Advancements in Texas - "The Hotchpot!"
Unless your world revolves around estate planning, you probably don't have a clue what the word "hotchpot" means, particularly in the legal context. That is why I used the word in the title to this post. But something you may be more familiar with is the word "advancement". The goal of this guide is to explain how advancements work under Texas law, and in the process we will discover what a hotchpot is.
The basic definition of an advancement is gift that is given during life to a beneficiary which is deducted from the beneficiary's share under the will. Perhaps the best way to explain this is a simple illustration: Henry has 3 children - Jack, Bill, and Grace. Using the proper legal process, Henry gives an advancement of $100,000 to Jack while he is still alive. Upon Henry's death, his estate is worth $500,000 and he wants to split his estate between his 3 children. Under Texas law, Jack gets $100,000, and Bill and Grace get $200,000 each. The formula for arriving at this distribution is: advancement + total estate / # of takers = share for each Then the taker who received the previous advancement has his share reduced by the amount of the advancement (i.e. $200,000 - $100,000). This formula might be intimidating, but it really isn't the point of this post. To have a valid advancement, Texas law requires that (1) the decedent acknowledge the advancement in a contemporaneous writing at the time of or prior to the transfer, or (2) the heir acknowledges in writing, at any time, that the transfer of property is to be treated as an advancement. There are some very important elements that must be satisfied to have a valid advancement, and it is very important that you follow the rules exactly. If you fail to follow the rules, the court will treat your attempt at an advancement is a gift. Finally, advancements are available in both contexts- with or without a will. Oh ya, we can't forget about the hotchpot. "Hotchpot" is the legal term to describe the total estate value when you combine the advancement and the total estate. Remember, there are many variations on the simple example used above. For example, what if the advancement is for more than the total amount of the estate? or, what if the the person receiving the advancement dies before the will is probated? If you have any questions about an advancement, you should probably consult with an attorney because this can be a complicated area and as mentioned.