Independent Administration 

• The central feature of Texas estate administration
• The consequence is that most estates in TX are administered without court supervision or involvement.

When can you have an Indep. Administration

• When provided for in the will - ANY words indicating independence are sufficient, however informal OR
• If all distributees agree, UNLESS the judge finds it not in the best interest of the estate

Which distributee's must agree to have Indep. Administration

If there is a trust created, income beneficiaries must agree (no need for the remaindermen)

If distributee is a minor or incapacitated, guardian can agree

If will makes gifts conditioned by survival, for this purpose the distributee is presumed to survive the proper time

Power of Independent Executor w/o court order

Anything a dependent administrator can be authorized to do as long as the act relates to:

• Proper settlement of the estate OR
• Preservation of estate assets

Power of Sale NOT given to the Indep. Executor

Any purchaser then will have to show that the executor had authority to sell the property (i.e. - to pay debts).  If there was enough cash in the estate to pay debts then the purchaser is not protected.

Accounting from Indep. Executor

 Interested parties are ENTITLED to an accounting on demand

• 15 months after will admitted to probate
• 12 months after last accounting was rendered

Procedures to close administration by Indep. Executor

• File Closing Report with Verified Affidavit that: 

(a) property initially received; 
(b) debts and expenses paid; and 
(c) names and addresses of distributees

• File for Declaratory Judgment seeking judicial discharge from further liability
• These are optional - so you don't have to do anything

Compelling closing or distribution from Indep. Executor

• Interested party can petition for distribution 2 years after the executor was appointed
• This is a show cause hearing where  you ASK for a distribution - NO right

Actions the Personal Rep must take w/in 120 days of appointment

• Post fiduciary bond w/in 20 days
• Publish notice of administration in newspaper of general circulation w/in 1 month
• File inventory of estate w/in 90 days
• Give notice to charitable beneficiaries w/in 30 days after will admitted to probate

Indep. Executor may be removed for cause if: (don't really need)

• Fails to return inventory w/in 90 days of appt.
• Fails to give notice to charitable beneficiaries w/in 30  days of will being admitted to probate
• Misapplied or embezzled property
• Fails to make a required accounting
• Guilty of gross misconduct or mismanagement
• Incompetent or is sentenced to penitentiary

Jurisdiction - Identical rules with Guardianship

• Counties with statutory county courts at law OR statutory probate courts
• County court has EXCLUSIVE ORIGINAL jurisdiction 
• Counties with only constitutional county courts
• County court (generally uncontested matters) and district court has concurrent jurisdiction 
• County court judge can request a statutory probate court judge assigned to the case

Methods of administering estate with least burden and cost

Note: This issue arises when there is a need to clear title to land, so we need to use the probate court

• Independent Administration - if all distributees agree
• Muniment of title (if D left a will)
• Statutory heirship proceeding (intestate)
• Small estate administration (intestate)
• Qualified community administration (intestate)
• Unqualified community administrator for the purpose of paying community debts (intestate)

Muniment of title

• No need to appoint the executor, but we need formal recognition to establish title
• Can only admit the will to probate using a muniment of title is there are NO unpaid debts (other than the mortgage on the homestead)

Statutory Heirship Proceeding

• D dies intestate w/o a need for formal administration, use this to formally recognize the title of successors by inheritance

• Can also be used to collect a bank account in decedent's name.  Wherein the bank is protected if it pays in reliance on the order

Small Estate Administration

• File affidavit if value of INTESTATE PROBATE estate is less than 50k
• Do not count homestead or exempt personal property or non-probate property
• Can be used to clear title to the homestead but NOT any other real property - so you can only use if all the real property you own is your homestead

Statutory Heirship Proceeding

D dies intestate w/o a need for formal administration, use this to formally recognize the title of successors by inheritance

Can also be used to collect a bank account in decedent's name.  Wherein the bank is protected if it pays in reliance on the order

Small Estate Administration

• File affidavit if value of INTESTATE PROBATE estate is less than 50k
• Do not count homestead or exempt personal property or non-probate property
• Can be used to clear title to the homestead but NOT any other real property - so you can only use if all the real property you own is your homestead

Qualified Community Administration

• IF decedent's dies intestate w/ descendants other than with his wife
• Surviving spouse must qualify with a bond and has the power of an independent executor.
• Distribution cannot be compelled until 12 months pass

Non-Statutory Affidavit of Heirship

• Used to clear title to land where the owner died years ago and no action was taken to clear title to land
• Get affidavits by neighbors or relatives of family history, that mom died intestate, who the heirs were . . . 
• File affidavit in county records

Fees in an unsuccessful will probate

Party who brought the will to probate is entitled to attny fees if the will was brought in GOOD FAITH

Temporary Administrator

• Can be appointed pending appointment of a permanent personal representative
• Powers are limited to those granted by the court
• Cannot exceed 180 days, except in a will contest - TA lasts until the will contest ends

Recording title to probate property

• Nothing to be done in the county of probate
• File will and order admitting it to probate in any other county or state where property is located 

Setting aside a deed when a 2nd will is found

• As long as the order admitting the first will to probate was validly entered, then a BFP who relies on a valid court order is protected
• The taker under the 2nd will has an action to recover sale proceeds against the party who sold the land

Time to Probate a will

• MUST offer it w/in 4 years of death, UNLESS:
• The party offering it can show they were not in default for not probating the will (cannot have known about the will)
• If the will is probated it will ONLY be as a muniment of title and no estate administration can be opened

Priority as to who is appointed personal representative

• Executor named in will
• Surviving spouse<--if dies intestate
• Principal beneficiary name in will
• Any other beneficiary named in will
• Next of kin, in nearest order of kinship <--if dies intestate

