How to Distinguish Estate Assets from Corporate Assets in Texas
Detailed Answer
When someone dies, their probate estate includes all property in which they had an interest at death. Under Texas Estates Code § 101.001 (link), the estate comprises real property, personal belongings, bank accounts, investments and other assets titled in the decedent’s name. A relative’s corporation, however, holds assets in its own name and enjoys a separate legal existence under Texas Business Organizations Code § 3.001 (link).
To differentiate between estate and corporate assets, apply these steps:
- Examine Title Documents: Real estate deeds and vehicle titles show the named owner. Assets titled to the decedent go into the probate estate. Assets titled to the corporation remain outside probate.
- Review Bank and Investment Accounts: Check account registration. Corporate accounts list the entity’s name and taxpayer ID, while estate accounts use the estate’s name or the decedent’s name with “Estate of.”
- Inspect Corporate Records: Articles of Incorporation or Formation (§ 3.053, link), bylaws, shareholder ledgers and meeting minutes confirm asset ownership and corporate actions.
- Analyze Tax Filings: Corporate tax returns (e.g., IRS Form 1120) differentiate corporate income and assets. The decedent’s final personal or estate tax return (Form 706 or 1041) lists estate assets separately.
- Identify Commingled Property: If the decedent mixed personal funds with corporate funds, Texas courts sometimes allow veil piercing to reach corporate assets. However, corporate assets generally stay separate absent fraud or injustice.
If you still face uncertainty, file for probate and request an inventory from the executor. The inventory, governed by Texas Estates Code § 309.051 (link), itemizes estate property. Comparing it to corporate schedules clarifies ownership.
Helpful Hints
- Gather all deeds, titles and account statements before probate begins.
- Check the corporate minute book for asset purchase resolutions.
- Open a dedicated estate bank account early to avoid commingling.
- Consult a probate attorney if you suspect asset-shifting into a corporation.
- Keep detailed records of transfers made before and after death.