4.04 Decedent's Estates

In 2007, legislation was passed that clarifies and expands the ability of an estate to carry on a business with limited or significant court oversight. Further, it allows the court to approve in advance the ability of the estate to sell real property. The Real Estate, Probate and Trust Law section of the State bar of Texas assisted in reworking this bill. Effective September 1, 2007.

Changes/actions required: While Texas law has for some time allowed an estate to remain open and run a farm, ranch, factory or other business, the personal representative has not had the authority to sell real property belonging to the estate. This bill amends Section 238 of the Probate Code (now Estate Code § 351.201) to allow the representative to obtain consent from the court to sell certain properties in the ordinary course of business without following Section 333 of the Probate Code (now Estate Code §356.051) . All sales of all other property should follow Probate Code section 333 (now Estate Code §356.051) and have express court order.

The 2011 Texas Legislature passed a major overhaul of the Texas Probate Code. HB 2759 is Effective January 1, 2014.   See Bulletin TX2011008 for analysis of the changes. 

This bill makes nonsubstantive revisions to Estates Code, which replaces the Probate Code January 1, 2014. Chapter 751 concerns Durable Powers of Attorney, and Chapter 752 concerns Statutory Durable Powers of Attorney. Chapters 1001-1356 concern guardianships.

The Estates Code includes the substance of the provisions in the current Texas Probate Code. The 81st Legislature enacted Title 1 and Subtitles A through M, Title 2, Estates Code, representing a nonsubstantive revision of the provisions of the Texas Probate Code applicable to decedents' estates, and redesignated without revising the remaining provisions of the Texas Probate Code as Subtitles X, Y, and Z, Title 2, Estates Code, and Title 25, Estates Code. House Bill 2759 proposes Subtitle P, Title 2, Estates Code, as a revision of the durable powers of attorney statutes and Title 3, Estates Code, as a revision of the statutes relating to guardianships, guardianship-related proceedings, and alternatives to guardianships. Provisions relating to scope, jurisdiction, and venue for guardianship proceedings, and a provision relating to payment for certain professional services in guardianship proceedings, have been redesignated without revision as Subtitles Y and Z of Title 3, Estates Code. Subtitle P, Title 2, and the revised provisions in Title 3, Estates Code, are divided into chapters. Each proposed chapter is divided into subchapters, if appropriate, and is further divided into sections. Sections are numbered decimally, and the number to the left of the decimal point is the same as the chapter number. Gaps in chapter and section numbering are for future expansion.

4.04.1

Basic Concepts

Vesting of Title (Estates Code §§ 101.001, 101.003, 101.005, 101.051)

  • Whether property passes under a will or by descent and distribution, the title vests immediately upon the death of the owner.
  • Such title is subject to the payment of debts including delinquent child support and the right of the executor or administrator to the possession of the estate as it existed at the death of the testator or intestate and to hold and dispose of such estate in accordance with the law.

    Generally, we believe that an estate open for about one year gives the executor with an express power of sale the right to sell estate property.  However, after two years after the estate is opened, we require proof that debts are still being paid or we consider title to be in the heirs.  See Texas Estates Code §§101.001, 101.003, 101.005, 101.051, 122, and 255.001-255.002.

Distinction Between Testacy and Intestacy

  • When a person dies leaving a will he dies testate.
  • Upon a testate death, the deceased person's property passes in accordance with the terms of the will.
  • If a person dies and does not leave a will he dies intestate.
  • Upon an intestate death the deceased person's property passes according to the statutory laws of descent and distribution. For persons dying after September 1, 1993, the law passes title to community property to the surviving spouse, if all children are children of the marriage. Before that date, children inherit.  See Texas Estates Code §201.003.

Presumptions

  • Texas law presumes that a decedent leaves an heir or heirs.
  • There is no presumption that a will exists.
  • A devisee under a will is required to establish his right to take under the will.
  • An heir is not required to prove that the deceased was intestate before taking as an heir.

Law Controlling

  • Conflicts of Laws: The laws of Texas govern as to inheritance of lands located in Texas, no matter where the parties lived and died.
  • Determination of Heirs: Who the heirs are is controlled by the law in force at the time of the death of the ancestor.

Administration of the Estate

  • If there is no will the probate court must determine whether or not there is a necessity for administration.
  • If there is a will the court must probate it and grant letters testamentary.
  • Generally speaking, in order for there to be a necessity for administration, there must be property and debts.
  • The jurisdiction of the probate court continues until administration is closed and the representative discharged.

Underwriting Requirements - General

Testacy, Intestacy and Debts

If the death of the decedent occurred within four years of the date of examination, require proof that the decedent died with or without a will.

Determine whether or not an administration is pending.

If there is no administration pending the existence of debts should be determined since there is the possibility of administration being opened or a need for administration to be opened.  NOTE Also, that foreclosure of a Deed of Trust, the grantor of which has died, may be set aside in an administration.  This applies to a foreclosure within 4 years after the date of death.

Remember that although the legal title to the property vests in the heirs upon death, it does so subject to the payment of debts. (Estates Code §§101.001, 101.003, 101.005, 101.051).

If there is a sale by the heirs, title passes subject to such debts, and administration could be subsequently opened within the four year period, and the property subjected to the payment of debts.

If there is an administration pending but there is no further necessity for it, require that it be closed to forestall any possibility of a sale to pay alleged debts.

Federal Estate Taxes

  • The federal estate tax is a tax assessed against the assets of a dead person's estate.

    The lien attaches as of the date of death to all property in the estate and continues generally for ten years thereafter unless the tax is paid.

    It is a secret lien; there is no requirement that a notice of lien be recorded.

 

Unified Credit

A credit is an amount that eliminates or reduces tax. The unified credit applies to both the gift tax and the estate tax. You must subtract the unified credit from any gift tax that you owe. Any unified credit you use against your gift tax in one year reduces the amount of credit that you can use against your gift tax in a later year. The total amount used against your gift tax reduces the credit available to use against your estate tax.

In 2001, the unified credit was $220,550, which eliminated taxes on a total of $675,000 (applicable exclusion amount) of taxable gifts and taxable estate. These amounts were increased for gifts made, and for estates of decedents dying, after 2001. The following shows the unified credit and the applicable exclusion amount for the calendar year in which a gift is made or a decedent dies.

For Gift Tax Purposes in years 2002 and 2003 the Unified Credit is $345,800, the Applicable Exclusion Amount is $1,000,000. For Estate Tax Purposes in years 2002 and 2003 the Unified Credit is $345,800 and the Applicable Exclusion Amount is $1,000,000.

For Gift Tax Purposes in years 2004 and 2005 the Unified Credit is $345,800, the Applicable Exclusion Amount is $1,000,000. For Estate Tax Purposes in years 2004 and 2005 the Unified Credit is $555,800 and the Applicable Exclusion Amount is $1,500,000.

For Gift Tax Purposes in years 2006, 2007 and 2008 the Unified Credit is $345,800, the Applicable Exclusion Amount is $1,000,000. For Estate Tax Purposes in years 2006, 2007 and 2008 the Unified Credit is $780,800 and the Applicable Exclusion Amount is $2,000,000.

For Gift Tax Purposes in year 2009 the Unified Credit is $345,800, the Applicable Exclusion Amount is $1,000,000. For Estate Tax Purposes in year 2009 the Unified Credit is $1,455,800 and the Applicable Exclusion Amount is $3,500,000.

State Inheritance Taxes (Vernon's Texas Codes Annotated [Tax] Secs. 211.001 to 211.259).

  • The present state inheritance tax on residents is equal to the amount of the federal credit as calculated under the Internal Revenue Code (26 U.S.C.A. Sec. 2101, et seq.) upon transfers at death of the property of residents.

    A tax is also imposed on the transfer at death of the property located in Texas belonging to nonresidents and aliens.

