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44 Cards in this Set
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- Back
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independent administration
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A will may name an independent executor and provide that no action shall be held in the courts other than probate of the will, and filing an inventory, any required appraisement, and list of claims of the estate.
=> consequence: most TX estates are administered w/o court supervision or involvement - central feature of TX estate administration law |
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When is an independent administration authorized under the Probate Code?
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(1) when provided for in will
- any words, however informal, are sufficient (e.g., "I designate my son John independent executor of my estate" = OK) - probate ct CANNOT veto |
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What are the powers of an independent, executor?
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Independent executor has the power to do, w/o court order: anything a dependent administrator can be authorized to do with court order.
However, the act must relate to (1) proper settlement of the estate (e.g., to pay debts, taxes, or expenses), OR (2) preservation of estate assets. |
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power of sale
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If will does not give independent executor a power of sale, any purchaser from executor has burden to show that executor had authority to sell real or personal property (e.g., to pay debts). If there was enough cash in the estate to pay debts, the purchaser is not protected.
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accounting
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Interested parties are entitled to an accounting from independent executor upon demand:
15 months after will admitted to probate, and successive accounting on demand 12 months after last accounting was rendered |
Cf: Trust beneficiaries are entitled to an accounting on demand, no sooner than 12 months after trust was created; and to successive accountings on demand at the same intervals.
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What procedures may an independent executor use to close the administration?
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FILE CLOSING REPORT WITH VERIFIED AFFIDAVIT
- closing report must show: (1) property initially received; (2) debts and expenses paid; AND (3) names and addressees of distributees FILE FOR DECLARATORY JUDGMENT - seeking judicial discharge of independent executor from further liability |
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For an estate under independent administration, when and by whom may the closing or distribution of the estate be compelled?
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Interested party can petition for distribution of estate 2 years after independent executor was appointed.
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What actions must the personal representative (executor if named in will; administrator if appointed by the court) take within 120 days after appointment?
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(1) Must POST FIDUCIARY BOND w/n 20 days [unless bonding requirement was waived by the will].
(2) Must PUBLISH NOTICE OF ADMINISTRATION in newspaper of general circulation w/n 1 month. (3) Must FILE INVENTORY of estate w/n 90 days [unless time pd was extended by ct]. *** (4) Must give NOTICE (& copy of will) TO NAMED WILL BENEFICIARIES w/n 60 days after will admitted to probate. (5) Must file CERTIFICATE that notice to beneficiaries has been given w/n 90 days. |
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Independent executor may be removed by the court for cause if:
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(1) Fails to return inventory w/n 90 days of appointment,
(2) Fails to give notice to beneficiaries w/n 60 days after will admitted to probate, or fails to file certificate that beneficiaries have been given notice w/n 90 days. (3) Has misapplied or embezzled state property, or there is cause to believe he is about to do so. (4) Fails to make a required accounting. (5) Is guilty of gross misconduct or mismanagement. (6) Becomes incompetent or sentenced to penitentiary. |
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jurisdiction
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(1) Counties with § county courts at law or § probate courts:
- county court has exclusive original j/d - appeal is to Ct of Appeals (2) Counties with only constitutional county courts: county court & district court have concurrent j/d - uncontested matters (routine probates and guardianship administrations): county court - contested matters (e.g., will contests) are transferred to district court on motion; returned to county court for further administration when contested matter is resolved. alternatively, county court judge can request that a statutory probate judge be assigned to the case. |
same rules for estate administration and guardianship proceedings
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Ways to clear title using informal administration of estates
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Trigger: estate contains property titled in decedent's name; need to clear title to recognize ownership of successors by will or intestacy
(1) independent administration if all distributees agree (& probate judge doesn't veto) (2) if D left a will: probate will as a muniment of title only (3) if D died intestate: statutory heirship proceeding (4) if D died intestate & estate valued at less than $50K: small estate administration by affidavit |
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muniment of title
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Use this when D left a valid will and there is no need to have an executor appointed and no need to formally administer his estate, BUT formal recognition is needed to establish the title of successors named in the will. The will and the order admitting it to probate constitute a MUNIMENT OF TITLE (a link in the chain of title) that serves the same record function as a deed.
