THE SAN ANTONIO ESTATE PLANNERS COUNCIL’S

DOCKET CALL IN PROBATE COURT

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

MARY C. BURDETTECalloway, Norris, Burdette & Weber

3811 Turtle Creek Blvd., Suite 400Dallas, Texas 75219

February 17-18, 2005

TABLE OF CONTENTS

I. DISPUTED CREDITOR CLAIMS................................................................ 1A. Introduction. ......................................................................................... 1B. Duties Owed to Creditors. .................................................................... 1C. Independent Administration. ................................................................ 1

1. Notice to Creditors.. ................................................................... 1a. Notice by Publication. ..................................................... 1b. Notice to Secured Creditors............................................. 1c. Penalty for Failure to Give Required Notices.................. 1d. Permissive Notice. ........................................................... 2

2. Presentment of Claim by Secured Creditor................................ 23. Non-Judicial Foreclosure. .......................................................... 2

a. Prior to Administration. ................................................... 2b. During Administration..................................................... 3

4. Presentment of Unsecured Claim............................................... 35. Enforcement of Claims by Suit. ................................................. 46. Liability of Independent Executor. ............................................ 47. Unliquidated Claims. ................................................................. 4

D. Dependent Administration. .................................................................. 41. Notices. ...................................................................................... 42. Presentment of Claims. .............................................................. 43. Exceptions to Presentment. ........................................................ 54. Action by Personal Representative with Respect to Claims. ..... 5

a. Form of Claim. ................................................................ 5b. Objections to the Form of Claims.................................... 5c. Endorsement of Claim. .................................................... 6d. Limitations on Claims...................................................... 6e. Rejected Claims. .............................................................. 6

E. Classification of Claims. ...................................................................... 71. Duty of Personal Representative................................................ 72. Claims for Child Support. .......................................................... 7 a. Child Support Accrued Before Death.............................. 7

b. Child Support Accrued After Death. ............................... 8 c. Credit for Social Security Death Benefits. ...................... 8

3. Debts Due to the United States. ................................................. 84. Order of Payment of Claims. ..................................................... 85. Secured Creditors....................................................................... 9

a. Election by Secured Creditor........................................... 9

b. Time for Election. ............................................................ 9c. Matured Secured Claims.................................................. 9d. Preferred Debt and Lien. ................................................. 9

F. Setting Aside Exempt Assets. .............................................................. 91. Action by Personal Representative. ......................................... 102. Delivery of Exempt Assets. ..................................................... 103. Homestead................................................................................ 104. Partition of Homestead. ........................................................... 105. Homestead Free from Debts. ................................................... 116. Title to Exempt Assets. ............................................................ 11

G. Setting Allowances............................................................................. 111. Family Allowance. ................................................................... 12

a. Time for Setting............................................................. 12b. Amount of Allowance. .................................................. 12c. Payment of Allowance................................................... 12

2. Allowances in Lieu of Exempt Property.................................. 12a. Setting Allowances.. ...................................................... 12b. Delivery of Allowances. ................................................ 13

3. Timely Setting Allowance. ...................................................... 13H. Non-probate Assets. ........................................................................... 13

II. RECOVERING TANGIBLE ASSETS. ....................................................... 13A. Right to Possession............................................................................. 13B. Show Cause Order.............................................................................. 14C. Order Under Sections 232, 233. ......................................................... 15D. File Suit and Seek Injunctive Relief................................................... 15E. Contempt Actions............................................................................... 16

1. Authority of the Court to Find Contempt................................. 162. Definitions................................................................................ 163. Direct Contempt. ...................................................................... 164. Constructive Contempt. ........................................................... 175. Distinguishing Contempt. ........................................................ 186. Due Process.............................................................................. 18

a. Notice............................................................................. 18b. Pleadings........................................................................ 18

(1) Specificity. ................................................ 18(2) Ambiguity. ................................................ 18(3) Opportunity to Purge. ............................... 19

c. Miscellaneous Provisions. ............................................. 19(1) Continuance of Hearings........................... 19