    All taxes due to the state are secured by a lien on all of the person's property that is subject to execution. The lien for taxes attaches to all of the property of a person (estate) liable for the taxes. (Tax Code Sec. 113.001).
  • Payment of the inheritance tax on a decedent's estate is due nine months after the date of the decedent's death. (Tax Code Sec. 211.102). This due date is subject to being extended or postponed. (Tax Code Sec. 211.103).
  • The personal representative is required to make a report to the Texas Comptroller on the value of the decedent's estate as fixed and determined by the federal government within 30 days after receiving notice of the final federal assessment and determination of the value of the taxable estate for the purpose of federal estate taxes. (Tax Code Sec. 211.104).
  • In the event no federal estate tax is due and no federal estate tax return must be filed, the filing of a Texas tax return is not required. (Tax Code Sec. 211.106).
  • The state comptroller shall issue a receipt for payment of inheritance tax. This receipt shall be delivered to the person making the payment or to the person's attorney of record. (Tax Code Sec. 211.107).
  • At any time within three (3) years after a determination has become due and payable, or within three (3) years after the last recording of a lien, the comptroller may bring an action to collect the amount delinquent, together with penalties and interest. (Tax Code Sec. 111.202).

    Inheritance taxes must be paid and a receipt obtained before title insurance may be provided without exception to said taxes.

Underwriting Standard: Federal Estate Tax and State Inheritance Tax

a) Whenever you are asked to insure property which is part of a decedent's estate or being sold by a decedent's estate, you should include exceptions substantially as follows:

Any lien for federal estate tax for the estate of _______________________, deceased.

Any lien for inheritance tax in favor of the State of Texas for the estate of ______________________, deceased.

b) The exception for federal estate taxes may be removed if a certificate of release or certificate of discharge has been issued by the IRS and filed of record.

c) The exception for Texas inheritance taxes may be removed if a receipt for payment has been issued by the Texas Comptroller and filed of record.

d) Some estates are not liable for any estate tax or inheritance tax. Occasionally, estate property will be sold before the estate or inheritance is paid. In either case, please contact Company counsel to determine the company's requirements if you are asked to remove the estate tax or inheritance tax exceptions before they are paid, released, discharged, or a closing letter is received from the IRS.

See also Texas Bulletin TX2015004 – LEGISLATIVE UPDATE 2015 Texas Disclaimer Act

4.04.2

Intestate Succession - General

Forms: TX Affidavit of Heirship 1 .

Property That May Descend

  • Each and every title to every estate of inheritance, real, personal or mixed, owned by the intestate decedent passes to the heir or heirs. (Estates Code §§201.001-201.002).
  • This may include an interest in partnership property, an estate in co-tenancy, a right to a patent, or any other title or estate whether assignable or not during life and whether exempt or not from claims of creditors. Included is property acquired by limitation.

Persons Who May Take

  • The potential heirs in the line of statutory designation are children and their descendants, father and mother, brothers and sisters, and their descendants, grandfather and grandmother and their descendants and husband and wife. (Estates Code §§102.001, 201, 353.001).
  • If a person is a descendant of one who, if alive, would be an heir, and said person is made an heir by law then said person is an heir in his own right and not as an heir of the one of whom he is a descendant.
  • The status of persons as heirs is fixed as of the date of the death of the intestate from whom they inherit. This is because the title vests as of the date of death.

Persons Who Take Upon Intestacy

  • Intestate leaving no spouse
    • Decedent's children or their descendants; or if none, then
    • Decedent's father and mother equally; or if only one parent survives, then

Half to surviving parent;

Half to brothers and sisters and their descendants;

If no surviving brothers, sisters or their descendants, then all to surviving parent.

  •  
    • If neither parent survives, then to brothers, sisters, and their descendants.
    • If none of the above survive, then the estate is divided into two shares, one for paternal kindred and one for maternal kindred, as follows:

Equal shares to the grandfather and grandmother; or if only one survives, then

Half (one share) to surviving grandparent.

Half (one share) to descendants of deceased grandparent.

If no descendants, all to surviving grandparent.

  •  
    • If neither grandparent survives, all to their descendants. (Estates Code §201.001).

 

  • Intestate leaving spouse: intestate's separate real property only.
    • If children or their descendants also survive:

Estate for life in 1/3 to surviving spouse;

Remainder to children or their descendants and outright ownership of the other two-thirds to children or their descendants. (Estates Code §201.002).

  •  
    • If no children or their descendants survive:

One-half (1/2) to surviving spouse; one-half (1/2) per rules of descent and distribution; provided

If decedent has neither surviving father nor mother nor brothers or sisters or their descendants, then all to surviving spouse. (Estates Code §201.002).

  • Intestate leaving spouse: intestate's separate personal property only.
    • If children or their descendants also survive:

One-third (1/3) to surviving spouse;

Two-thirds (2/3) to children and their descendants. (Estates Code §201.002).

  • Intestate leaving spouse: Community Estate. (Estates Code §201.003).
    • If no children or their descendants survive, then all to surviving spouse.
    • Prior to September 1, 1993: If children or their descendants survive then
  •  
    • If no children or their descendants survive, then all to the surviving spouse. (Estates Code §201.002).

1/2 of community estate to surviving spouse (the 1/2 the spouse already owns); and

1/2 to children and their descendants.

  •  
    • Effective September 1, 1993: If children or their descendant's survive:

If all surviving children and descendants of the deceased spouse are also children or descendants of the surviving spouse, then all to the surviving spouse.

If a surviving child or other descendant of the deceased spouse is not a child or descendant of the surviving spouse, then

One-half (1/2) of community estate is retained by the surviving spouse (the (1/2) the spouse already owns); and

One-half (1/2) to children or descendants of the deceased spouse.

Inheritance Rights of Children

  • Maternal Inheritance

    A child is the child of his biological or adopted mother so that the child and the child's issue shall inherit from the mother and from the maternal kindred.
  • Paternal Inheritance

    A child is the child of his biological father if the child is born under circumstances described by Section 12.02, Family Code, or is adjudicated to be the child of the father by court decree, or was adopted by his father, or if the father executed a statement of paternity as provided by law.

    A person claiming to be a biological child of a decedent who is not otherwise presumed to be a child of the decedent, or claiming an inheritance through a biological child of the decedent, who is not otherwise presumed to be a child of the decedent, may petition to the probate court for a determination of right and inheritance.

    If the court finds by clear and convincing evidence that the purported father was the biological father of the child, the child is treated as any other child of the decedent.
  • Reliance on Heirship Affidavit

    A person who purchases for valuable consideration any interest in real property of the heirs of a decedent,
    • who in good faith relies on the declarations and affidavit of heirship that does not include a child who at the time of the sale or contract of sale of the property is not a presumed child of the decedent and has not under a final court decree or judgment been found to be entitled to treatment under this subsection as a child of the decedent, and
    • who is without knowledge of the claim of that child,
    • acquires good title to the interest that the child would have received, as purchaser, in the absence of any claim of the child not included in the affidavit.
    • Texas has adopted a statutory form of the Affidavit of Heirship. Another form may be used.

Underwriting Standard: Be certain to act upon the information contained in the Affidavit of Heirship.

  • Annulled Marriages - Effect

The issue of marriages declared void or voided by annulment shall be treated in the same manner as issue of a valid marriage. (Estates Code §§102.001, 201.051-201.053, 201.055, 353.001).

Half-Blood Heirs

  • Collateral kindred of the half-blood inherit only half as much as collateral kindred of the full blood. (Estates Code §§201.056-201.062). This means that each individual related by half-blood gets only half as much as an heir in the same degree and being of whole blood.
  • If all are of the half-blood they share equally. (Estates Code §§201.056-201.062).

Heirs Apparent

The status of the heirs is determined at the instant of death. One may be an heir apparent. However, such heir apparent does not have a vested right in the expectancy. If the heir apparent dies, the expectancy as such does not descend, rather, its heirs become direct heirs by substitution in accordance with the statutes of descent and distribution and take per stirpes.

Per Capita and Per Stirpes

When the intestate's children, or brothers, sisters, uncles, or aunts or any other relative standing in the first or same degree alone come into distribution upon intestacy, they shall take per capita, namely, by persons. If a part are living and a part are dead, the descendants of the deceased person take per stirpes. (Estates Code §201.101).

