I. JURISDICTION AND VENUE OVER PROBATE MATTERS.

A. INTRODUCTION.

1. What is Probate?

1. “Probate” refers to the judicial proceeding in which an instrument is determined to be the duly executed last will of the decedent, or if there is no will the Probate refers to the proceeding in which the decedent’s heirs are judicially determined.

2. What is the difference between an executor and an administrator?

1. A personal representative (Called an executor if named in the will and an administrator if named by the court) is appointed to carry out the estate administration, as evidenced by letters testamentary or letters of administration.

a. Executor—Executor is a personal representative that is named in the will who is appointed to carry out the estate administration. This duty is evidenced by the letters of testamentary or letters of administration. (is it letters of testamentary with a executor and letters of administration with a court appointed administrator?)

b. Administrator—administrator is a personal representative that appointed by the court (if a personal representative is not named in the will) to carry out the estate administration.

3. What One of the chief functions of the probate process?

1. One of the chief functions of the probate function is the title-clearing function by which the ownership rights of the decedent’s successors are judicially established.

B. JURISDICTION.

1. What court must all probate proceedings be filed and heard?

1. County Court. All probate proceedings must be filed and heard in county court.

2. What court has jurisdiction for all probate hearings in smaller Texas Counties with only constitutional county courts?

1. County Court has Original Jurisdiction. In smaller Texas counties that have only constitutional county courts, the county court has original jurisdiction over probate matters.

3. What court has jurisdiction to hear contested matters?

1. Statutory probate Judge/ Contested matters are heard by an appointed statutory probate judge or transferred to the district court, while the county maintains jurisdiction over the management of the estate.

4. What court has jurisdiction in mid-sized counties where there is a county court at law and the county court?

1. Concurrent jurisdiction. In mid-sized counties in which there is a county court at law, the county court and the county court at law have concurrent jurisdiction over probate matters.

5. What court has jurisdiction in larger counties with statutory probate courts?

1. Exclusive Jurisdiction. In larger counties with statutory probate courts, the statutory probate court has exclusive jurisdiction over all probate procedings and concurrent jurisdiction with the district court over personal injury, survival, or wrongful death actions and those involving a trust or power of appointment.

C. VENUE.

1. Where is Venue for Probate if the Decedent was A Texas Resident?

1. County of Domicile. If the decedent was a Texas Resident, venue lies in the county in which he was domiciled at the time of his death.

2. Is Venue for Probate a "Jurisdictional Question?”

1. No. Venue is not a “jurisdictional question.”

3. Where is Venue for Probate if a Non-Resident Dies in Texas?

1. County where Principal Assets Were at the Time of Death or the County Where he was Situated at the Time of his Death. If a non-resident dies in Texas, venue lies in either the county where his principal assets were situated at the time of his death or in the county where he died.

4. Where is Venue for Probate if a Non-Resident Dies outside of Texas.

1. Venue where his Nearest Kin Resides. If a non-resident dies outside of Texas, Venue lies in the county where his nearest kin resides.

2. What if he does not have kin in Texas?

a. County Where his Principal Assets were at the Time of his Death.

i. If he has no kin in Texas, venue lies in the county where his principal assets were situated at the time of his death.

D. ATTORNEY AD-LITEM.

1. Under What Circumstances may a Probate Judge Appoint an Attorney Ad Litem to Represent Interests of What Kinds of Persons?

1. A probate judge may appoint an attorney ad litem to represent the interests of persons under a legal disability, nonresidents, unborn or unascertained persons or unknown heirs.

a. Attorney Ad Litem Represent interests of persons

i. Under legal disability

ii. Non residents

iii. Unborn or unascertained persons

iv. Unknown heirs

E. WILL MUST BE PROBATED WITHIN FOUR YEARS.

1. Can a will be admitted into probate more than four years after the testators death?

1. No. A will cannot be admitted to probate more than four years after the testator’s death,

2. Are there any execptions to the four year rule?

1. A will may be admitted into probate more than four years after the testator’s death if it is shown that the applicant was not in default in failing to present the will within the four year period.

3. Who must be notified if the will is offered for probate more than four years after descendent’s death?

1. If a will is offered for probate more than four years after the decedent’s death, notice must be given to the decedent’s heirs,

4. If the will is offered for probate more than four years after the testators death can letters of testamentary be issued ?

