An advancement on an inheritance under Texas law is a gift given during a decedent’s life that is counted against the receiver’s inheritance after the decedent’s death.
When Is A Gift An Advancement On Inheritance Under Texas Law?
Texas law contains specific requirements for when a gift is considered an advancement on an inheritance under Texas law.
If a decedent died with a valid will (testate), the situation is straightforward – the terms of the will govern whether or not the gift is considered an advancement.
If the decedent died without a will (intestate), Texas law provides that property given by decedent to decedent’s heir during decedent’s lifetime is considered an advancement on inheritance if:
- the decedent declared in a contemporaneous writing, or the heir acknowledged in writing, that the gift or nontestamentary transfer is an advancement; or
- the decedent’s contemporaneous writing or the heir’s written acknowledgment otherwise indicates that the gift or nontestamentary transfer is to be considered in computing the division and distribution of the decedent’s intestate estate.
The rule on advancements on inheritance in Texas can be found at section 201.151 of the Texas Estates Code.
What Is A Contemporaneous Writing For Purposes Of An Advancement On Inheritance?
A contemporaneous writing is one that is written by the gift-giver at or very near the time that the gift is made. If a decedent created a writing a year after making a gift identifying the gift made a year ago as an advancement for inheritance purposes, Texas law would likely not consider that a contemporaneous writing.
If the gift-receiver acknowledges in writing that the gift was an advancement on inheritance under Texas law, there is no requirement that the heir’s writing is contemporaneous with the giving of the gift.
If you would like a gift to be considered an advancement on inheritance under Texas law, then either mention it in your will or document your intention with a contemporaneous writing.
How Is An Advancement on Inheritance Valued Under Texas Law?
Once it has been determined that a lifetime gift qualifies as an advancement on inheritance under Texas law, the value of the advancement must be determined.
Property that is advanced is valued as of the earlier of:
- the time that the heir came into possession or enjoyment of the property; or
- the time of the decedent’s death.
Once the value of the advancement is determined, then it is deducted from that beneficiary or heir’s inheritance.
For example, if an estate has a value of $400,000 and four heirs (Ann, Bill, Carrie, and Doug) who are to share the estate equally, and Ann received an advancement of $50,000, then Ann would receive $62,500, and Bill, Carrie, and Doug would each receive $112,500 (total estate + advancement)/# of takers = share for each. Ann’s share would be reduced by her $50,000 advancement.
A Texas probate attorney is well equipped to calculate the appropriate shares for each heir after an advancement on inheritance.
Section 201.151 of the Texas Estates Code
The complete text of section 201.151 of the Texas Estates Code governing an advancement on inheritance is set forth below:
(a) If a decedent dies intestate as to all or part of the decedent’s estate, property that the decedent gave during the decedent’s lifetime to a person who, on the date of the decedent’s death, is the decedent’s heir, or property received by the decedent’s heir under a nontestamentary transfer under Subchapter B, Chapter 111 (Nonprobate Assets in General), or Chapter 112 (Community Property With Right of Survivorship) or 113 (Multiple-party Accounts), is an advancement against the heir’s intestate share of the estate only if:
(1) the decedent declared in a contemporaneous writing, or the heir acknowledged in writing, that the gift or nontestamentary transfer is an advancement; or
(2) the decedent’s contemporaneous writing or the heir’s written acknowledgment otherwise indicates that the gift or nontestamentary transfer is to be considered in computing the division and distribution of the decedent’s intestate estate.
(b) For purposes of Subsection (a), property that is advanced is valued as of the earlier of:
(1) the time that the heir came into possession or enjoyment of the property; or
(2) the time of the decedent’s death.