Note - this list does NOT apply to temporary administrators - court can appoint whoever they want 

Who cannot be a personal representative

• Minors
• Incapacitated persons
• Convicted felons
• A person whom the court finds unsuitable

Note: a  nonresident of TX can serve as guardian or personal rep as long as they appoint a resident agent for service of process

Liability of Personal representative

General test is prudence - would a prudent person do X

We do NOT care what the decedent did

Compensation of Executors and Administrators

• 5% in 5% out Rule - absent a contrary will provision entitled to 5% of all sums actually received and 5% of all sums paid out in cash 
• Does NOT apply to cash on hand or the collection of life insurance policies
• Does NOT apply to distributions to the beneficiaries or heirs

Notice to creditors in dependent or independent administration (SAME)

• Notice by publication - w/in month of being issued letters testamentary must publish notice in newspaper of general circulation 
• Permissive personal notice to unsecured creditors - MAY give notice that the creditor must present the claim w/in 4 months or the claim is barred
• Personal notice to secured creditors - w/in 2 months MUST give personal notice by registered or certified mail

Creditors procedures in dependent administration

• Must file an authenticated claim supported by an affidavit w/ the court or the administrator
• Administrator must write a memo allowing or rejecting the claim w/in 30 days (if nothing is done it is presumed rejected)
• If the claim is disallowed, the creditor must file suit w/in 90 days or the claim is barred

Note: creditor can't bring a "claim for money" unless they first present it to the administrator and it is rejected.  This rule does not apply to unliquidated or contingent claims

Creditors procedures in independent administration

• Same notice rules, but not the same presentment rules 
• Failure to present a claim does NOT affect the creditor's right to bring an action on the claim

Suing an estate

• CANNOT name an estate - it is not an entity
• Have to name the personal representative

Matured Secured Claim

If there was personal liability on a note secured by a mortgage, the creditor CAN present its claim for pmt out of the general assets of the estate even though the claim is not yet due 

• Must by the later of 6 months of the date of appointment of the personal representative OR 4 months of personal notice
• File a matured secured claim
• If you fail to do this the secured creditor is treated as a Preferred Debt and Lien and can only look to security interest in satisfaction of the debt
• Can foreclose on the mortgage, but NO deficiency judgment

Creditors' claims in a guardianship

All above is the same, except there is MANDATORY personal notice to known creditors - secured or unsecured

Priority of paying claims against an estate

• Funeral expenses and expenses of last illness up to 15k Family allowance
• Expenses of administration
• Secured claims to extent covered by the lien (if filed a matured secured claim)
• Child support arrearages reduced to J
• State taxes
• Claims for repayment of Medicaid assistance paid by state
• Cost of confinement if decedent imprisoned in Texas prison
• All other claims, including funeral expenses, etc. > 15k

Set Aside in Insolvent estate

• Residence may qualify for homestead exemption
• Furnishings, auto, cattle, etc. up to 60k as exempt personal property
• Jewelry can't exceed 15k

Note: set aside is only temporary in a solvent estate

Emergency intervention for pmt

To pay funeral expenses and to protect personal property in rental unit, can seek emergency intervention no sooner than 3 days and no later than 90 days after death

Foreclosure

• In a dependent administration you MUST get court approval
• Do not need court approval in an independent administration

Procedural steps for Sale of Real property in Dependent Administration

•  File application for sale describing the property, amt of outstanding claims, property on hand to pay creditors, other facts showing need to sell for authorized purpose: pay funeral expense; debts; family allowance
• Date for hearing set, and notice given to all persons interested in the estate
• Hearing held, at which court orders sale, specifying terms
• Property is sold, sale reported to court w/in 30 days
• After notice to interested parties, confirmation hearing is held and court affirms sale
• Personal representative gives deed to purchaser

Homestead Exemption

Urban - 10 acres w/o regard to value of improvements --> must be used as a residence and/or business

Rural - 200 acres for family, 100 acres for single individual

Consequences of Qualifying as a Homestead

• Both spouses must join in any conveyance
• Free from creditors claims except those exempt
• Passes free of creditor's claims IF owner is survived by spouse, minor child, or unmarried adult child living with decedent
• Right to occupy homestead rent free for life, or for so long as she chooses for the minor child and spouse, but NOT the unmarried adult child --> cannot pass this right along when you die

Exempt creditors - Keep their claim against a homestead

• Purchase money mortgage lien
• Taxes on the homestead itself
• Federal tax liens and loan to pay off federal tax lien
• Mechanics, materialman's lien for improvements IF written K, signed by H&W, entered B4 improvements made and recorded
• Loan to enable parties to distribute or divide homestead on divorce
• Equity loan for up to 80% of the value of the equity

Payments b/t Homestead occupant and legal owner

• Legal owner must pay casualty insurance premiums and mortgage principal pmts
• Occupant must pay real property taxes and mortgage interest pmts

Allowance in lieu of . .

In lieu of homestead - 15k IF decedent did not own a homestead

In lieu of exempt personal property - 5k to the extent that items on exempt personal property list are not in the estate at death

Family Allowance

• Def - to provide support for surviving spouse, minor children during period decedent's assets are in administration
• Get amt needed for support for a period of one year

Family Allowance Rules

• All these allowances come off the top of the estate - they are over and above amt inherited

• Do NOT take into account the size of the community estate to determine in an allowance is allowed

• Do take into account separate property in determining the size of the allowance

• The allowance is charged against the entire community estate as a community obligation - 1/2 from each 1/2 of the CP