(2) Appointment of Counsel. .......................... 19(3) Officers of the Court. ................................ 20(4) Monetary Sanctions. ................................. 20(5) Delay. ........................................................ 20

III. CONVERTING BETWEEN INDEPENDENT AND DEPENDENTADMINISTRATIONS. ................................................................................ 20A. Converting from Independent to Dependent. ..................................... 20B. Converting from Dependent to Independent Administration. ............ 21

IV. ADMINISTERING COMMUNITY PROPERTY IN DISPUTED ESTATES.... 21A. Introduction. ....................................................................................... 21

1. Probate Code §177(b). ............................................................. 212. Fiduciary Duties. ...................................................................... 223. Inventory. ................................................................................. 234. Probate Code §156. .................................................................. 235. Powers of Executor. ................................................................. 23

V. DEALING WITH THE NON-PAYING CLIENT....................................... 24A. Representing the Independent Executor. ............................................ 24

1. Engagement Letter. .................................................................. 242. Retainer. ................................................................................... 243. Non-payment............................................................................ 24

B. Representing the Dependent Administrator. ...................................... 24C. Representing a Beneficiary. ............................................................... 25

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

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PITFALLS OF THE NOT SO “SIMPLE” PROBATE

I. DISPUTED CREDITOR CLAIMS

A. Introduction

A decedent’s estate can be a trap for the unwary

creditor who is seeking to enforce a lien or collect

a debt against a deceased debtor. A creditor must

be aware of Texas law in both independent and

dependent administrations and act appropriately

in order to protect its claim against an estate.

How a personal representative deals with

creditors’ claims, allowances and exempt assets

can materially affect the assets passing to the

family members.

B. Duties Owed to Creditors

Although some prior cases indicated to the

contrary, a recent Houston Court of Appeals case

specifically held that an executor’s statutory duty

to approve and pay claims does not give rise to a

fiduciary duty, and the executor does not hold the

estate property in trust for those with claims

against the estate. FCLT Loans, L.P. v. Estate of

Bracher, 93 S.W.3d 469 (Tex. App.–Houston

[14 Dist. 2002, no writ). Compare Cochran’sth

Administrators v. Thompson, 18 Tex. 652 (1857);

Farmers’ & Merchants’ Nat. Bank v. Bell, 31

Tex. Civ. App.–124, 71 S.W. 570 (1902, writ

ref’d).

C. Independent Administration

1. Notice to Creditors.

Sections 146 and 294 of the Texas Probate

Code provide for the notices that a personal

representative in an independent administration is

required to give to creditors.

a. Notice by Publication

Within one (1) month after receiving letters, the

personal representative of an estate shall publish

in some newspaper, printed in the county where

the letters were issued, a notice requiring all

persons having claims against the estate being

administered to present the same in the time

prescribed by law. The notice shall include the

date of issuance of letters held by the

representative, the address to which the claims

may be presented and an instruction of the

representative’s choice that the claims be

addressed in care of the representative, in care of

the representative’s attorney or in care of

“Representative, Estate of _________”. A copy

of the printed notice together with the publisher’s

affidavit that the notice was properly published

shall be filed in the court where the cause is

pending. Published notice is required in all

independent administrations.

b. Notice to Secured Creditors

A personal representative in an independent

administration must also give notice to secured

creditors in accordance with Section 295 of the

Code. Within two (2) months after receiving

letters, the personal representative shall give

notice of the issuance of such letters to each and

e very p erson kn ow n to th e p ers o n a l

representative to have a claim for money against

the estate of a decedent that is secured by real or

personal property of the estate. If the personal

representative does not have actual notice of such

a creditor within two (2) months of receiving

letters, then within a reasonable time after

obtaining actual knowledge of the existence of a

secured creditor, the personal representative shall

give notice to that person of the issuance of

letters. Notice to secured creditors shall be given

by certified or registered mail, with return receipt

requested, addressed to the record holder of such

indebtedness or claim at the record holder’s last

known post office address. A copy of each notice

to a secured creditor, a copy of the returned

receipt, and an affidavit of the representative

stating that the notice was mailed as required by

law, giving the name of the person to whom the

notice was mailed, shall be filed with the Clerk of

the Court from which the letters were issued.

c. Penalty for Failure to Give

Required Notices.