1. No. if the will is offered for probate more than four years after the descendant’s death letters of testamentary cannot be issued.

5. if the will is offered into probate more than four years after the testator’s death can an estate administration be held?

1. No. if the will is offered into probate more than four years after the testator’s death then no estate administration can be held.

6. How can the will be probated if the will is offered into probate more than four years after the testator’s death?

1. The will can be probated only as a muniment of title.

2. Good faith purchasers from the heirs will have good title against legatees named in the will.

II. INDEPENDENT ADMINISTRATION.

A. INDEPENDENT ADMINISTRATION OF FREE COURT SUPERVISION.

1. What happens after the will has been admitted into probate and a person has been designated as the independent executor has been qualified?

1. After a will has been admitted to probate and the person designated as independent executor has been qualified,

a. she then files with the court an inventory of the estate assets,

b. an appraisement of their value, and

c. a list of claims of the estate (or affidavit of inventory, appraisement, an list of claims)

d. she administers the estate, paying or disallowing creditor’s claims, and distributing the net estate to those entitled, without any court involvement or supervision.

2. Powers Exercisable by Independent Executor.

1. What powers are customary for the will to grant an independent executor?

a. All of the Powers Given to a Trustee. It is customary for the will to grant an independent executor all of the powers given to a trustee.

i. Absent such an expansion of powers in the will,

1. the executor has the power to do any act,

2. without a court order,

3. that an executor under a dependent administration could be authorized to do by court order,

4. including the power to sue or be sued,

5. pay or deny claims,

6. set aside family allowance, and exempt property,

7. operate a business that is part of the estate, and

8. make a distribution of the assets.

2. Sale of Real Property.

a. If a will contains a power of sale, real property can be sold by an independent executor irrespective of the existence of estate debts.

b. If there is no power of sale, the property may be sold only to pay debts and expenses to satisfy the family allowance or other statutory allowances.

c. If a sale of property is made in the absence of a power of sale granted by the will or the court, the burden is on the purchaser to prove the estate’s indebtedness at the time of the sale.

d. If he cannot do so, he is not a bona fide purchaser, and the sale is void.

3. Designating an Independent Executor in the Will.

1. Texas Courts have been very liberal in finding that a person named as executor has independent administration powers.

2. However, merely naming a person as executor and waiving bond, without more, will not suffice.

4. All Distributees Agree on Independent Administration.

1. Independent administration is permitted if all of the distributes agree on independent administration and the court finds that it is in the best interest of the estate.

2. If a distribute is a minor or incapacitated, a guardian may sign the application on behalf of the distributee.

3. If the will creates a trust, the income beneficiaries are distributes who must agree to independent administration.

4. Note: the testator may provide in his will that there shall be no independent administration and in that case, independent administration will not be permitted.

5. When Independent Administration Laws Do Not Apply.

1. Rules governing dependent administration will apply only when the decedent did not leave a will naming an independent executor, and either:

a. (1) the distribute cannot agree that there should be an independent administration, or

b. (2) the probate judge finds that such administration would not be in the best interest of the estate.

Exam Tip:

Remember that even if all beneficiaries agree to an independent administration, the court may refuse to enter an order granting independent administration if it determines that it is not in the estate’s best interest.

B. Person Who Declines Appointment as Independent Executor May be Appointed Administrator.

1. A resignation or declining to serve as an independent executor does not automatically disqualify the individual from being appointed as administrator in a court-supervised administration of the estate.

C. REMEDIES AGAINST WRONGDOING BY INDEPENDENT EXECUTOR.

1. A court may remove an independent executor who:

a. (i)fails to return an inventory and list of claims within 90 days after qualification;

b. (ii) has misapplied or embezzled estate property;

c. (iii) fails to make a required accounting;

d. (iv) fails to give notice to charitable beneficiaries within 90 days after the will is admitted to probate;

e. (v) is guilty of gross misconduct or gross mismanagement;

f. (vi) becomes incapicaited or is sentenced to a pentitentiary; or

g. (vii) becomes incapable of properly performing his duties due to a material conflict of interest.