Therefore, if the intestate is survived only by nephews and nieces of deceased brothers and sisters, such nieces and nephews take per capita.

Murder of the Decedent by an Heir

  • No conviction shall work corruption of blood or forfeiture of estate. (Const. Art. I Section 21). (Estates Code §§201.058, 201.059, 201.061).
  • Even if an heir should murder the ancestor he will inherit the estate. However, in such case, the estate is taken subject to a constructive trust in favor of those heirs other than the one committing the murder. In other words, although the legal title passes in accordance with the statutes of descent and distribution, the actual beneficial title is in the other heirs and the murderer may be compelled by court order to convey the legal title to them.
  • Furthermore, if one of the heirs in whose favor the trust is imposed should die leaving the murderer as his heir a further trust is imposed on the murderer's share.

Suicides

The estates of those who destroy their own lives shall descend or vest as in case of natural death. (Estates Code §§201.058, 201.059, 201.061).

Aliens

No person is disqualified to take as an heir because he or a person through whom he claims is or has been an alien. (Estates Code §201.060).

Vesting of the Inheritance and Burdens Thereon

  • Effect of Recordation Statutes

There is no actual transfer of title under descent and distribution as contemplated by the recordation statutes. In other words, the passage of such title is not reflected by the deed records nor may it be reflected in such manner as is provided for by the recordation statutes applicable to purchasers for value and creditors. (Property Code Sec. 13.001). Title Examiners generally determine heirship rights either by examination of probate records or affidavits of facts which have been filed either in the deed records or other official records.

  • The Nature of the Title Which Passes

The title does not change upon passage. It goes to the heir exactly as it existed in the ancestor. For example, if the property is community property in the husband's name alone, the wife's interest is an equity and it passes to her heirs as an equity.

  • Matters to Which Title is Subject
    • The title passes subject to existing liens, equities and debts, including delinquent child support, and to the expenses of administration and the statutory exemptions and allowances to survivors. (Estates Code §§101.001, 101.003, 101.005, 101.051, 122, 255.001-255.002).
    • The community estate descends subject to the debts against it. (Estates Code §201.003).
  • Co-tenancy
    • Generally speaking, heirs occupy the status of co-tenants.
    • Children of a deceased husband are co-tenants with the surviving wife as to community property.
    • This brings into operation the strict rule of actual notice of a claim of adverse possession where one heir purports to claim adversely to another.
    •  However, if one takes a life estate and the other a remainder, the relationship of co-tenancy does not exist. (Estates Code §201.002).

      See Bulletin 39 for discussion of owelty liens

  • Requirement of Survival by 120 Hours
    • Survival by Heirs

      A person who fails to survive a decedent by 120 hours, is deemed to have pre-deceased the decedent. However, this does not apply where such application would result in an escheat of the estate. (Esatates Code §§121.051-121.053).
    • Disposal of Community Property

      In case of death of a husband and wife where neither survives the other by 120 hours, one-half passes as if the husband had survived and one-half as if the wife had survived. (Estates Code §121.151).

Prior Disposition of Property

The right to inherit may be lost by prior disposition of property through conveyance or by will. It is not an actual right until it comes into operation by virtue of the death of the intestate.

Disclaimer or Renunciation of Interest Receivable from a Decedent

  • Failure to comply will render a disclaimer ineffective except as an assignment of such property to those who would have received the property had the person attempting the disclaimer died prior to the decedent.
  • No disclaimer shall be effective after the acceptance of the property by the heir. Acceptance means taking possession or exercising dominion and control of such property as an heir. (Estates Code §§101.001, 101.003, 101.005, 101.051, 122, 255.001-255.002).
  • This procedure also applies to beneficiaries of a will.
  • Such disclaimers are not subject to claims of any creditor of the disclaimant after September 1, 1993.
  • In general, a written memorandum of disclaimer must be filed not later than 9 months after the death of a decedent.
  •  
    • Any person, or
    • The personal representative of an incompetent, deceased, unborn or unascertained, or minor person, with prior court approval, or
    • Any independent executor of a deceased person, without prior court approval,
    • Who may be entitled to receive any property as an heir and who intends to disclaim the whole or any part of such property shall cause a disclaimer to be made as provided by the Estates Code.

Assignment of Property Received from a Decedent

  • A person entitled to receive property or an interest in property from a decedent by inheritance who does not disclaim the property under Estates Code §§101.001, 101.003, 101.005, 101.051, 122, and 255.001-255.002 may assign the property or interest in property to any person.
  • The assignment may be filed as provided for the filing of a disclaimer which requires the service of notice.
  • Failure to comply with the provisions of Estates Code §§101.001, 101.003, 101.005, 101.051, 122, and 255.001-255.002 does not affect the assignment.
  • Such an assignment is a gift to the assignee and is not a disclaimer or renunciation under Estates Code §§101.001, 101.003, 101.005, 101.051, 122, and 255.001-255.002. (Estates Code §§122.201-122.206).

Underwriting Standard: The issuing company must be satisfied that such assignment was not executed in fraud of creditors. Evidence of possible fraud, but not necessarily conclusive, would include filed Abstracts of Judgments, known pending litigation against assigning party, or federal or state tax liens.

Adopted Child - Inheritance By and From

  • An adopted child is regarded as a child of the parent or parents by adoption, and such adopted child and child's descendants inherit from and through the parent or parents by adoption and such parents' kin as if such child were the natural legitimate child of such parents by adoption.
  • Likewise, the parents by adoption inherit from and through an adopted child the same as if such child was the natural legitimate child of such parents by adoption.
  • The natural parent or parents of an adopted child do not inherit from and through the child.
  • An adopted child shall inherit from and through the natural parents or parent.
  • Nothing in the Estates Code diminishes the right of a parent by adoption from disposing of property by will. (Estates Code §201.054).

Title Insurance Where Intestate Succession Appears in Chain

  • Generally, the Deed Records should reflect succession to ownership which in the event of intestate succession may be accomplished by a proceeding to declare heirship under Estates Code §§202-204. (See Small Estates, Section 4.04.6).
  • In some instances, the title insurance company may accept an affidavit of heirship from disinterested parties in lieu of said proceeding.

 

 

 

 

4.04.3

Joint Tenancies - Written Agreement Required

  • Where two or more persons hold an interest in property jointly and one joint owner dies before severance, the interest in said joint estate shall not survive to the remaining joint owner or joint owners, but shall pass by intestacy or will from the deceased joint owner as if the decedent's interest had been severed.
  • However, by an agreement in writing of joint owners of property, the interest of any joint owner who dies may be made to survive to the surviving joint owner or joint owners, but no such agreement shall be inferred from the mere fact that the property is held in joint ownership. (Estates Code §§101.002, 111.001).

Underwriting Standard: The policy issuing company should consider the rights of any pre-existing creditors who may be defrauded and rights of bona fide purchasers and general creditors in the event the agreement was not duly recorded.

  • Estates Code §§101.002 and 111.001 does not apply to agreements between spouses regarding rights of survivorship in community property. (See Proceeding to Declare Heirship, Section 4.04.5).

4.04.4

Right of Survivorship in Community Property (Estates Code §112.051)

  • Article 16, Sec. 15 of the Texas Constitution was amended on November 3, 1987 to provide that spouses may agree in writing that all or part of their community property become the property of the surviving spouse on the death of a spouse.
  • However, such an agreement executed after the date of the amendment does not alter the character of the property which remains community property until death of one of the spouses.
  • Requirements: To be valid, a separate agreement must be in writing, apart from the deed, which is signed by both spouses and include any of the following phrases:
    • with right of survivorship;
    • will become the property of the survivor;
    • will vest in and belong to the surviving spouse; or
    • shall pass to the surviving spouse.