Order Admitting Will to Probate as Muniment of Title cannot be entered unless there are no unpaid debts (other than mortgage on the homestead). Funeral expenses, debts, etc., should be paid before petition for muniment of title probate is filed. |
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ways to distribute an intestate estate w/o the appointment of a personal representative
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(1) statutory heirship proceeding
(2) small estate administration by affidavit |
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statutory heirship proceeding
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Use when D died intestate and there is no need to formally administer his estate, BUT formal recognition is needed to establish title of successors by inheritance.
Judgment states that the person died intestate, names and addresses of persons determined to be the heirs, and shares of the estate that each is entitled to take. |
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small estate administration by affidavit
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Use if value of intestate decedent's probate estate (not counting homestead, exempt personal property) is less than $50K.
Affidavit (issued by ct clerk) serves the same function as letters testamentary granted to an executor (or letters of administration granted to an administrator). Party w/ the affidavit can collect the decedent's assets by furnishing a copy of the affidavit. |
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Can a small estate administration by affidavit be used to clear title to the decedent's homestead?
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Yes. The affidavit must be recorded in the county where the land is located.
Note, small estate administration by affidavit cannot be used to clear title to any other real property--just the homestead. |
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unqualified community administrator
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As UNQUALIFIED COMMUNITY ADMINISTRATOR, SS may sell CP to pay for community debts when D's 1/2 CP, after dying intestate, passes to D's kids from another marriage [and not to SS].
However, if there is sufficient cash on hand to pay community debts, SS does NOT have any power to sell assets as unqualified community administrator. |
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nonstatutory affidavit of heirship
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Used primarily to clear title to land where owner died years ago and no action was taken to clear title at that time.
Affidavits by neighbors or relatives recite facts of family history (e.g., that mom died intestate, that her heirs were son and daughter, etc.) Affidavit is filed in the county records, and TX title insurance companies and title examiners act in reliance on validity of the recitals in the affidavit. |
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attorney's fees
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As long as attempt to probate will was in good faith, independent executor is entitled to attorney's fees from the estate for an unsuccessful attempt to probate the will.
POLICY: we want executors to offer wills for probate; let ct decide whether will is valid |
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temporary administrator
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A temporary administrator may be appointed pending appointment of a permanent personal representative (e.g., will contest has been filed, meaning the will naming an executor has not been probated).
The TA's powers are limited to those granted by the court. If the TA is appointed pending a will contest, the appointment continues until termination of the contest and appointment of a permanent representative. In all other cases, the temporary administration CANNOT EXCEED 180 DAYS. |
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probate of will as muniment of title: land in several counties
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Suppose that X, a resident of Houston, owns land in Houston and Dallas. X dies leaving a will that devises his entire estate to his daughter D. The will is admitted to probate in Harris County--proper venue, b/c X was a resident of Houston.
The will and the order admitting it to probate serve as a MUNIMENT OF TITLE for purposes of the Harris County records. To constitute muniment of title in Dallas County, a certified copy of the will and the order admitting it to probate must be filed in Dallas County. |
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probate of a will as muniment of title: BFPs protected
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The order admitting the will to probate as a muniment of title constitutes sufficient legal authority to persons purchasing from and otherwise dealing the estate. Thus, these persons are protected if they act in reliance on the order.
Held: An order admitting a will to probate is conclusive as to its correctness unless and until the order is set aside. Parties who buy assets from a devisee named in the will are entitled to protection as BFPs. |
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will must be probated w/n 4 years
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A will cannot be admitted to probate more than 4 years after the testator's death, UNLESS it is shown that the party applying for probate was not in default in failing to present the will w/n the 4 year period.
- not in default = some reasonable as to why didn't probate will earlier - no personal representative can be appointed and no estate administration can be opened more than 4 years after death |
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priority as to who is to be appointed personal representative
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(1) executor named in will;
(2) surviving spouse*; (3) principal beneficiary named in will; (4) any other beneficiary named in will; (5) next of kin, in nearest order of kinship* * only these apply in an intestacy situation - disqualified from appointment are minors, incapacitated persons, convicted felons, and "a person whom the court finds unsuitable" - a nonresident may serve as administrator of a TX estate or as guardian of a proposed ward's estate if he appoints a resident agent for service of process |
The statutory list of priority for appointment does not apply to the appointment of a temporary administrator.
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insurance
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A personal representative has a duty to insure the property of the estate if a reasonably prudent person would have done so (regardless whether D insured it during his lifetime).
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compensation of executors and administrators: the "5% in, 5% out" rule
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Absent contrary provision, a personal representative is entitled to a commission of 5% of all sums ACTUALLY RECEIVED and 5% of all sums paid out in cash.