2. Upon removal, the court may appoint a successor independent executor.

3. An interested party can demand an accounting from an independent executor after 15 months from the date the independent executor was appointed and thereafter, every 12 months.

D. DISQUALIFYING AN INDEPENDENT EXECUTOR.

1. A person may be disqualified as unsuitable if he has an interest adverse to the estate, but the courts give great deference to the testator’s intent in naming the executor.

a. For example, a person named as independent executor will not be disqualified merely because he asserts a claim against the estate as a creditor.

2. However, the reluctance of an executor to pursue effective administration of the estate may be grounds for disqualification.

E. CLOSING AN INDEPENDENT ADMINISTRATION.

1. There is no requirement that the independent executor formally close the estate administration.

2. However, he is authorized by statute to file, in the county records, either a closing report or notice of closing, both of which must be verified by affidavit showing:

a. (i) the property that came into his hands,

b. (ii) that all debts have been paid,

c. (iii) that no litigation is pending, and

d. (iv) the names and addresses of the persons to whom the estate property was distributed.

2. An independent administration is considered closed 30 days after the closing report or notice of the closing is filed unless an interested person files an objection within that time.

3. When the estate is closed, the power and authority of the independent executor is terminated, and the independent executor may file for a declaratory judgment seeking discharge from liability for matters that have been fully disclosed. An interested party can petition for distribution of the estate two years after an independent executor is appointed, and a hearing will be held on whether administration should continue.

III. ADMINISTRATION OF COMMUNITY PROPERTY.

A. INTRODUCTION. All of the community property, and not just the deceased spouse’s one-half share, is subject to administration on the death of one spouse.

B. NO ADMINISTRATION WHEN SURVIVING SPOUSE TAKES ALL BY INTESTACY. If an intestate decedent is not survived by decedents, or if all of the decedents were also decedndants of the surviving spouse, the surviving spouse succeeds to all community property and no administration is necessary. To sell any real property and to collect assets such as bank accounts, the surviving spouse may need to take some action(e.g. have land records reflect her succession to ownership). This can be accomplished by a statutory heirship proceeding.

C. UNQUALIFIED COMMUNITY ADMINISTRATION—TEMPORARY ADMINISTRATION FOR PURPOSES OF PAYING COMMUNITY DEBTS. When one spouse has died and no administration is pending, the surviving spouse may act on behalf of the community estate. The unqualified administration power terminates upon paying debts.

EXAM TIP!

Note that the surviving spouse as unqualified community administrator has the authority to sell, mortgage, lease and otherwise dispose of community property without court order, but the action must be for the purpose of paying community debts.

D. ADMINISTRATION OF COMMUNITY ASSETS IN OTHER SITUATIONS.

1. If a testator names an independent executor of his estate and the surviving spouse does not want to let the named executor administer all of the community property, the executor is entitled to administer the following assets:

a. separate property,

b. community property that was under the sole management of the deceased spouse, and

c. community property that was under the joint management of the spouses.

2. The surviving spouse is entitled to administer community property that was under her sole management during the marriage.

IV.OTHER PROCEDURES FOR SIMPLIFIED ADMINISTRATION.

A. INFORMAL FAMILY SETTLEMENTS.

1. Family Settlement Encouraged.

1. Unless the decedent left a will that names an executor, there must be an affirmative showing that an administration of the estate is needed before letters of administration will be issued by the probate court.

2. Administration is necessary if:

i. (1) there are two or more debts against the estate,

ii. (ii) a judicial partitition is desired, or

iii. (iii) funds or other property due the estate must be recovered.

b. Upon the death of a person, either estate or intestate, legal title passes immediately and automatically to his legatees or heirs, subject to the personal representative’s right of possession in the event that an administration is necessary.

Exam Tip:

Always consider the possibility that no administration is necessary if the estate is relatively small and uncomplicated (there are less than two debts) and family members appear to have a harmonous relationship.

2. Written Settlement Agreements.

1. In Texas, even though the estate includes assets calling for the administration, administration can be avoided if all persons interested in the estate sign an agreement as to how the property will be distributed.

2. An executor is not an interested party and therefore his consent to a settlement agreement is not required.

3. All interested parties must be over the age of 18; a minor heir would not be bound by the agreement.

4. The parties must be able to obtain possession of all of the decedent’s property without the necessity of some more formal procedure.