      An agreement that otherwise meets the requirements of the law, however, shall be effective without including any of those phrases.
  • Transfers at death resulting from such agreement are effective by reason of the agreement involved and are not testamentary transfers.
  • Such agreement may be mutually revoked in writing or by one spouse by a written instrument signed and delivered to the other.
  • The agreement may also be revoked with respect to specific property by the disposition of such property by one or both spouses if such disposition is not inconsistent with specific terms of the agreement and applicable law. (Estates Code §§112.054, 112.151, 112.152).
  • On death of a spouse, the surviving spouse or personal representative may apply to the court for an order stating that the agreement satisfies the requirements of the Estates Code and is effective to create a right of survivorship in community property.
  • If an order adjudicating such an agreement valid is obtained, the order shall constitute sufficient authority to all persons owing money, having custody of any property, or acting as registrar or transfer agent of any evidence of interest, indebtedness, property, or right, that is subject to the provisions of the agreement, and to persons purchasing from or otherwise dealing with the surviving spouse for payment or transfer to the surviving spouse, and the surviving spouse may enforce his or her right to such payment or transfer. (Estates Code §§112.053, 112.101-112.105).
  • Adjudicated original agreements are deposited in the office of the county clerk of the county in which it was adjudicated. (Estates Code §112.106).
  • The Code provides for protection of persons or entities acting without knowledge or notice of the agreement and when they purchase real property more than 6 months after the decedent's death. (Estates Code §§112.201-112.208).

Underwriting Standard: A requirement should be made to (a) obtain an order of the court that the agreement is valid and (b) to file such order in the Deed Records of the county in which the land is situated. Any deviation from this procedure requires approval of Company counsel.

 

 

 

 

 

4.04.5

Proceeding to Declare Heirship

When and Where Instituted

When a person dies intestate owning or entitled to real or personal property in Texas and

  • there is no administration, or
  • if a will has been probated, or
  • an administration taken out but property omitted from such will or judicial proceeding, or
  • no final disposition has been made in the administration, then
  • the court where a proceeding was last pending or the court where the property is situated may determine and declare in the manner provided by the Code who are the heirs and only heirs of a decedent and their respective shares and interests. (Estates Code §§202.001, 202.002, 202.006).
  • Such proceedings may be instituted by a person claiming an interest in the estate of such decedent. (Estates Code §§202.004, 202.005, 202.007, 202.008).

Judgment Effect

  • In such a proceeding, the judgment of the court shall declare the names and places of residence of the heirs of the decedent, and their respective shares and interest in the real and personal property of such decedent. (Estates Code §202.201).
  • Although the judgment may be later modified, set aside, or nullified, it shall be conclusive in any suit between any heir omitted from the judgment and a bona fide purchaser for value who has purchased real or personal property after entry of the judgment without actual notice of the claim of the omitted heir.
  • Similarly, any person who has delivered funds or property of the decedent to the person declared to be heirs in the judgment, or has engaged in any other transaction with them, in good faith, after entry of such judgment, shall not be liable therefore to any person. (Estates Code §§202.202-202.205).

Filing Certified Copy of Judgment in Deed Records

A certified copy of such judgment may be filed for record in the office of the county clerk of the county in which any of the real property described in such judgment is situated, and recorded in the Deed Records of such county, and indexed in the name of such decedent as grantor and of the heir's name in such judgments as grantor and of the heir's name in such judgments as grantees and from such filing, such judgment shall constitute constructive notice of the facts set forth therein. (Estates Code §202.206).

Underwriting Standard: For title insurance purposes, the issuing company should rely on judgments declaring heirship only after the time to perfect an appeal has expired and the judgment becomes final.

 

 

 

 

4.04.6

Small Estates (Estates Code §205)

Distributees of a small estate, when

  • the value excluding homestead and exempt property is less than $50,000,
  • no petition for appointment of personal representative is pending or granted, and
  • at least 30 days have lapsed since the death of the decedent,
  • may file with the clerk an affidavit, of such facts including a list of assets and liabilities, the names and addresses of the distributees, and all rights which they may have.

In addition to the distributees, two disinterested witnesses must join in the affidavit.

The affidavit may be relied upon by a person holding a portion of the estate as authority to transfer such property to the distributees.

  • For the estate of a decedent who dies on or after September 1, 1993, title to a homestead that is the only real property of a decedent's estate may be transferred pursuant to an affidavit that meets the requirements of Section 205.
  • In this case, the affidavit must be recorded in the deed records.
  • A bona fide purchaser may rely upon the affidavit.

 

 

 

 

4.04.7

Application for Order that No Administration is Necessary (Estates Code §451.001)

  • If the value of the entire assets of an estate excluding homestead and exempt property does not exceed the amount to which the surviving spouse and minor children of the decedent are entitled as family allowance, an application may be filed requesting the court to make a family allowance and to enter an order that no administration is necessary.
  • The application shall state the names of the heirs or devisees, a list of creditors together with the amounts claimed and a description of all real and personal property belonging to the estate together with the estimated value thereof according to the best knowledge and information of applicant, liens and encumbrances thereon, with a request for a family allowance.
  • The court shall grant the family allowance and if the entire assets in the estate, excluding homestead and exempt property, are thereby exhausted, shall order that no administration be had of the estate and shall assign to the surviving spouse and minor children the whole of the estate in the same manner and with the same effect as provided in the Estates Code for the making of family allowances to surviving spouse and minor children.

Underwriting Standard: A policy issuing company may rely upon such an order if the appeal period has expired.

4.04.8

Powers of Surviving Spouse When No Administration Is Pending (Estates Code §§453.003-453.004)

  • When no one has qualified as executor or administrator of the estate of a deceased spouse, the surviving spouse, whether the husband or wife, as the surviving partner of the marital partnership, without qualifying as a community administrator as provided in the Estates Code, has power to sue and be sued for the recovery of community property; to sell, mortgage, lease and otherwise dispose of community property for the purpose of paying community debts; to collect claims due to the community estate; and has such other powers as shall be necessary to preserve the community property, discharge community obligations, and wind up community affairs.

Underwriting Standard: A policy issuing company should obtain the approval of a Texas Underwriter before relying on this procedure.

4.04.9

Community Administration (Probate Code Sects. 161, 166, 167)

Section intentionally deleted.

 

4.04.10

Accounting and Distribution by Community Survivor (Estates Code §§453.006-453.008)

  • The survivor, whether qualified as community administrator or not, shall keep a fair and full account and statement of all community debts and expenses paid and of the disposition made of the community property; and, upon final partition of the estate, shall deliver to the heirs, devisees or legatees of the deceased spouse their interest in such estate, and the increase and profits of the same, after deducting therefrom the portion of the community debts chargeable thereto, unavoidable losses, necessary and reasonable expenses, and a reasonable commission for the management of the same.
  • Neither the survivor nor his bondsman shall be liable for losses sustained by the estate, except when the survivor has been guilty of gross negligence or bad faith.

4.04.11

Distribution of Powers Among Personal Representatives and Surviving Spouse (Estates Code § 453.009)

  • A qualified community administrator is entitled to administer the entire community estate, including the part which was by law under the management of the deceased spouse during the continuance of the marriage.
  • If a community administrator has not qualified, the executor of the estate of the deceased spouse is authorized to administer the separate property of the deceased spouse and the community property which was by law under the management of the deceased spouse during the continuance of the marriage and all of the community property that was by law under the joint control of the spouses during the continuance of the marriage.
  • The surviving spouse is entitled to retain possession and control of all community property which was legally under the sole management of the surviving spouse during the continuance of the marriage.

 

4.04.12

Testate Succession - General

Introduction

In order for a will to become a part of the title, evidencing the passage of such title, it is necessary that it be proved that it was executed in accordance with legal formalities. The Estates Code provides that, except as to foreign wills, no will shall be effectual for the purpose of proving title to, or the right to the possession of, any real or personal property disposed of by the will, until such will has been admitted to probate. Probate in this sense simply means proof. (Estates Code §256.001).

Court Jurisdiction

  • The probate or county court has jurisdiction only to probate the will, which of course, includes the determination that the instrument is a will.
  • The District Court has exclusive jurisdiction of a suit to construe the will once it has been probated.