Pursuant to Probate Code Section 297, if a

personal representative fails to give notice by

publication or to a secured creditor, the

representative and the sureties on the

representative’s bond shall be liable for any

damage which any person suffers by reason of

such neglect, unless it appears that such person

had notice otherwise.

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

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d. Permissive Notice.

Section 146 provides that a personal

representative in an independent administration

may give notice permitted under Section 294(d)

of the Code and bar a claim under that

subsection. Section 294(d) provides that

permissive notices may be given to unsecured

creditors at any time before an estate

administration is closed. Such notice may be

given by certified mail with return receipt

requested to an unsecured creditor having a claim

for money against the estate expressly stating that

the creditor must present a claim within four (4)

months after the date of the receipt of the notice

or the claim is barred, provided the claim is not

already barred by the applicable statute of

limitation. A notice must include: (1) the date of

issuance of letters held by the representative; (2)

the address to which claims may be presented;

and (3) the instruction of the representative’s

choice that the claim be addressed in care of: (a)

the representative; (b) the representative’s

attorney; or (c) “Representative, Estate of

_______ (naming the estate)”. It is also

suggested that the notice instruct the creditor that

the claim must be in the form required by the

Texas Probate Code and that the attorney for the

estate cannot give advice as to the proper

procedure for filing a claim, so the creditor

should contact an attorney of its choice with

respect to the procedures for filing the claim.

This should decrease the number of phone calls

received by the attorney for the personal

representative from creditors asking for help in

filing claims. It also puts the creditor on notice

that the claim needs to be in a particular form.

See Appendix A.

2. Presentment of Claim by Secured

Creditor.

A major difference between a dependent

administration and an independent administration

is the form in which a claim must be presented by

a creditor. Pursuant to Section 146(b), a secured

claim for money must be presented within six (6)

months after the date letters are granted, or within

four (4) months after the date notice is received if

the notice was sent more than two (2) months

after the date letters were issued, whichever is

later. A creditor with a claim for money secured

by real or personal property must give notice to

the independent representative of the creditor’s

election to have the creditor’s claim approved as

a matured secured claim to be paid in the due

course of administration. If this election is not

timely made, the claim is classified as a preferred

debt and lien against the specific properties

securing the indebtedness and shall be paid

according to the terms of the contract that secured

the lien, and a claim may not be asserted against

other assets of the estate. The independent

representative may pay the claim before the claim

matures if paying the claim before maturity is in

the best interest of the estate. If a secured

creditor’s claim is considered a preferred debt

and lien, then the creditor may not seek any

deficiency against the other assets of the estate.

Prior to this addition to Section 146, the secured

creditor was not bound to such an election and

could still seek a deficiency against the estate in

an independent administration.

3. Non-Judicial Foreclosure

a. Prior to Administration

It has long been the law in Texas that, in a

dependent administration, an attempted exercise

of a power of sale in an extrajudicial foreclosure

is void. Pearce v. Stokes, 291 S.W. 2d 309

(Tex.1956); Hury v. Preas 673 S.W. 2d 949

(Tex.App--Tyler 1984, writ ref’d n.r.e.);

Bozeman v. Follitt, 556 S.W. 2d 608

(Tex.Civ.App.—Corpus Christi 1977, writ ref’d

n.r.e.). Consequently, if a secured creditor

foreclosed upon a deceased person’s assets prior

to a dependent administration being opened, the

foreclosure would be void, but the foreclosure

would stand if an independent administration was

opened. Taylor v. Williams, 101 Tex. 388, 108

S.W. 815 (1908); Fischer v. Britton, 125 Tex.

505, 83 S.W.2d 305 (1935). Further, a

nonjudicial foreclosure while a dependent

administration is pending is void, as the

administration suspends the power of sale.

Because of the changes in Section 146, does a

secured creditor also take a risk by foreclosing

prior to the opening of an independent

administration? There are no cases addressing

this point since the changes to Section 146.