B. ORDER OF NO NECESSITY FOR ADMINISTRATION.

1. If the court finds that there is no need for administration of the estate, the court will recite in its order refusing the application that no necessity for administration exists.

2. This procedure constitutes sufficient legal authority for each person who owes money, has custody of property, or acts as registrar or transfer agent of any interest belonging to the estate for payment or transfer to distributes.

C. PROBATE OF WILL AS MUNIMENT OF TITLE.

1. Court Must Find That There Are No Unpaid Debts. The court cannot enter a muniment of title order unless it finds that there are no upaid debts owed by the estate other than the mortgage on the homestead. Therefore, all other creditors must be paid before the petition for admission of a will as a muniment of title is filed.

2. Effect of Will as Muniment of Title. An order admitting a will to probate as a muniment of title establishes the ownership rights of the beneficiaries named in the will, and they may treat the property as their own. ** Muniment of title procedure can be used to register stock certificates in the benficiaries’ names, to collect bank accounts of the decedent, etc. Its chief use is in squaring away land title records. The order admitting the will to probate as a muniment of title protects bona fide purchasers dealing with the estate.

3. Land in Several Counties. Where the land is in several counties and the will is admitted to probate in one of the counties, to constitute muniment of title in the other county, a certified copy of the will and the order admitting it into probate must be filed in that county.

4. Affidavit Must Be Filed Within 180 Days After Will Probated. An affidavit must be filed within 180 days after the order admitting the will to probate as a muniment of title, certifying the terms of the will that have been fulfilled and the terms yet to be carried out.

5. Muniment of Title Order Can Include Declaratory Judgment Construing Will and Ascertaining Beneficaries. If the beneficiaries cannot be ascertained solely by reference to the will (e.g. “to my desendants per stirpes”) or if the will raises questions of construction, the court may hear evidence and include in the order a declatory judgment construing the will and determining the interest of the beneficiaries.

D. STATUTORY HEIRSHIP PROCEEDING.

1. Serves Same Function as Muniment of Title Probate. A statutory hearing proceeding establishes by court order, that a person is dead, that he left no will, and that he was survivied by the named persons as heirs. It also fixes the amount of their intestate shares. Bona fide purchasers who deal with legatees under the will probated as a muniment of title or persons named as heirs in the statuory heirship proceeding are completely protected.

2. The Unexpected “Heir.” An heir whose name was not included in an affidavit of heirship may bring suit against the other heirs.

E. NONSTATUTORY AFFIDAVIT OF HEIRSHIP. This is an informal procedure to clear title to a decedent’s assets.

1. When e.g. an estate is not probated, title may be established many years later to the satisfaction of a title insurance company through affidavits of people familiar with the family stating that the estate was not administered and naming the people who were the decedent’s only heirs.

F. ADMINSTRATION OF SMALL ESTATES.

1. Value of Intestate Estate Does Not Exceed $50,000.00—Collection of Estate by Affidavit. Heirs of an intestate estate are entitled to disrbution without need for appointment of a personal representative or any kind of administration where the value of the intestate estate, not including homestead and exempt personal property, does not exceed $50,000.00. Heirs need only file an affidavit with the court showing the basis upon which they are entitled to distribution.

2. Affidavit Procedure Can Be Used to Clear Title to Homestead If Decedent Owned No Other Real Property. If a homestead is the only real property in a decedent’s estate, title to it may be transferred under a small estate administration affidavit. The affidavit must be recorded, and purchasers who rely on it are protected against an heir who was not disclosed in the affidavit.

3. Estate Does Not Exceed Amount of Family Allowance---No Administration. If the value of the estate, excluding homestead and exempt personalty does not exceed the amount to which the surviving spouse or minor child are entitled as family allowance, application can be made for the setting aside of a family allowance an order that no administration is necessary.

G. COLLECTING OF DECEDENTS FINAL PAYCHECK BY AFFIDAVIT OF SURVIVING SPOUSE. The surviving spouse can collect the decedent’s last paycheck (incuding sick pay or vacation pay) by giving the employer an affidavit stating that no one has been appointed executor or administrator of the estate. The employer is protected upon paying the funds in reliance of the affidavit.