Duty of Custodian of Will

When a person dies, the person having custody of his will is supposed to deliver it to the clerk of the court having jurisdiction of the estate. If he does not do so, the county judge may cause him to be cited to show cause why he has not done so. Such person may be arrested and imprisoned until the will is delivered. (Estates Code §§252.201-252.204).

Children Born or Adopted After Will Executed (Pretermitted Children)

  • Whenever a child of a testator is born or adopted after the execution of the testator's will, and
  • Said child is neither provided for in the will nor in any way mentioned in the will, then
  • Said child shall succeed to a portion of the testator's estate; the actual share depending on whether the testator had children living at time of execution of the will; and if provision is made in the testator's will for any children. (Estates Code §§255.051-255.056).

Underwriting Standard: The policy issuing agent should contact a Texas Underwriter before committing to insure a transaction involving pretermitted children.

Prior Death of Beneficiary

  • When the testator leaves a part of his estate to a child or other descendant of the testator, and such devisee or legatee dies during the testator's life leaving children or descendants who survive the testator, the devise or legacy does not lapse.
  • Such estate so devised or bequeathed vests in the children or descendants of the devisee or legatee in the same manner as if the deceased devisee or legatee had survived the testator and died intestate. (Estates Code §§255.151-255.154).

Divorce - Effect on Will

  • If the testator is divorced after making the will, all provisions in the will in favor of the testator's former spouse or with respect to the estate or persons of the testator's children, shall be null and void and of no effect. (Estates Code §§123.001-123.002, 253.001).
  •  A person who is divorced from a decedent or whose marriage to the decedent has been annulled is not a surviving spouse unless by virtue of a subsequent marriage the person is married to the decedent at his death.

    A provision in a will leaving property or money to the attorney who drew the will or his immediate family or employees or the employees' immediate family is void. Amended §254.003, Estates Code,

    New §§123.052-123.053, Estates Code, provides that the dissolution of marriage revokes trust provisions nominating the former spouse to serve in a fiduciary or representative capacity. New §§123.054-123.055, Estates Code, provides that a bona fide purchaser of property from a divorced individual's former spouse or a person who receives from a divorced former spouse any property in partial or full satisfaction of an enforceable obligation is not required to return the property and is not liable for the value of the property.

Time in Which to Probate Will

  • For the court to have authority to grant letters testamentary, a will should be probated within four years from date of testator's death. The time period for probate may be extended upon showing of good cause.
  • Within four years or thereafter when proof is shown that the party applying for such probate was not in default in failing to present the will for probate, the will may be probated as a muniment of title without letters being issued or administration thereon. (Estates Codes §§256.003, 257.051-257.053).
  • If real property is purchased from the heirs of the descendant more than four years from the date of the death of descendant, and the purchaser has no knowledge of the existence of a will, the purchaser will have good title to the interest purchased against claims of devisees or legatees under any will which may thereafter be offered for probate. (Estates Code §256.003).

Action of Court on Probated Will

  • Upon completion of a hearing, if the court is satisfied that the will should be admitted to probate, an order to that effect will be entered. (Estates Code §256.201).
  • On qualification of the personal representative, letters testamentary shall issue. (Estates Code §§306.004-306.005).

Period for Contesting Probated Will

  • After a will has been admitted to probate, any interested person may institute a suit to contest the validity thereof.
  • Said suit must be filed within two years after the will is admitted to probate, except that any interested person may institute suit to cancel a will for forgery or other fraud within two years after the discovery of such forgery or fraud.
  • Incapacitated persons and minors shall have two years after the removal of their respective disabilities within which to institute such a contest. (Estates Code §256.204).

 

4.04.13

Independent Administration

Establishment (Estates Code §§351.351, 401, 402)

An independent administration may be established in any one of the following situations:

  • Will; Independent Administration

    Any person capable of making a will may provide in his will that no other action shall be had in the probate or county court in relation to the settlement of the person's estate other than the probating and recording of the will, and the return of an inventory, appraisement and list of claims of the estate.
  • Will; Not Independent Administration; Distributee's Agree
    • Where the will names an executor but does not provide for independent administration of decedent's estate as reflected above, all of the distributees of the decedent may agree on the advisability of having an independent administration and collectively designate in the application for probate of the decedent's will the executor named in the will to serve as independent executor and request in the application that no other action shall be had in relation to the settlement of the estate other than the probating, recording of the decedent's will, and return of the inventory, appraisement and list of claims.
    • The court shall then enter an order granting an independent administration unless it finds it would not be in the best interests of the estate to do so.
  • Will; No Executor or Deceased or Disqualified; Distributees Agree
    • Where no executor is named in the will or where the executor is deceased or disqualified to serve as executor or refuses to serve, all the distributees of decedent may collectively designate in the application for probate a qualified person to serve as independent administrator and request that no action be had in relation to the settlement of the estate other than the probating and recording of the will and return of the inventory, appraisement and list of claims.
    • The court will grant orders of independent administration appointing such person as the independent administrator unless the court finds that it would not be in the best interests of the estate to do so.
  • Intestacy, Distributees Agree
    • All of the distributees of the decedent dying intestate may agree on the advisability of having an independent administration and collectively designate in the application for administration a qualified person to serve as independent administrator and request in the application that no action be had in the court in relation to the settlement of the estate other than the return of an inventory, appraisement and list of claims of the estate.
    • The court shall enter an order granting an independent administration and appointing such person unless the court finds that it would not be in the best interest to do so. (Estates Code §§351.351, 401, 402).

Notice, Evidence

  • The statute provides for proper notice to all parties prior to an independent administrator being appointed to serve in any intestate administration.
  • Clear and convincing evidence must be presented to the court that the distributees constitute all of the decedent's heirs. (Estates Code §§351.351, 401, 402).

Powers and Duties of Independent Executors and Administrators

  • Order of Probate Court

    Any act that an ordinary executor or administrator can perform under an order of the probate court may be done by an independent executor without such order.
  • Claims, Exempt Property, Allowances

    An independent executor shall receive, classify, allow, and pay or reject claims against the estate in the same order or priority, classification, and proration prescribed in the Estates Code and set aside and deliver to those entitled thereto exempt property and allowances for support, and in lieu of homestead, as prescribed in the Estates Code to the same extent and result as if his actions had been accomplished in, and under orders of the court. (Estates Code §§403.001-403.0585).
  • Lawsuits

    An independent executor may be sued by a person having a claim or debt against the estate. (Estates  Code §403.059).
  • Power of Sale
    • If the will empowers the independent executor to sell, he may exercise such power so long as the administration of the estate lasts.
    • This power does not depend on the existence of debts but arises from the terms of the will.
    • If there are debts, and the administration is pending, he has power to sell to pay the debts, even though the will does not expressly authorize a sale.
    • If there are no debts and no express power of sale in the will, or a power of sale to pay debts only and there are no debts, then there is no power of sale in the independent executor. In these cases, the independent executor is not authorized to sell property.

Closing of Independent Administration

  • Affidavit
    • Generally, independent administrations are not closed.
    • The Estates Code does, however, provide that the independent administration may be closed by affidavit when all debts known to exist against the estate have been paid and distribution of the assets has been completed.
    • The filing of such affidavit shall terminate the independent administration and the power and authority of the independent executor but shall not relieve the independent executor from liability from any mismanagement of the estate or from liability or for any false statements contained in the affidavit. Thereupon, persons dealing with properties of the estate shall deal directly with the distributees of the estate. (Estates Code 405.002, 405.004-405.007).
  • Distributee Application

    A distributee may also file an application to close the administration and, after citation upon the independent executor, and upon hearing, the court may enter an order closing the administration and terminating the power of the independent executor to act as such. (Estates Code §405.009).

 

 

 

 

 

 

 

4.04.14

Informal Probate of a Will (Probate Code Secs. 501-524)

Section intentionally deleted.

4.04.15

Probate of Wills as Muniments of Title (Estates Code §§257.051-257.053)

A probate may admit a will to probate as a muniment of title if the court is satisfied:

  • A will should be admitted to probate, and
  • That there are no unpaid debts owing by the estate of the testator, excluding secured liens on real estate, or
  • That there is no necessity for administration upon such estate.

