an interested person may file an application with the court for an order admitting a will to probate, whether the will is written or unwritten, in the applicant's possession or not, lost, destroyed or outside of this state. An application for the probate of a will may be combined with an application for the appointment of an executor or administrator. A person interested in either the probate or the appointment may apply for both. If the court is satisfied on the completion of hearing an application for the probate of a will that the will should be admitted to probate, the court shall enter an order admitting the will to probate. Sec. 256.201 and Sec. 256.051.

Notifications

When an application for the probate of a written will produced in court, or for letters of administration, is filed with the clerk, he must issue a citation to all parties interested in such estate, which citation must be served by posting and must state:

  1. That such application has been filed, and the nature of it.
  2. The name of the deceased and of the applicant.
  3. The time when such application will be acted upon.
  4. That all persons interested in the estate should appear at the time named and contest said application, should they desire to do so. Sec. 258.001.

Inventory

Within 90 days after his qualification, unless a longer time is granted by the court, the representative must file with the clerk of court a verified, full and detailed inventory, in one written instrument, of all the property of such estate which has come to his possession or knowledge, which inventory must include:

  1. All real property of the estate situated in the State of Texas;
  2. All personal property of the estate wherever situated. The representative must set out in the inventory his appraisement of the fair market value of each item as of the date of death in the case of grant of letters testamentary or of administration, as the case may be; provided that if the court appoints an appraiser or appraisers of the estate, the representative must determine the fair market value of each item of the inventory with the assistance of such appraiser or appraisers and must set out in the inventory such appraisement. Sec. 309.051.

Homestead and the Family Allowance

The homestead is not liable for the payment of any of the debts of the estate, except for:

  1. The purchase money thereof;
  2. The taxes due thereon;
  3. Work and material used in constructing improvements thereon;
  4. An amount owed on a partition imposed against the entirety of the property;
  5. The refinance of a lien against a homestead, including a federal tax lien;
  6. An extension of credit on the homestead; or
  7. A reverse mortgage. Texas Const. Art. 16 Sec. 50.

If all or any of the specific articles exempt from execution or forced sale by the constitution and laws of this state are not among the decedent's effects, the court shall make, in lieu of the articles not among the effects, a reasonable allowance to be paid to the decedent's surviving spouse and children as provided by Section 353.054. The allowance in lieu of a homestead may not exceed $45,000, and the allowance in lieu of other exempt property may not exceed $30,000, excluding the family allowance for the support of the surviving spouse, minor children, and adult incapacitated children. Sec. 353.053.

Debts and Distributions

A claim may be presented to the personal representative at any time before the estate is closed if suit on the claim has not been barred by the general statutes of limitation. If a claim of an unsecured creditor for money is not presented within four months after the date of receipt of the notice, the claim is barred. Sec. 355.001 and 355.060.

Claims against an estate of a decedent must be classified and have priority of payment, as follows:

  1. Funeral expenses and expenses of last sickness for a reasonable amount to be approved by the court, not to exceed a total of $15,000, with any excess to be classified and paid as other unsecured claims.
  2. Expenses of administration and expenses incurred in the preservation, safekeeping and management of the estate, including fees and expenses awarded under Sec. 352.052 and unpaid expenses of administration awarded in a guardianship of the decedent.
  3. Secured claims for money, including tax liens, so far as the same can be paid out of the proceeds of the property subject to such mortgage or other lien, and when more than one mortgage, lien or security interest exists on the same property, they must be paid in order of their priority.
  4. Claims for the principal amount of and accrued interest on delinquent child support and child support arrearages that have been confirmed and reduced to money judgment and claims for unpaid child support obligations.
  5. Claims for taxes, penalties and interest.
  6. Claims for the cost of confinement.
  7. Claims for repayment of medical assistance payments made by Texas to or for the benefit of the decedent.
  8. All other claims. Sec. 355.102.

Estate/Inheritance Tax


Texas' estate tax is equal to the amount of the federal credit against state estate taxes. However, the tax is reduced by the lesser of the amount of death tax paid to another state or the amount computed by multiplying the federal credit by a fraction. The numerator of the fraction is the value of the estate less real and personal property in Texas. The denominator is the federal gross estate value. Sec. 211.051. There is currently no estate tax in Texas.

Income Tax Charitable Deductions and/or Credits


No personal income tax in Texas.

Gift Annuity Requirements


Texas, a "notification" state, governs the issuance of charitable gift annuities under Texas Insurance Code Secs. 102.001 through 102.152. Under these provisions, the issuance of gift annuities as described in Sec. 501(m)(5) is exempt from classification as engaging in the business of insurance provided the issuing organization is described in Sec. 501(c)(3) or Sec. 170(c), has been in continuous operation for at least three years (or is a successor/affiliate of a charitable organization that has) and has a minimum of $100,000 in unrestricted assets (cash, cash equivalents, or publicly traded securities exclusive of the assets funding the annuity agreement).

Notification Process

Written notification must be given to the Department of Insurance on the date the organization enters into its first qualified gift annuity agreement. The notice shall be signed by an officer or director of the organization, identify the organization and certify that the organization is a charitable organization and the annuities issued by the organization are qualified charitable gift annuities. As of 2009, the Texas Department of Insurance requests supporting evidence to be submitted with the notification. Satisfactory evidence includes the charity's tax-exempt letter from the IRS (evidencing its Sec. 501(c)(3) or Sec. 170(c) status), three years of financial statements (evidencing three years of continuous operation and $100,000 in unrestricted assets) and a sample gift annuity agreement (evidencing its compliance with Sec. 501(m)(5) and state disclosure requirements). Failure to comply with state law may result in fines up to $1,000 per annuity agreement issued until the charity complies.

Disclosure Language

The annuity agreement must include the following state-required disclosure language (in a separate paragraph, print size no smaller than that used in the agreement):

"The charitable gift annuity is not insurance under the laws of this state; not subject to regulation by the department; and not protected by a guaranty association affiliated with the department."

Reserve Requirements

Texas does not require an issuing charity to hold any amount in reserve.

Annual Filing Requirements

Once notification is given to the state, no further reporting is required.

State Contact Information

Sandra Dodson
Texas Department of Insurance
Rate and Form Review Office
Life/Health & HMO Intake Team
MC-106-1E

US Mail:
P.O. Box 149104
Austin, TX 78714-9104

Private Carrier:
333 Guadalupe
Austin, TX 78714-9104

(512) 322-3595
sandra.dodson@tdi.texas.gov

State Forms

None
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