H. ANCILLARY ADMINISTRATION. A Texas court cannot enter a decree that adjudicates title to land in another state (And vice versa). It is necessary to bring ancillary administration proceedings in the state where the land is located. If a nonresident decedent owned land in Texas, title to the land can be cleared by a muniment of title procedure.

V. “DEPENDENT” OR COURT—SUPERVISED ADMINISTRATION.

A. STEPS IN THE PROCESS—IN GENERAL. A dependent administration involves four steps at every stage in the process: petition, notice to the interested parties, hearing, and subsequent judicial confirmation.

1. Petition,

2. Notice to the interested parties,

3. Hearing,

4. Subsequent judicial confirmation.

B. SALE OF REAL PROPERTY.

1. For the sale of real property, the procedural steps are:

1. (i) application for the sale is filed shoing a need to sell the property;

2. (ii) the date for a hearing is set, and notice is given to all persons interested in the estate;

3. (iii) a hearing is held at which the court orders a sale and specifies a public auction or private sale;

4. (iv) the property is sold; (v)the court affirms the sale; and

5. (vi) the representative gives the deed to the purchaser.

C. TEMPORARY ADMISTRATION. If immediate action must be taken before a permanent personal representative is appointed, the court may appoint a temporary administrator with powers limited as the circumstances require. Any suitable person may be appointed temporary administrator. The powers of a temporary admistrator are limited as the circumstances require. Any suitable person may be appointed temporary administration. The powers of a temporary administrator are limited to those granted by the court. If a temporary administrator is appointed pending a contest relating to the probate of a will, the appointment continues until the termination of the contest and the appointment of a permanent executor or administrator. In all other cases in which a temporary administrator is appointed , the appointment cannot exceed 180 days unless it is made permanent by the court in a later proceeding.

VI.CREDITORS CLAIMS.

A. NOTICE TO UNSECURED CREDITORS. There is no statute of limitations in Texas. Unless the permissive personal notice procedures (discussed below) is followed, an unsecured creditor can assert its claim at any time within the statute of limitations applicable to the particular claim. Moreover, the statue is tolled from the date of the obligors death for 12 months or until the appointment of a personal representative, whichever period is shorter.

1. Notice by Publication. Within one month after appointment and receiving letters testamentary or letters of administration, the personal representative must give notice to the unsecured creditors by publication in the newspaper in the county. The notice must contain the representative’s name, the address to which to send claims, and the date the letters were issued.

2. Permissive Personal Notice Triggers Four Month Statute of Limitations. At anytime before the estate administration is closed, the personal representative may (but is not required to) give notice by certified or registered mail, return receipt requested, to an unsecured credtor having a claim for money against the decedent. The notice must expressly state that if the claim is not preented within 120 days after the date of the receipt of the notice then the claim will be barred.

B. UNSECURED CLAIMS—DEPENDENT ADMINSTRATION.

1. Claims Must Be Authenticated. In a dependent administration, a claim must be authenticated, i.e. it must be accompanied by exhibits or vouchers, and must be supported by an affidavit. Without an affidavit, the claim cannot be paid.

2. Creditor Must File Suit Within Ninety Days After Claim Is Rejected. The personal representative must allow or reject the claim within 30 days after receipt. Failure to act within 30 days constitutes rejection. If the claim is rejected, the claimant must file suit within 90 days after such rejection; otherwise, the claim is barred.

3. Independent Administration Compared. The independent executor must give notice by publication in a newspaper and may give unsecured creditors permissive personal notice, triggering the four month statute of limitations. If she does not give personal notice, the above rules do not apply. In an independent administration, presentment of a claim does not have to be in a particular form, it does not have to be authenticated, and the independent executor’s rejection of the claim does not trigger any 90 day statute of limitations. If the executor refuses to pay the claim, the creditor’s recourse is to sue in either the district or the county court (not the probate court), depending on the nature and amount of the claim.

4. Action Against Estate Must be Filed Against Personal Representative. Any action to establish liability against an estate must be filed against the estate’s personal representative (not the estate), or, if no personal representative has been appointed, against the estate’s heirs or beneficiaries.

C. SECURED CREDITORS.

1. Personal Notice Must be Given Within Two Months. Within two months after appointment, the personal representative must be given notice by certified or registered mail, return receipt requested, to all secured creditors who are known to the personal representative.