However, in Bozeman v. Folliott, the Court seems

to base its decision on the fact that in an

independent administration, a creditor cannot

enforce its claim against the executor in probate

court. However, in a dependent administration,

the creditor is required to seek permission from

the probate court to foreclose and to enforce its

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

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claim. In Section 146, a secured creditor is now

put to an election, and that election must be made

within six months. Since a secured creditor in an

independent administration is now put to an

election, and an independent executor has the

right to pay the claim in accordance with the

contract, does this some how change the law with

respect to nonjudicial foreclosures prior to the

opening of an independent administration? If a

creditor forecloses prior to the opening of an

independent administration, do the provisions of

Section 146 not apply to that estate? In the

Supreme Court decision of Pearce v. Stokes, the

Court’s decision seems to turn more on the fact

that the Court felt that a sale of property pursuant

to a nonjudicial foreclosure prior to the opening

of an administration would always interfere with

the due administration of an estate. The Court

held that the secured creditor is protected in the

payment of his debt when the property is brought

into administration. He has a choice of methods

he may pursue in obtaining payment. Now that

the secured creditor is put to the same election

and choices in both an independent and

dependent administration, can it be argued that a

nonjudicial foreclosure before the opening of an

independent administration is voidable?

b. During Administration

A power of sale under a deed of trust may be

validly exercised during the pendency of an

independent administration, and the sale is not

voidable by the independent executor. Robertson

v. Paul, 16 Tex. 472 (1856); Fischer v. Britton,

83 S.W.2d 307 Itex. 1935); Taylor v. Williams,

101 Tex. 388, 108 S.W. 815 (1908); Pottinger v.

Southwestern Life Ins. Co., 138 S.W.2d 645 (Tex.

Civ. App.–Waco 1940, no writ); Bozeman v.

Folliott, 556 S.W.2d 608 (Tex. Civ. App.–Corpus

Christi 1977, writ ref’d n.r.e.). This same rule

applies to federal tax lien foreclosures. I.T. 2918,

XIV-2 Cum. Bull. 263. A foreclosure sale

conducted during an independent administration

remains valid even though the administration is

later brought under court supervision. Bozeman

v. Folliott, supra.

Notice of the foreclosure sale pursuant to a

deed of trust is given to the independent executor

in the same manner as would have been given to

the decedent, as prescribed by Texas Property

Code §51.002 and the applicable provisions of

the deed of trust. Fenimore v. Gonzales County

Savings and Loan Association, 650 S.W.2d 213

(Tex. Civ. App.–San Antonio 1983, writ ref’d

n.r.e.). Conducting a nonjudicial foreclosure sale

pursuant to a deed of trust does not constitute

state action for purposes of the due process clause

of the United States Constitution. Barrera v.

Security Building and Investment Corporation,

519 F.2d 1166 (5 Cir. 1975); Williamson v.th

Tucker, 615 S.W.2d 881 (Tex. Civ. App.–Dallas

1981 writ ref’d n.r.e.); Armenta v. Nussbaum, 519

S.W.2d 673 (Tex. Civ. App.–Corpus Christi

1975, writ ref’d n.r.e.). An argument can be

made based on Section 146(b) that a secured

creditor cannot exercise foreclosure rights under

the contract until the expiration of six months

after the date that letters are granted to an

Independent Executor. See Rivera v. Morales,

733 S.W. 2d 677, 679 (Tex. App. - San Antonio

1987, writ ref’d n.r.e.) (A claim secured by a

mortgage is a “money claim” under §298 even

though it contains a power of sale by way of a

non-judicial foreclosure.)