The rule does NOT apply to cash on hand (incl. bank accounts, CDs) or the collection of life insurance proceeds. Also, the rule does NOT apply to distributions to the beneficiaries or heirs. |
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presentment of CRs' claims against an estate: notice requirements
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Notice requirements are the same for dependent and independent administrations.
Notice by publication: w/n 1 mo after being appointed, personal representative MUST publish notice in a newspaper of general circulation, requiring all persons having claims against the estate to present them "within the time prescribed by the law." PERMISSIVE personal notice to unsecured CRs: personal representative MAY give personal notice by registered or certified mail to unsecured CRs having claims for money stating that the CR must present the claim w/n 4 mos after receipt of notice; otherwise the claim will be BARRED. Personal notice to secured CRs: w/n 2 mos after being appointed, the personal representative MUST give personal notice by registered or certified mail to secured CRs with valid liens |
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presentment of CRs' claims against an estate: dependent administration
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In a dependent administration, a general CR must file an authenticated claim supported by an affidavit w/ probate ct or administrator. Administrator must then write a memo allowing or rejecting the claim w/n 30 days. If the administrator does not so act, there is a conclusive presumption that the claim has been rejected.
If the claim is allowed & approved by the ct, it is paid. If the claim is disallowed, CR must file suit on claim w/n 90 days after it is rejected, else the claim is barred. In a dependent administration, a CR CANNOT bring an action on a "claim for money" unless claim is first presented to the administrator and rejected by the ct. However, this rule does not apply to unliquidated or contingent claims. |
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presentment of CRs' claims against an estate: independent administration
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In an independent administration, executor MUST give notice by publication and personal notice to secured CRs, and MAY give permissive personal notice to general CRs, but the rules re: presentment of claim that apply in a dependent administration do not apply in an independent administration.
Indeed, failure to formally present a claim does not affect CR's right to bring an action on the claim. |
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bringing suit for claims against an estate
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AN ESTATE IS NOT AN ENTITY THAT CAN BE SUED.
Suit must be brought against the personal representative of the estate. |
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presentment for payment as matured secured claim
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A secured CR can elect to present its claim for payment as a matured secured claim (1) w/n 6 mos after appointment of the personal representative, OR (2) w/n 4 mos after personal notice is received, whichever period is later.
If the CR makes this election, it is entitled to payment notwithstanding that the claim has not yet matured (e.g., 18 yrs to run on a 30 yr mortgage note). POLICY: This is the last opportunity for the CR to benefit from the decedent's personal liability, i.e., to collect the debt from the obligor's personal estate |
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secured CRs: presentment as a preferred debt and lien
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If the secured CR elects to present its claim as a preferred debt and lien, the debt is paid according to the terms of the note secured by the lien. By electing this procedure, the secured CR waives its right to collect the debt from the decedent's personal estate.
If the note is not paid according to its terms by the decedent's successors, the CR must foreclose the mortgage or other lien in satisfaction of the debt. If the value of the collateral is not sufficient to pay the claim in full, the CR cannot collect the deficiency. => If a secured CR does not formally present its claim as a matured secured claim w/m the 6 mo pd, the claim is automatically classified as a preferred debt and lien. |
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preferred debt and lien has priority over all other claims
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A preferred debt and lien has an advantage if the decedent's estate is insolvent. The CR's priority wrt its collateral is preserved as against all other claims, including Class 1 claims for funeral and last sick expenses, family allowance, and Class 2 claims for administration expenses.
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CRs' claims in a guardianship administration
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The procedures for handling claims in a guardianship are nearly identical to the procedures in a dependent administration of the decedent's estate.
- notice by publication w/n 1 mo after receiving letters of guardianship - w/n 4 mos after receiving letters, guardian MUST give personal notice, by registered or certified mail, to (1) secured CRs & (2) unsecured CRs having a claim for money if the guardian has actual knowledge of the claim. - CR's claim must be authenticated and supported by an affidavit; guardian has 30 days to allow or reject claim; claim presumed rejected if no response w/n 30 days; claim is barred if CR does not file suit on rejected claim w/n 90 days - secured CRs may present as either mature secured claim or preferred debt and lien |
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priority of claims
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[secured CR w/ preferred debt and lien takes 100% of foreclosure sale proceeds]
Class 1: funeral & last illness expenses, up to $15K [excess over $15K, is Class 8] => family allowance Class 2: expenses of administration => IRS claim for unpaid income taxes Class 3: secured claims, to extent covered by the lien [if matured secured claim] Class 4: child support arrearages reduced to judgment Class 5: state taxes Class 6: claims for repayment of medicaid assistance paid by state Class 7: cost of confinement if decedent imprisoned in TX prison Class 8: all other claims |
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exempt personal property set-aside
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Tangible personal property worth $60K per family and $30K for an individual is exempt from CRs' claims.