The order admitting a will to probate as a muniment of title shall constitute authority to all persons -

  • Owing any money to the decedent's estate,
  • Having custody of any property, and
  • Purchasing from or otherwise dealing with the estate

    for payment or transfer, without liability to the persons described in such will as entitled to receive the particular asset without administration.

Persons entitled to property under the provisions of such will shall be entitled to deal with the properties to which they are so entitled in the same manner as if the record of title thereof were vested in their names.

Unless waived or extended by the court, on or before the 1st day after a will is admitted to probate as a muniment of title, the applicant shall file an affidavit stating specifically the terms of the will that have been fulfilled and the terms of the will that have not been fulfilled.

Failure to file such affidavit shall not affect the title to property passing under the terms of this will.

This section applies only to the estate of persons who die after September 1, 1993.

4.04.16

Foreign Wills - Probate Procedures

Probate

  • The will of a testator not domiciled in Texas at his death which would affect real property in this state may be admitted to probate on proof that it is probated in any of the United States, its territories, the District of Columbia, or any foreign nation.
  • Where the will was probated in testator's domiciliary jurisdiction, no citation or notice is required.
  • Where a will was probated in a nondomiciliary jurisdiction, citation shall be issued and served on each devisee and heir by registered or certified mail.
  • A copy of the will and of the judgment, order, or decree admitting the will to probate shall be filed with the application. (Estates Code §§501.001-501.003, 503.002, 505.052).

Probate Accomplished by Recording

  • If the will has been probated or established in the jurisdiction in which the testator was domiciled at the time of his death, it is the ministerial duty of the clerk of the court to record such will and the evidence of its probate or establishment in the minutes of the court.
  • No order of the court is necessary.
  •  When so filed and recorded, the will shall be deemed to be admitted to probate, and shall have the same force and effect for all purposes as if the original will had been probated by order of the court, subject to contest in the manner and to the extent provided by the Code.
  • If the will has been probated or established in a jurisdiction not the domicile of the testator, its probate is subject to contest in the same manner as if testator had been a domicile of Texas.
  • If no contest is filed, the clerk shall record such will and the evidence of its probate, and no order of the court shall be necessary.
  • When a foreign will has been probated in this state in accordance with the above procedures concerning a foreign will previously probated in the domicile of the testator, and it is proved in a proceeding brought for the purpose that the foreign jurisdiction in which the will was admitted to probate was not in fact the domicile of the testator, the probate in Texas shall be set aside.
  • However, the rights of any bona fide purchaser for value of the property of the estate shall not be affected thereby. (Estates Code §§501.004-501.005, 504.003).

Filing and Recording Foreign Will in Deed Record

  • When any will conveying or disposing of land in Texas has been probated according to the laws of any of the United States, or its territories, or the District of Columbia, or of any country out of the limits of the United States, a copy thereof and of its probate which bears the attestation, seal and certificate required by the Estates Code, may be filed and recorded in the Deed Records in any county of Texas in the same manner as deeds and conveyances are required to be recorded and without further proof or authentication.
  • The validity of such will may be contested in the manner and to the extent provided by the Estates Code. (Estates Code 501.001, 501.003).
  • The filing of such will establishes the presumption that the will has been duly admitted to probate and shall take affect and be valid and effectual as a deed of conveyance of all property in this state covered by said foreign will and the recording thereof shall have the same force and effect as the recording of deeds or other conveyances of land. (Estates Code 503.051).

Original Probate of Foreign Will in Texas

An original probate of the will of a testator who died domiciled outside Texas may be granted in the same manner as the probate of other wills are granted under the Probate Code. (Estates Code §502.001).

 

 

 

 

4.04.17

Sales through Administration

Testate: Sales Authorized By Will (Estates Code §356.002)

  • Where the will authorizes the sale no order is necessary.
  • In such case, the sale may be made at public auction or privately as the executor deems in the best interest of the estate and may be made for cash or upon such credit terms as the executor shall determine.
  • If the testator has given particular directions in the will respecting the sale, it is necessary that such directions be followed, unless they are set aside by the court.
    • If the will empowers the independent executor to sell, he may exercise such power so long as the administration of the estate lasts.
    • This power does not depend on the existence of debts but arises from the terms of the will.
    • If there are debts, and the administration is pending, he has power to sell to pay the debts, even though the will does not expressly authorize a sale.
    • If there are no debts, and no express power of sale in the will, or a power of sale to pay debts only and there are no debts, then there is no power of sale in the independent executor. In these cases, the independent executor is not authorized to sell property.

Intestate: Court Must Order Sales (Estates Code §356.001)

  • Generally, no sale of any property of an intestate estate is permitted without an order of court.
  • The court may order property sold for cash or on credit, at public auction or private sale, as it may consider most to the advantage of the estate.

Application for Sale of Real Estate (Estates Code §356.251)

Application may be made to the court for an order to sell property for the estate when it appears necessary or advisable. The most common reasons are to pay expenses of administration, funeral expenses and expenses of last sickness of decedents and allowances and claims against the estates of decedents and wards. However, the Estates Code does allow other reasons for a sale.

Contents of Application for Sale of Real Estate (Estates Code §356.252)

  • The application for the sale of the real estate must be in writing and describe the property to be sold.
  • It is to be accompanied by an exhibit, verified under oath, showing the condition of the estate, including all facts tending to show the necessity or advisability of the sale.

Opposition to Sale (Estates Code §356.254)
Hearing on Application and Any Opposition (Estates Code §356.255

  • The court shall hold a hearing on an application if opposition to the sale is filed during the period prescribed in the citation.

Citation and Return (Estates Code §356.253)

  • After the application is filed and the court has set a date for hearing, the clerk issues citation to all interested persons.
  • Service of such citation is by posting.

Order of Sale (Estates Code §356.256)

  • The court may either grant or deny the application dependent on whether it thinks the sale necessary or advisable.
  • The court's order should specify:
    • The property to be sold and its description
    • How it is to be sold, whether at private sale and its purpose
    • The necessity or advisability of the sale and its purpose
    • That the general bond, if required, is sufficient or if insufficient, specify the increase.
    • That the sale be made and the report returned in accordance with law
    • The terms of the sale.

Report of Sale (Estates Code §356.551)

  • The Report of Sale must be made within 30 days after the sale is made. It should show:
    • Date of order of sale
    • Property sold
    • Time and place of sale
    • Purchaser's name
    • Amount for which sold
    • Terms of sale whether sold by public or private sale
    • Whether purchaser is ready to comply with the terms of the sale.
  • It must be written, sworn to, filed with clerk, and noted on Probate docket.

Order Confirming Sale (Estates Code §§356.552, 356.556)

  • After the expiration of 5 days from the filing of a Report of Sale, the court shall inquire into the sale, hear any evidence for or against it and determine the sufficiency of the bonds.
  • If satisfied, the court enters an Order Confirming The Sale which authorizes conveyance of the property.
  • The court, if dissatisfied, may set the sale aside and order a new sale.
  • The action of the court in confirming or disapproving a report of sale shall have the force and effect of a final judgment.

Deed Conveys Title (Estates Code §356.557)

  • The deed given pursuant to the Order Confirming The Sale must refer to and identify the court Order Confirming The Sale.
  • Such deed vests in the purchaser all right, title, and interest of the estate to such property.

Delivery of Deed (Estates Code §356.558)

  • After a sale is confirmed by the court and the terms of sale have been complied with by the purchaser, the representative of the estate shall forthwith execute and deliver to the purchaser a proper deed conveying the property.
  • If the sale is made partly on credit, the vendor's lien securing the purchase money note or notes shall be expressly retained in said deed, and before actual delivery of said deed to purchaser, he shall execute and deliver to the representative of the estate a vendor's lien note or notes and also a deed of trust or mortgage on the property.
  • Upon completion of the transaction, the personal representative shall promptly file or cause to be filed and recorded in the appropriate records in the county where the land is situated said deed of trust or mortgage.