2. Presentment For Payment as Matured Secured Claim. A secured creditor can elect to present its claim for payment as a matured secured claim; (i) within six months after appointment of the personal representative, or (ii) within four months after personal notice is received, whichever period is later. If the creditor makes this election, it is entitled to payment even if the claim has not yet matured.

1. Effect of Sale of Property. If the encumbered property is sold to raise the needed cash, the secured creditor who files a matured secured claim has a Class 3 claim, which has priority as to the sale proceeds over all other claims except for funeral and last sickness expenses (up to $15,000.00), family allowance, and expenses of the administration. If the sale proceeds are not sufficient to satisfy the secured claim in full, the creditor is entitled to a deficiency judgment and may collect the deficiency as a Class 8 unsecured claim.

2. Source of Payment of Matured Secured Claim. Because Texas has abolished the exoneration of liens doctrine with respect to wills executed on or after September 1, 2005, the source of payment of a matured secured claim depends on when the testator’s will was executed. For example, if the will was executed prior to September 1, 2005, then the burden of payment falls on the residuary legatees, but if the will was executed on or after that date, the beneficiary of the encumbered property bears the burden.

3. Presentment As Preferred Debt and Lien. Alternatively, the secured creditor can elect to present its claim as a “preferred debt and lien.” If this election is made, the debt is paid according to the terms of the note secured by the lien. By electing this procedure, the secured creditor 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 creditor must foreclose the mortgage or other lien in satisfaction of the debt.

1. Claim Not Presented –Classified as Preferred Debt and Lien. If the secured creditor does not formally present its claim as a matured secured claim within the six month period, the claim is automatically classified as a preferred debt and lien. Even if the secured claim is classified as a preferred debt and lien, the personal representative can pay off the debt during the etate administration (without prepayment penalty) if she chooses to do so.

2. Preferred Debt and Lien has Priority Over All Other Claims. Although a secured creditor who elects (or is regelated to) preferred debt and lien status is not entitled to a deficiency judgment, if the decedent’s estate is insolvent, the creditor’s priority with respect to its collateral is preserved as against all other claims, including Class 1 claims for funeral and last sickness expenses, family allowance and Class 2 claims for administration expenses.

4. Dependent Administration—Lien Cannot be Foreclosed Without Court Approval. The only major difference between dependent and independent administration is that, in a dependent administration, the creditor cannot foreclose on the lien without court approval. This is so even if, under the terms of the debt, the mortgage payments are in default.

5. Independent Administration. The procedures described above generally apply to secured claims in an independent administration. Secured creditors electing matured secured claim status must file notice in the county where the real property securing the debt is located. These creditors must obtain either court approval or the independent executor’s consent to exercise any foreclosure rights. Secured creditors electing preferred debt and lien status may not exercise any foreclosure rights during the first six months of the estate administration.

D. PRIORITY OF CLAIMS. The order of payment is: (1) funeral expenses and expenses of last sickness, up to $15,000.00; (2) the family allowance for the surviving spouse and minor children; (3) expenses of administration; (4) secured clams if mortgaged property is sold and the proceeds are not required to pay the above items; (5) claims for unpaid child support and child support arreages reduced to judgment; (6) state taxes; (7) costs of the decedent’s confinement in prison; (8) claims by the state for reimbursement of medical assistance payments; and (9) all other claims.

VII. REVIEW OF THE PROCESS OF ADMINISTRATION.

A. APPOINTMENT OF PERSONAL REPRESENTATIVE. Where there is property upon which an administration is needed, as soon after death as is practical, the personal representative makes application to the probate court for letters of testamentary or letters of administration. *Notice to the interested parties is given by posting at the county courthouse. Within 20 days of the court granting letters, the personal representative takes her oath of office and posts bond (unless the decendant’s will waives the bond requirement).

1. Priority of Persons Eligible to Be Appointed. Statutory priority as to who is to be appointed personal representative is: (1) the executor named in the will; (2) the surviving spouse, (3) the principal beneficiary named in the will, (4) any other beneficiary named in the will; (5) the next of kin in nearest order of descent, (6) creditor of the descendant, or (7) any other person of good character. Any person with priority can waive the right by filing written waiver with the probate court.