4. Presentment of Unsecured Claim.

In an independent administration, an

unsecured creditor who has a claim for money

against the estate and who has received the

permissive four (4) month notice, shall give

notice to the independent representative of the

nature and amount of the claim no later than the

120 day after the date on which notice isth

received, or the claim is barred. Section 146(e)

provides that the notice given by either a secured

creditor or an unsecured creditor responding to a

permissive four (4) month letter must be

contained in: (a) a written instrument that is hand

delivered with proof of receipt or mailed by

certified mail, return receipt requested, to the

independent executor or the executor’s attorney;

(b) a pleading filed in a lawsuit with respect to

the claim; or (c) a written instrument or pleading

filed in the court in which the administration of

the estate is pending. These provisions of Section

146 were added by the Legislature in 1995. Note

that the 120 day requirement is different than the

four (4) month requirement that is set forth in the

permissive notice letter. Consequently, if an

unsecured creditor filed a claim within four (4)

months, but later than the 120 day, there is ath

question as to whether or not the claim is barred.

This author believes that the claim is not barred

and that the creditor should have the full four (4)

months as provided in the notice. The claim does

not have to meet the formal requirements that are

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

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set forth in a dependent administration for the

form of claims of creditors, Ditto Investment Co.

v. Ditto, 293 S.W. 2d 267 (Tex. Civ. App.—Fort

Worth 1956, no writ), but the delivery of the

notice must meet the requirements of Section

146(e), or the claim is barred. For instance, if the

creditor simply sends by regular mail a statement

showing the amounts owed, it does not comply

with Section 146(e) because it was not hand

delivered with proof of receipt or mailed by

certified mail. Therefore, a strict reading of the

statute requires that the claim be barred. An

executor’s attorney receiving claims from

creditors should always keep the envelope in

which the claim is received as proof as to whether

or not it was properly delivered.

5. Enforcement of Claims by Suit.

Pursuant to Section 147, any person having a

debt or claim against the estate in an independent

administration may enforce the payment of same

by suit against the independent executor; and

when judgment is recovered against the

independent executor, execution shall run against

the estate of the decedent in the hands of the

independent executor which is subject to such

debt. However, if the estate is insolvent, a

creditor who secures judgment against the

independent executor cannot have estate property

sold under execution and applied to his debt to

the exclusion of other creditors. Woods v.

Bradford, 284 S.W. 673 (Tex. Civ. App. 1926, no

writ). An independent executor is not required to

plead to any suit brought against him for money

until after six (6) months from the date the

independent administration was created and the

order appointing an independent executor was

entered. Probate Code §147. Consequently,

unlike a dependent administration, a claimant

may file suit against the executor on its claim at

any time provided the statute of limitations has

not expired or, if the claimant has received the

permissive four (4) month letter, four (4) months

have not lapsed.

6. Liability of Independent Executor.

A n in d ep en d en t ex ecu to r , in th e

administration of an estate, may pay at any time,

without personal liability, a claim for money

against the estate to the extent approved and

classified by the personal representative if: (a) the

claim is not barred by limitations; and (b) at the

time of payment, the independent executor

believes the estate has sufficient assets to pay all

claims against the estate. Probate Code §146(c).

7. Unliquidated Claims.

Section 146 and Section 294 provide for

permissive notice to unsecured creditors having a

claim for money. Consequently, an unliquidated

claim may not be presented and is not subject to a

four (4) month bar if a letter under Section

146(a)(2) is sent. Case law has construed “all

claims for money” to require presentment of a

claim if the amount can be ascertained with

certainty. Examples of such unliquidated claims

are tort claims See Wilder v. Mossler, 583 S.W.

2d 664 (Tex. Civ. App.—Houston 1964, no writ)

and quantum meruit claims for services rendered

See Wells v. Hobbs, 122 S.W. 451 (Tex. Civ.

App.—1909, no writ); and Moore v. Rice, 80

S.W. 2d 451 (Tex. Civ. App.—Eastland 1935, no

writ).

D. Dependent Administration.

1. Notices.

In a dependent administration, the same

notices as set forth above for an independent

administration are required under Sections 294

and 295 for a dependent administration;

therefore, a published notice and notice to

secured creditors are required. In addition, the

permissive four (4) month notice may be given to

unsecured creditors.

