Estate Administration - Texas Bar Exam 2010

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Simplified Administration

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For historical reasons, Texas has a broader array of simplified administration procedures than any other state; although many of these simplified procedures are rarely used in Texas (because independent administration is so simple, straightforward and inexpensive), they appear on Bar Exam

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Independent Administration

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Authorized under Probate Code:
1. when provided for in will (any words - however informal - are sufficient to have independent administration)
2. if all distributees agree and the will does not name independent executor or in cases of intestacy (but if executor is named in will, probate court cannot veto)

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Independent Executor's Powers

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Independent executor has power to do, without court order: anything a dependent administrator (court-supervised administration) can be authorized to do with court order; however, act must relate to:
1. proper settlement of estate (ex. pay debts, taxes, expenses)
2. preservation of estate assets

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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 accountings on demand 12 months after last accounting was rendered

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How Independent Executor May Close Administration

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1. File Closing Report with Verified Affidavit: closing report must show property initially received; debts and expenses paid; and names and addresses of distributees

2. File for Declaratory Judgment: seek judicial discharge of independent executor from further liability

Interested party can petition for distribution of estate 2 years after independent executor appointed (cannot compel distribution - just a hearing)

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Actions Personal Representative (executor if named in will; administrator if appointed by court) Take within 120 Days after Appointment

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1. Post fiduciary bond within 20 days (unless waived by will)
2. Publish notice of administration in newspaper of general circulation within 1 month
3. File inventory of estate within 90 days
4. Give notice (and copy of will) to named beneficiaries within 60 days after will admitted to probate
5. File certificate that notice to beneficiaries has been given within 90 days

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Reasons Why Independent Executor May Be Removed by Court for Cause

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1. Fails to return inventory within 90 days after appointment
2. Fails to give notice to beneficiaries within 60 days
3. Has misapplied or embezzled estate property
4. Fails to make a required accounting on demand
5. Is guilty of gross misconduct or mismanagement
6. Becomes incompetent or sentenced to penitentiary

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Jurisdiction

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All probate proceedings must be filed and heard in county court

Smallest counties = constitutional county courts; may be transferred to district court and returned to country court for further administration when contested matter is resolved

Medium counties = county court or county court at law; no district court involvement

Largest counties = statutory probate courts; no district court involvement

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Muniment of Title

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When decedent left a valid will and there is no need to have executor appointed and no need to formally administer his estate (family can wind up decedent's affairs informally), BUT formal recognition (ex. in the land records) is needed to establish title of successors named in will ... the will and the order admitting it to probate constitute a muniment of title (link in the chain of title) that serves the same record function as a deed

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Small Estate Administration

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Where decedent died intestate leaving a probate estate whose value, not including homestead and exempt personal property, doesn't exceed $50,000, heirs are entitled to the estate without the need for the appointment of a personal representative or any kind of administration

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Statutory Heirship Proceeding

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Court order establishes that the person is dead, that he left no will, and that he was survived by the named persons as heirs; it also fixes the amount of their intestate shares; statutory heirship proceedings don't' require the appointment of a personal representative

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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, that mom died intestate, that her heirs were son and daughter, etc.

Affidavit is filed in county records - and Texas title insurance companies and title examiners will act in reliance on validity of recitals in the affidavits

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Appointment of Personal Representative

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1. Person named in will as executor
2. Surviving spouse
3. Principal beneficiary in will
4. Any other beneficiary in will
5. Decedent's next of kin
6. Creditor of the decedent
7. Any other person of good character

Following persons aren't qualified to serve as personal representatives:
1. minors
2. incapacitated persons
3. convicted felons
4. nonresident banks not qualified to do business in Texas
5. persons whom court finds unsuitable

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Priority of Claims

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1. First $15,000 of funeral expenses and expenses of last sickness; then, family allowance
2. Expenses of administration
3. Secured claims, to extend covered by the lien
4. Child support arrearages
5. State taxes
6. Claims for repayment of medicaid assistance paid by state
7. Cost of confinement if decedent imprisoned in Texas prison
8. All other claims, including funeral, last sickness expenses in excess of $15,000

* IRS claim for unpaid federal income taxes takes priority over all other claims except funeral and last sickness expenses and expenses of administration

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Homestead

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-Surviving spouse is entitled to exclusive occupancy of house rent-free for as long as she uses it as her principal residence
-TX doesn't require formal designation of property as homestead; protection arises automatically
-Homestead isn't subject to attachment, execution or forced sale for creditors' claims; if homestead is sold, sale proceeds are exempt from creditors' claims for 6 months, giving seller time to invest proceeds in another homestead
-exceptions: purchase money mortgage lien; property taxes; federal tax liens; mechanic's lien for improvements
-conveyance of homestead to revocable trust does not cause loss of creditor protection even though trustee holds legal title

Urban homestead = 10 acres (residence or business)

Rural homestead = 20 acres (need not be contiguous)

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HEF - Homestead, Exempt Personal Property, Family Allowance

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Homestead allowance = $15,000 in lieu of homestead if decedent didn't own homestead

Personal Property Exemption = $60,000 worth of furniture, cattle, cars, etc. ($15,000 limit on jewelry) or $5,000 allowance in lieu of exempt personal property if items on exempt personal property list aren't in estate at death

Family Allowance = amount needed for support for a period of one year; comes off the top (purpose: provide support for surviving spouse and minor children during period decedent's assets are in administration)