Exam Tip!

Remember that the statutory list of priorities of persons eligible to be appointed permanent administrator does not apply to the appointment of a temporary administrator. The only restriction in appointing a temporary administrator is that the appointee be a suitable person.

2. Persons Disqualified From Being Appointed. Not qualified for appointment are minors, incapicated persons, convicted felons, nonresident banks, or any person the court finds unsuitable. A nonresident of Texas can serve as administrator but must appoint a resident agent for service of process.

B. NOTICE TO WILL BENEFICIARIES. Within 60 days after a will is admitted to probate, the executor must give notice, including a copy of the will or a summary of gifts made to the beneficiary to all beneficiaries named in the will. The executor must file an affidavit or certificate stating that all required notices have been given within 90 days after the wills admission to probate. An executor who fails to give this notice or file the affidavit or certificate may be removed upon petition of any interested person. *Note: notice is not required if: the will is probated under the muniment of title; the value of bequests to a beneficiary is $2000.00 or less; all bequests have been distributed to the beneficiary within the 60-day period; or the beneficiary acknowledges receiving either a copy of the will or a summary of the bequests.

C. INVENTORY. After qualification, the personal representative collects all estate assets so that they may be properly managed. The personal representative must file an inventory (or an affidavit in lieu of an inventory) with the probate court within 90 days of qualifying unless the court grants an extension. She may also be required to file an “appraisement” of the estate. If there are no unpaid debts, an independent administrator may, in lieu of the inventory, file an affidavit stating that all debts have been paid and all beneficiaries have received an inventory.

D. SETTING ASIDE HOMESTEAD, FAMILY ALLOWANCE, AND EXEMPT PROPERTY. In the case of an insolvent estate, the setting aside of homestead, family allowance, and exempt property is the next major activity.

E. PAYING DEBTS, TAXES, AND ADMINSTRATION EXPENSES. The personal representative then pays debts, taxes, and administration expenses in accordance with established procedures that assure adequate proof of claims and equality of treatment of all those in the same class.

F. MANAGING THE ESTATES PROPERTY; ACCOUNTINGS. The personal representative has the power to manage the estate property (e.g. make investments), but she must file annual accountings.

G. DISTRIBUTING THE REMAINING ASSETS. When the all of the above steps have been taken, the personal representative distributes the remaining property to its new owners, the heirs or will beneficiaries.

H. COMPENSATION OF PERSONAL REPRESENTATIVE. In Texas, absent a contrary will provision, the personal representative is entitled to a commission of 5% of all the amounts paid and 5% if all amounts actually received by the personal representative on behalf of the estate. The 5% rule does not apply to: (1) cash on hand at the decedent’s death, (2) life insurance proceeds, or (3) distributions to legatees or heirs. Total compensation cannot exceed 5% of the gross value of the estate. Court approval of the compensation is required in a dependent administration. The personal representative can waive compensation.

I. EXECUTOR MAY PURCHASE ESTATE ASSETS IF AUTHORIZED BY WILL OR COURT ORDER. An Executor is a fiduciary and is subject to the rules against self-dealing. However, an executor may purchase property from the estate if so authorized by the will, or if a court determines that it is in the best interests of the estate.

J. EMERGENCY INTERVENTION TO PAY FUNERAL EXPENSES AND TO PROTECT PERSONAL PROPERTY IN RENTAL UNIT. Any person qualified to serve as an administrator may request emergency court intervention to provide for: (1) payment of the decedent’s funeral or burial expenses or (2) protection and storage of decedents personal property located in a rental unit. The application, which must be filed no sooner than 90 days after the decedent’s death, can be filed only if no application for appointment of an executor or administrator is pending and not one has applied for a small estate administration affidavit.

VIII. HOMESTEAD, EXEMPT PERSONAL PROPERTY, AND FAMILY ALLOWANCE.

A. PROBATE HOMESTEAD AND SET-ASIDE OF EXEMPT PROPERTY.

1. Constitutional Definitions of Homestead. Up to 200 acres of rural land can qualify as rural homestead. Up to 10 acres of land with improvements thereon can qualify as urban homestead. The homestead exemption for single persons is 10 urban acres or 100 rural acres. The urban homestead can include property used for business. The business homestead must be either on the same lot as the residence used for business or on a contingous lot. It is part of the urban homestead and not a separate homestead. Homestead protection is lost if the claimant “abandons” the homestead by ceasing to use it as her principal residence, but it is not lost if the claimant conveys the homestead to a revocable trust.