Representative Purchasing Property of the Estate (Estates Code §§356.651-356.655)

  • The personal representative of the estate is prohibited from purchasing any property of an estate being sold by him.
  • This applies to any co-representative also.
  • Procedures are established for declaring such sale void.
  • A personal representative may purchase property of the estate if the will expressly authorized the sale.
  • The personal representative of a decedent or a ward is authorized to comply with a contract and purchase property if the contract was signed by the decedent or before the ward became incompetent.

Permissible Terms of Sale of Real Estate (Estates Code §§356.351-356.353)

  • Real estate may be sold for cash or for part cash and part credit.
  • In addition, if there is only an equity in the estate and an existing indebtedness, the equity may be sold either subject to such indebtedness or the purchaser may assume such indebtedness.
  • This may be at public or private sale as the court deems.

Bond on Sale (Estates Code §§356.553-356.555)

  • If no general bond is required, the court simply confirms the same.
  • If a general bond is required, the court must determine whether the general bond is sufficient to protect the estate after proceeds of sale are received.

Public Sales (Estates Code §§51, 356.401-356.405)

  • A notice of the public sale is required to be advertised and published containing full information with reference to the sale, including reference to the order of sale, the time, place and terms of the sale.
  • A brief description of the property sufficient to identify it is required.
  • Such sales are made at public auction to the highest bidder.
  • The sale must be made in the county in which the proceedings are pending at the courthouse door or other authorized place, on the 1st Tuesday of the month after publication of notice is completed between 10 A.M. and 4 P.M..
    • The court may order sale in the county where the land is situated.
    • In this case, notice must be published both in the county where the land is and in the county where the proceedings are pending.
  • Publication is by advertisement in a newspaper one time not less than ten days before the return date.

Private Sales (Estates Code §356.451)

  • The court's order sets the manner of a private sale.
  • No further advertising notice or citation is required unless the court required it in its order.

Sales of Easements and Rights of Ways (Estates Code §§356.501-356.502)

  • The personal representative may sell and convey easements and rights under court order, regardless of whether the proceeds of such sales are required to pay claims and charges.
  • The procedure is the same as for ordinary sales of real estate.

Sale of Mortgaged Property (Estates Code §§356.201-356.203)

  • If a creditor has a claim secured by a valid mortgage or other lien which has been allowed and approved or established by suit, he may file application and get an order for the sale of such property to satisfy his claim.
  • Citation is issued in such case requiring the representative of the estate to appear.
  • The court may order the lien discharged out of the general assets of the estate or may grant the application and order the property sold. (Estates Code §§356.201-356.203).

Underwriting Standard: Require that all proper steps prescribed by the provisions of the Estates Code be strictly followed. If there is any deviation from such procedure, a Texas Underwriter should be consulted before proceeding.

Test for Necessity or Advisability of Sale

  • The determination of whether or not the sale is necessary or advisable must be made by the court.
  • The test is not whether or not claims have been established but rather whether or not valid claims exist.
  • For example, taxes due at death as well as subsequently are valid claims.
  • Furthermore, all indebtedness created in order to pay taxes is a valid claim.

Sale to Pay Debts Barred by Limitations

Property may not be sold to pay debts barred by limitation. (Estates Code §355.061(b)).

Applications of Proceeds - No Duty on Purchaser

There is no duty on the part of the purchaser to trace the proceeds of the sale and see to their proper application.

Sales by Agents

  • Sales by means of agents may be accomplished by means of court approval in the case of administrators.
  • Generally speaking, an executor may authorize an agent to do or perform ministerial act.
  • In other words, if the actual agreement or contract is made and entered into by the executor he may then authorize another to carry out the mechanical and ministerial acts incident to completion of the sale.

4.04.18

Authority of Personal Representative – Extending Obligations; Purchases; Compromises; and Releases

The personal representative of an estate may, upon application and order authorizing the same, renew or extend any obligation owning by or to such estate.

Such personal representative may also upon application and order authorizing same:

  • Purchase or exchange property
  • Take claims or property for the use and benefit of the estate in payment of any debt due or owing to the estate
  • Compound bad or doubtful debts due or owing to the estate
  • Make compromises or settlements in relation to property or claims in dispute or litigation
  • Compromise or pay in full any secured claim has been allowed and approved as required by law against the estate by conveying to the holder of such claim the real estate or personalty securing same, in full payment, liquidation, and satisfaction thereof, and in consideration of cancellation of all notes, deeds of trust, mortgages, chattel mortgages, or other evidences of liens securing the payment of such claim.
  • Without application or order, release liens upon payment at maturity of the debt secured thereby. (Estates Code §§351.051-351.052).

4.04.19

Joint Executors or Administrators - Conveyances

Except in conveyances of real estate, where there is more than one executor or administrator at the same time, the acts of one is as valid as if all had acted jointly.

Upon death, resignation or removal of one, the other continues to act as if there had been no death, resignation or removal.

In the case of a sale of real estate, all of the executors or administrators who have qualified as such and are acting as such shall join in the conveyance, unless the court after due hearing authorizes less than all to act. (Estates Code §307.002).

4.04.20

Inventory, Appraisement, and List of Claims

Purpose

The inventory, appraisement and list of claims is a fundamental part of any estate procedure. The inventory is a source of important information. It will on occasion identify the property under search, furnish information as to necessity or advisability of sale and the information to determine whether or not there is a likelihood of state inheritance and federal estate tax.

Appraisers

Appraisers are appointed by the court in the order granting letters of administration of letters testamentary. (Estates Code §309.001).

Inventory and Appraisement

It is the duty of the personal representative, within ninety (90) days after he has qualified and received letters, with the aid of a majority of the appraisers, to prepare and show any property held in co-ownership. (Estates Code §§309.051, 309.056).

List of Claims

There should be attached to the inventory a list of claims due or owing to the estate stating names and addresses, nature of claim, date and due date of indebtedness, amount of claim and whether claims are separate or community property and what portion is held in co-ownership. (Estates Code §309.052).

Action of the Court

  • The court examines the inventory, appraisement and list of claims and enters an order approving or disapproving same.
  • If the court disapproves the inventory, appraisement and list of claims, it shall also require the return of another inventory, appraisement or list of claims within not less than 20 days. (Estates Code §309.054).

Discovery of Additional Property

  • If additional property not included in the first inventory is discovered, the representative should make and return the same for action to the court.
  • If an interested person knows of property that should be included he can have the personal representative cited to show cause why it should not be included.
  • The court, upon proper proof, can order the personal representative to return an additional inventory within twenty days. (Estates Code §309.102).

Correction Required

If there is an error in the inventory, appraisement, or list of claims, an interested person can have the personal representative cited to show cause why the error should not be corrected. The court, upon proper proof, can order corrections. (Estates Code §309.102).

Use As Evidence

Statements in inventories, appraisements and lists of claims are not conclusive proof of the matters contained therein. In other words, in court their accuracy may be rebutted by proper evidence. (Estates Code §309.151).

Underwriting Standard: Require that all of the necessary procedures with reference to the inventory, appraisement and list of claims be properly carried out.

 

 

 

 

4.04.21

Definitions and Distinctions

“Administration of Decedent's Estate” consists in the management and settlement of a decedent's estate by an executor, administrator, or personal representative.

“Administratrix” is a female personal representative appointed by the probate court to handle and settle the estate of an intestate decedent.

“Administrator” is a male personal representative appointed by the probate court to handle and settle the estate of an intestate decedent.

“Bequeath” means to give property by will. Formerly, bequeath was used where personal property was given, and devise was used where real property was given. However, the courts have since construed bequeath to be synonymous with “Give” when used in a will and to refer to a gift of real as well as personal property.

“Child” includes an adopted child, whether adopted by any existing or former statutory procedures or by acts of estoppel, but, unless expressly stated herein, does not include a child who has no presumed father.

“Claims” include liabilities of a decedent which survive, including taxes, whether arising in contract or in tort or otherwise, funeral expenses, the expense of a tombstone, expenses of administration, estate and inheritance taxes, liabilities against the estate of a minor or incompetent, and debts due such estates.