2. Presentment of Claims.

In a dependent administration, the creditor is

required to formally “present” its claim. The

Probate Code authorizes two different methods

by which a claim may be presented: (a) the

creditor may present the claim directly to the

executor or administrator as authorized by

Section 298(a); or (b) claims may also be

presented by depositing, or filing, same with the

Clerk pursuant to Section 308 of the Probate

Code. If a claim is deposited with the Clerk, then

the Clerk is directed to notify the “representative”

of the estate of the deposit of the claim with the

Clerk, but Section 308 goes on to provide that

failure of the Clerk to give that notice does not

affect the validity of the presentment or the

presumption of rejection if the claim is not acted

upon within thirty (30) days after it is filed with

the clerk.

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

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3. Exceptions to Presentment.

There are a few exceptions to the

requirement of presentment of claims in a

dependent administration: (a) as discussed in

independent administrations above, unliquidated

claims need not be presented because Section 298

requires only that “claims for money” be

presented to the administrator; and (b) Section

317(c) eliminates presentment as a requirement

with respect to: (1) claims of any heir, devisee, or

legatee who claims in such capacity; (2) claims

that accrue against the estate after the granting of

letters for which the representative of the estate

has contracted, such as attorneys’ fees,

accounting fees, or other administration expenses

(3) claims for delinquent taxes against the

decedent’s estate that is being administered in

probate in: (a) a county other than the county

where the taxes were imposed or (b) the same

county in which the taxes were imposed if the

probate of the decedent’s estate has been pending

for more than four (4) years.

4. Action by Personal Representative with

Respect to Claims.

a. Form of Claim.

Section 301 of the Code prohibits an

administrator from allowing, and the Court from

approving, any claim that is not supported by an

affidavit that the claim is just and that all legal

offsets, payments and credits known to the affiant

have been allowed. Consequently, any time a

claim is received in a dependent administration, it

should be checked for these magic words. In

addition, Section 304 of the Probate Code

contains the requirement that if the claim is made

on behalf of a corporation, it must provide that

the “cashier, treasurer or managing official” of

the corporation made the affidavit authenticating

the claim and that it is sufficient to state in such

affidavit that the person making it “has made

diligent inquiry and examination, and that he

believes that the claim is just and all legal offsets,

payments and credits known to the affiant have

been allowed”. A corporate representative

signing in his or her individual capacity, or

simply signing the name of the corporation, with

nothing else, is not proper, and the claim should

be rejected.

b. Objections to the Form of Claims.

Under Section 302, an administrator is

deemed to have waived “any defect of form, or

claim of insufficiency of exhibits or vouchers

presented” in a claim, unless he files a written

objection thereto within thirty (30) days after

presentment. The d ilemma facing the

administrator on this subject is whether a defect

in a claim is one of form only, or is a fatal defect,

rendering the claim a nullity. In City of Austin v.

Aguilar, 607 S.W. 2d 310 (Tex. Civ.

App.—Austin 1980, no writ), the creditor filed

two claims in which the authenticating affidavit

was not properly executed by a representative of

the corporation. The Administratrix rejected both

of those claims although the Administratrix made

no written objections to either claim. More than

ninety days passed after the rejection of the

claims. The Administratrix took the position that

the claims were barred under Section 313 of the

Code. The claimant argued that the claims were

null because of its own failure to comply with

Section 304. The Court of Appeals disagreed

with the claimant and held that the defects in the

claims were defects in form only, which were

waived by the Administratrix because she filed

no written objection as to the form of the claim.

The claims were barred because the claimant

failed to file suit ninety days after rejection.