2. Exempt Personal Property Set-Aside. The exemption from creditors claims is limited to assets worth $60,000.00 per family ($30,000.00) for single person who is not a member of a family. The statute gives detailed list of items that can qualify as exempt personal property, such as household furninshings, tools, retirement, plans etc.

3. Consequences of Homestead Exemption. There are five consequences that can result from classification of real property as homestead: (1) Freedom From Creditors Claims During Lifetime; (2) Spouses must Join in Conveyance of Homestead; (3) Homestead Passes at Death Free of Creditor’s Claims; (4) “Probate Homestead”—Right to Occupy Homestead; (5) Exemption from Real Property Ad Valorem Taxes.

a. Freedom From Creditors Claims During Lifetime. Homestead real property and exempt personal property are not subject to attachment, execution, or forced sale for creditors claims, except for: (i) purchase money liens; (ii) taxes on homestead property; (iii) mechanics and material man’s liens incurred in connection with improvements on the homestead, provided that the contract is signed by both the spouses and recorded (iv) federal tax liens; (v) loan to pay off a federal tax lien or to divide a homestead on divorce; or (vi) a second lien on homestead are exempt from creditor claims for six months to allow the seller to invest in another homestead.

a. Bankruptcy—Homestead Exemption Limited to $125,000.00 in Certain Cases. Under federal bankruptcy law, the homestead exemption is limited to $125,000.00 if the homestead was acquired within 1,215 days of filing bankruptcy petition unless:(1) the homestead is a family farmer’s principal residence, or (2) the amount exempted is rolled over from another residence in the same state acquired by the debtor prior to the 1,215 day period.

b. Spouses must Join in Conveyance of Homestead. Both spouses must join in conveyance of the homestead (even if the homestead is one spouse’s separate property).

c. Homestead Passes at Death Free of Creditor’s Claims. The homestead passes at death free of creditor’s claims (subject to the exceptions listed in § a, supra) if the decedent is survived by a spouse or minor child. This is true even if the property passed to a devisee other than the person listed (e.g. to the decedent’s brother).

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§ Exam Tip!

§ Remember that the decedent’s residence does not always qualify as a homestead (i.e. pass at death free from creditor’s claims). The decedent must be survived by a spouse or minor child.

d. “Probate Homestead”—Right to Occupy Homestead. If the decedent was surviivied by a spouse or minor chilredn, the spouse is entitled to occupy the homestead as long as she chooses to occupy it. A minor child may occupy it until age 18. The homestead cannot be portioned until the right of occupancy ends. If the surviving spouse does not claim the occupancy right, the minor children can. An occupying spouse must pay taxes and mortgage interest, but not insurance premiums.

e. Exemption from Real Property Ad Valorem Taxes. Property that qualifies as homestead is partially exempt from the local property taxes.

B. ALLOWANCE IN LIEU OF HOMESTEAD OR EXEMPT PROPERTY. If a decedent did not own all of the objects that his surviving sppuse or minor children are entitled to have set apart for them, the probate judge may award an allowance in lieu of such property. The allowance in lieu of homestead is an amount up to $45,000.00; the allowance in lieu of exempt personal property is up to $30,000.00. this allowance is not triggered by an election by the surviving spouse.

C. FAMILY ALLOWANCE. The surviving spouse, minor children, and adult incapicated children supported by the decedent are entitled to an allowance sufficient for their support and maintainence for one year. the suriviving spouse’s speaparte property (but not community property, non probate assets, or the spouses salary) is taken into account in determining the entitlement to and amount of the allowance. As a general rule, the family allowance is paid to the surviving spouse. The allowance is treated as a community obligation and is payable out of the community estate. The alloance is over and above testamentary gifts and the intestate share.

Exam Tip!

Remember that the spouse’s ½ interest in community property, no matter how substantial, is not taken into account in determining the amount of the family allowance.

	Created by Sahar Athari over 10 years ago

Note on Estate., created by Sahar Athari on 05/19/2014.

Estate.