2005 Texas Estate Administration Legislation

Revised February 02, 2006

2005 Texas Estate Administration Legislation

by

Gerry W. Beyer

Governor Preston E. Smith Regents Professor of Law
Texas Tech University School of Law
Lubbock, Texas

This article reviews the legislation enacted by the 2005 Texas Legislature relating to the Texas law of estate administration. The reader is warned that not all recent legislation is presented and not all aspects of each cited statute are analyzed. You must read and study the full text of the legislation before relying on it or using it as authority.

A. Jurisdiction

1. Testamentary Trusts

Amendments made in 2003 to Probate Code § 5 caused confusion regarding the jurisdiction of a statutory probate court over testamentary trusts. Section 5(e), effective with regard to actions filed on or after September 1, 2005, makes it clear that a statutory probate court has concurrent jurisdiction with the district court in all actions involving a testamentary trust.

2. Actions By or Against a Trustee

Several recent cases had held that “[t]he mere fact that a plaintiff happens to be a trustee, however, does not transfer a case into one ‘concerning trusts’” thereby giving a statutory probate court jurisdiction over the case. Mobil Oil Corp. v. Shores, 128 S.W.3d 718, 725 (Tex. App.—Fort Worth 2004, no pet.). See also Shell Cortez Pipeline Co. v. Shores, 127 S.W.3d 286 (Tex. App.—Fort Worth 2004, no pet.). Probate Code § 5(e) was amended to reverse the effect of these cases with respect to an action filed on or after September 1, 2005. The section now provides that the statutory probate court has jurisdiction “in all actions by or against a trustee.”

3. Pre-Contest Request for a Statutory Probate Court Judge

Probate Code § 5(b-1) was amended to permit a party to a probate case pending in a constitutional county court to file a motion for the assignment of a statutory probate court judge even before the matter becomes contested. If the matter is actually contested at a later time, the amendment requires the constitutional county court judge to grant the pre-contest motion and prevents the judge from transferring the case to a district court instead.

The amendment also provides that if the constitutional county court judge had previously transferred the case to a district court using authority granted elsewhere (that is, not because of a contest), the party still has the right to have the matter assigned to a statutory probate court judge.

B. Temporary Administration

Effective for the estates of decedents who die on or after June 17, 2005, the person appointed as a temporary administrator has a longer time to file bond with the county clerk. Under prior law, the filing had to be done on the date of the order. Now, the appointee has until the third business day after the date of the order. Business day is defined as a day “other than a Saturday, Sunday, or holiday recognized by [Texas].” See Prob. Code § 131A.

C. Appraisers

Probate Code § 248 was amended to require that good cause be shown before a court may appoint appraisers, either on the court’s own motion or upon the application of an interested party. Note that this change was included in two enacted bills (SB 347 and HB 3434) but with slightly different language.

D. Homestead

Amendments to Probate Code §§ 271 and 272 make it clear that the homestead may be set aside and delivered only to the surviving spouse or minor children. Under the prior wording of the statute, the homestead could arguably be set aside for unmarried children remaining with the family of the decedent. These amendments finally bring the statutes into conformity with the 115 year old Texas Supreme Court case of Zwernemann v. Von Rosenburg, 13 S.W. 485 (Tex. 1890), which held similar language in a prior version of the statute to be contrary to the Texas constitution.

E. Claims of Creditors

1. Secured Claims

Because of the repeal of the common law doctrine of exoneration by Probate Code § 71A, discussed above, subsection (c-1) was added to Probate Code 306 to handle the situation where a secured creditor elects matured secured claim status. First, the personal representative is required to collect from the beneficiary the amount of the debt and pay that amount to the secured creditor. If there is more than one beneficiary of the encumbered property, each pays a pro rata share of the debt.

Second, if the personal representative is unable to collect enough money to pay off the debt, then the property is sold. The proceeds of the sale are first used to pay the debt and any expenses associated with the sale. If there is a surplus, it will be divided pro rata among the beneficiaries of the specific gift. If there is a deficiency, the creditor has an unsecured claim for that amount.

2. Class 2 Claims

With regard to the estates of decedents who die on or after September 1, 2005, Class 2 claims are expanded because of an amendment to Probate Code § 322. Class 2 claims now include not only the administration expenses triggered by the decedent’s death but also the unpaid expenses awarded in a guardianship of the decedent. This change prevents these expenses from losing the priority status they enjoyed while the decedent-ward was alive under Probate Code § 805.

In publishing this article, the author is not engaged in rendering legal, accounting or other professional service. If legal advice is required, the service of a competent professional should be sought.

Ó 2006 Gerry W. Beyer