“Codicil” is a supplement or addition to a will which may modify or revoke provisions thereof.

“Collateral heir” is a person not in a direct line of lineal ascent or descent, tracing a kinship relationship to an intestate decedent through a common ancestor (e.g., brothers, sisters, uncles, aunts, nephews, nieces, cousins), and forming a collateral line of relationship.

“County Court” and “Probate Court” are synonymous terms and denote county courts in the exercise of their probate jurisdiction, courts created by statute and authorized to exercise original probate jurisdiction, and district courts exercising probate jurisdiction in contested matters.

“County Judge”, “Probate Judge”, and “Judge” denote the presiding judge of any court having original jurisdiction over probate proceedings, whether it be a county court in the exercise of its probate jurisdiction, a court created by statute and authorized to exercise probate jurisdiction, or a district court exercising probate jurisdiction in contested matters.

“Decedent” is the deceased person, referred to as having died testate (with a will) or intestate (without a will).

“Descendant” is a claimant to an intestate's share who is related to the decedent in a descending lineal blood line.

“Descent” is succession to the ownership of an estate by inheritance.

“Devise”, when used as a noun, includes a testamentary disposition of real or personal property, or of both. When used as a verb, “devise” means to dispose of real or personal property, or of both, by will.

“Devisee” is the recipient of a devise, that is, any person designated in a will to receive property, and includes legatee.

“Distributee” denotes a person entitled to the estate of a decedent under a lawful will, or under the statutes of descent and distribution.

“Distribution” of the estate is the apportionment and division under authority of the probate court of the remainder of the intestate's estate, after payment of debts and charges, among those who are legally entitled to share in the same.

“Escheat” is the reversion of property to the state in the absence of legal heirs or claimants.

“Estate” denotes the real and personal property of a decedent or ward, both as such property originally existed and as from time to time changed in form by sale, reinvestment, or otherwise, and as augmented by any accretions and additions thereto (including any property to be distributed to the representative of the decedent by the trustee of a trust which terminates upon the decedent's death) and substitutions therefor, and as diminished by any decreases therein and distributions therefrom.

“Executor” is the man named by the testator in the will to be the personal representative of the estate and carry out the provisions of the will.

“Executrix” is the woman named by the testator in the will to be the personal representative of the estate and carry out the provisions of the will.

“Foreign will” is made and executed in, and in conformity with, the laws of a state other than the state in which it is offered for probate, or made and executed in, and in conformity with, the laws of a foreign country.

“Gross estate” of the decedent is the value of all property left by a decedent before deductions; that is, debts, taxes, and other expenses or liabilities.

“Heirs” denote those persons, including the surviving spouse, who are entitled under the statutes of descent and distribution to the estate of a decedent who dies intestate.

“Holographic will” is entirely written, dated, and signed by the testator's own handwriting.

“Independent executor” means the personal representative of an estate under independent administration as provided in Sections 351.351, 401, and 402 of the Estates Code. The term “independent executor” includes the term “independent administrator”, as well as independent executrix or independent administratrix.

“Interested persons” or “persons interested” means heirs, devisees, spouses, creditors, or any others having a property right in, or claim against, the estate being administered; and anyone interested in the welfare of a minor or incompetent ward.

“Intestacy” is the state or condition of dying without having made a valid will or without having disposed of property by will.

“Intestate” as an adverb, intestate is the condition of a person who dies without making a will. As a noun, intestate is a decedent who has not made a valid will.

“Intestate succession” is called intestate when the decedent has left no will or when the decedent's will has been revoked or annulled.

“Intestate succession laws” or descent and distribution laws determine the manner in which a decedent's property will be distributed when the decedent has no valid will.

“Issue” means persons who have descended from a common ancestor. It is a broader term than children and includes lineal descendants of any degree (children, grandchildren, etc.). Adopted and illegitimate children may be considered as issue.

“Kin” denotes a person's relatives collectively as a group of persons descending from a common ancestor, or constituting a family clan, tribe, or race. In a general sense, kin may be used to include relations both by blood and marriage.

“Lapsed devise” fails or takes no effect by reason of the death of the devisee before the testator, or by reason of the unwillingness of the devisee to accept the devise.

“Last Will and Testament” is a legally enforceable declaration of a person's intention to dispose of property, both real and personal, after death.

“Legacy” includes any gift or devise by will, whether personalty or realty. “Legatee” includes any person entitled to a legacy under a will.

“Letters of Administration” are an instrument in writing granted by a probate or surrogate court to a person appointed as administrator to settle the estate of a decedent who has left no will. These letters constitute the administrator's legal authority to act.

“Letters testamentary” are an instrument in writing granted by a probate court empowering the executor named in a will to dispose of the estate in accordance with its terms. Letters testamentary make it known that the will in question has been properly proved and that the estate is to be settled.

“Lineal” refers to a person related to an intestate decedent in a direct line of kinship either upward in an ascending blood line or downward in a descending blood line.

“Minors” are all persons under eighteen years of age who have never been married or who have not had disabilities of minority removed for general purposes.

“Net estate” means the real and personal property of a decedent, exclusive of homestead rights, exempt property, the family allowance and enforceable claims against the estate.

“Next of kin” includes an adopted child or his or her descendants and the adoptive parent of the adopted child.

“Nonprobate asset” is property that passes by operation of law, such as life insurance.

“Nuncupative will” is an oral will declared by the testator before witnesses in the testator's final sickness and later reduced to writing and subscribed by witnesses. Such a will is not valid in some states and in others only valid as to a limited amount of personal property.

“Per Capita” means by persons by the _______ (that is, by the number of individuals). Persons succeed to an inheritance per capita when they individually take equal shares.

“Per Stirpes” means roots or stocks, by representation. It means that the descendants of the intestate inherit only that part of the estate which the parent through whom they inherit would have inherited if alive.

“Person” includes natural persons and corporations.

“Personal property” includes interests in goods, money, choses in action, evidence of debts, and chattels real.

“Personal representative” or “Representative” includes executor, independent executor, administrator, independent administrator, temporary administrator, guardian, and temporary guardian, together with their successors.

“Probate matters”, “Probate proceedings”, “Proceeding in probate”, and “Proceedings for probate” are synonymous and include a matter or proceeding relating to guardianship, as well as a matter or proceeding relating to the estate of a decedent, and proceedings regarding incompetents; probate is the formal judicial proceeding to prove or confirm the validity of a will.

“Property” includes both real and personal property.

“Real property” includes estates and interests in lands, corporeal or incorporeal, legal or equitable, other than chattels real.

“Residuary estate” is that portion of an estate remaining after all debts and obligations of the estate, together with all the specific bequests and devises, have been paid or met.

“Statutory probate court” refers to any statutory court presently in existence or created after the passage of this Act, the jurisdiction of which is limited by statute to the general jurisdiction of a probate court, and such courts whose statutorily designated name contains the word “probate”. County courts at law exercising probate jurisdiction are not statutory probate courts under this Code unless their statutorily designated name includes the word “probate”.

“Surety” includes both personal and corporate sureties.

“Testacy” is the state or condition of leaving a will at one's death and is the opposite of intestacy.

“Testamentary disposition” is the disposition of property by deed, will, trust, or otherwise, but in such a manner that it shall not take effect unless or until the grantor dies.

“Testamentary trust” is a trust created by the terms of a valid will, which does not take effect until the death of the trustor/testator.

“Testate” is one who dies leaving a valid will.

“Testator” is a male maker of a will.

“Testatrix” is a female maker of a will.

“Trust” is a fiduciary arrangement by which a transferor (trustor) transfers title to property (corpus) to a transferee (trustee) for the benefit of a designated beneficiary.

“Will” is an instrument executed by a competent person in the manner prescribed by statute whereby the testator makes a disposition of property to take effect upon death; it includes codicil; it also includes a testamentary instrument which merely (1) appoints an executor or guardian; (2) directs how property may not be disposed of; or (3) revokes another will.

The singular number includes the plural; the plural number includes the singular.

The masculine gender includes the feminine and neuter.

Consult Texas Estates Code §22 for more definitions.