- special limit as to jewelry: can't exceed 25% of the dollar limit ($15K for family; $7500 for single) - "for the use and benefit of the SS and minor children and unmarried children remaining w/ the family of the deceased" - In TX, the set-aside is permanent only if estate is insolvent. If the estate is solvent, the exempt property set-aside is only temporary, during the period of estate administration. |
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emergency intervention to pay funeral expenses and to protect personal property in a rental unit
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No sooner than 3 days and no later than 90 days after decedent's death, ANY person can file application for emergency intervention [e.g., to w/draw funds from decedent's bank acct] to pay funeral expenses, or for protection and storage of personal property located in a rental unit--as long as no application for appointment of a personal representative or small estate administration is pending.
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procedural steps for the sale of real property in a court-supervised administration
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(1) file application for sale describing property, amt of outstanding CRs' claims, property on hand available to pay CRs, other facts showing need to sell real estate for authorized purpose: funeral & administration expenses, debts, family allowance
(2) date for hearing set, and notice given to all persons interested in the estate (3) hearing held, at which ct orders sale, specifying terms of sale (4) property is sold; sale reported to ct w/n 30 days (5) after notice to interested parties, confirmation hearing is held and ct confirms the sale (6) personal representative gives deed to purchaser |
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definitions of a homestead
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Urban homestead consists of lot or contiguous lots not to exceed 10 acres w/o regard to value of improvements. Must be used as a residence and/or business.
Rural homestead: 200 acres (need not be contiguous), w/o regard to value of improvements. Single person homestead [not a member of a "family"]: 10 acres if urban, 100 acres if rural. |
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consequences of qualifying as a homestead
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(1) BOTH spouses must join in conveyance or mortgage of homestead property (even if homestead is one spouse's SP)
(2) free from CRs' claims EXCEPT for: - purchase money mortgage lien - property taxes on the homestead - federal tax liens - mechanic's, materialman's lien for improvements on homestead where written K, signed by H & W, entered into before improvements are made, and recorded - loan to enable parties to divide homestead on divorce - equity loan (2d mortgage loan) for up to 80% of the value of the equity (3) on owner's death passes free of CR's claims [other than those above] IF owner survived by spouse, minor child, or unmarried adult child who lived w/ the decedent (4) PROBATE HOMESTEAD: rt to occupy the homestead rent-free for life, or for so long as she choose to occupy it as a homestead, in favor of SS or minor children, but NOT in favor of unmarried adult child. |
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probate homestead: duties of occupying spouse
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The SS who exercises her rt to occupy the homestead is liable for payment of all property taxes and mortgage INTEREST, but she is under no obligation to insure the residence.
Note: the legal owner of the homestead (the one that holds fee simple title subject to SS's rt of occupancy) must pay casualty insurance premiums and mortgage PRINCIPAL payments on the homestead. - legal owner is one who gained legal title to the homestead under decedent's will |
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homestead cannot be partitioned until right to occupy ends
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The homestead cannot be partitioned among the decedent's heirs so long as the spouse asserts her right of occupancy. If the spouse ceases to use the homestead as her principal residence, or if the spouse dies, the homestead can be partitioned among the respective owners in the same manner as any tenancy in common.
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homestead allowance & allowance in lieu of exempt personal property
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Homestead allowance & allowance in lieu of exempt personal property are available to SS, minor children.
[both come off the top of the estate; over and above amt given by will or intestate share] - $15K allowance in lieu of homestead if decedent didn't own a homestead [in effect, only for apt dwellers] - $5K [total] allowance in lieu of exempt personal property. available to the extent that items on "exempt personal property" list are not in the estate at death |
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family allowance
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Purpose is to provide support for SS, minor children during period decedent's assets are in administration.
Permissible allowance: amount needed for support for period of 1 yr [comes off the top of the estate]. In determining whether SS should be awarded family allowance, SS's SP is taken into account, but the community estate is not (b/c subject to probate administration to pay debt). Family allowance is charged against the entire community estate as a community obligation. |
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