However, in Boney v. Harris, 557 S.W. 2d 376

(Tex. Civ. App.—Houston 1977, no writ), the

affidavit filed by the claimant did not comply

with Section 301 because the affidavit stated that

all legal offsets, payments and credits through a

certain date had been allowed, but the affidavit

was filed four months after the stated date. No

representation was made in the claim concerning

any offsets, payments or credits after the date set

forth in the claim. The Administrator rejected the

claim and the claimant failed to file suit within

ninety days thereafter. The Court of Appeals, in

reversing the trial court, held that the rejection of

the improperly verified claim did not set in

motion the ninety day statute of limitation. The

Court stated that: “A claimant may sue for the

establishment of his claim only after rejection of

it by the personal representative and only if the

claim was legally presented.” The Court found

the claim at issue to be void and held that the

ninety-day limitation period could not run against

a void claim. Consequently, a personal

representative who receives a claim that is not in

the proper form has the dilemma of whether or

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

6

not to object to the form of the claim. This

author’s practice is to reject a claim that is not in

the proper form and state that the reason for the

rejection of the claim is because the claim does

not comply with the form required by the Texas

Probate Code. If the creditor fails to timely file a

proper claim and does not file suit within ninety

days of the rejection, the personal representative

can argue that the claim is barred because the

claim was rejected. If the personal representative

had sent the four month permissive notice under

Section 294(d) and the trial court decides to

follow the reasoning under Boney, the personal

representative could then argue that the creditor

failed to file a properly authenticated claim as

required by the Texas Probate Code, and

therefore, the claim is void, as it was not filed

within the requisite four month period.

Consequently, a dependent administrator should

always consider sending the permissive notice

allowed under Section 294(d) because this puts

the burden on the creditor to timely file a claim

that strictly complies with the requirements of the

Code.

c. Endorsement of Claim.

Under Sections 309 and 310 of the Code, the

administrator must endorse on or annex to every

claim presented to him, within thirty (30) days

after presentment, a memorandum signed by him,

stating the time of presentation or filing, and

whether he allows or rejects it, or what portion

thereof he allows or rejects. The administrator’s

failure to take any action constitutes a rejection of

the claim; and, under Section 310, if the claim is

thereafter established by suit, the costs shall be

taxed against the estate representative ,

individually, or he may be removed on the

written complaint of any person interested in the

claim, after citation and hearing.

d. Limitations on Claims.

The administrator is expressly prohibited by

Section 298(b) from allowing any claim that is

barred by limitations. If the administrator allows

such a claim, and if the Court is satisfied that

limitations has run, Section 298(b) directs the

Probate Court to disapprove the claim. Under

Section 299 of the Code, the general statutes of

limitations are tolled: (1) by filing a claim which

is legally allowed and approved; or (2) by

bringing a suit on a rejected claim within ninety

(90) days after rejection. Also, under Section

16.062 of the Texas Civil Practice and Remedies

Code, the general statute of limitation which

would otherwise apply, are tolled for a period of

twelve (12) months after a decedent’s death or

until “an executor or administrator of a

decedent’s estate qualifies”, whichever occurs

first. The running of the statute of limitations is

not tolled by filing a suit to establish a claim

which has not been properly presented. See Furr

v. Young, 607 S.W. 2d 532, 536 (Tex. Civ. App. -

Fort Worth 1975, no writ).

e. Rejected Claims.

An administrator may reject a claim at any

time during the 30-day period following

presentation. Probate Code §309. No actual

notice of rejection must be given to the creditor.

See Russell v. Dobbs, 163 Tex. 282, 354 S.W. 2d

373 (1962); Cessna Finance Corp. v. Morrison,

667 S.W. 2d 580 (Tex. App. - Houston [first

dist.] 1984, no writ). The administrator is under a

duty to reject any claim barred by the statute of

limitation. Probate Code §298(b). If an

administrator in a dependent administration

rejects a claim, the Court cannot override the

rejection unless the rejected claim is established

by suit. See, eg, Smith v. State, 493 S.W. 2d 650

(Tex. Civ. App. - Eastland 1973, writ ref’d

n.r.e.); Small v. Small, 434 S.W.2d 940 (Tex.

Civ. App. - Waco 1968, writ ref’d n.r.e.).

Similarly, the court cannot approve a claim which

has not been presented to the administrator.

Probate Code §314; Butler v. Summers, 151 Tex.

618, 253 S.W.2d 418 (1952); Clements v.

Chajkowski 146 Tex. 408, 208 S.W.2d 841

(1948). When that occurs, the Court may then

render a judgment granting the claim and

classifying it. Under Section 314, a creditor

cannot obtain a valid judgment against an

administrator unless he goes through the claims

process, including presentment, rejection by the

administrator, and obtaining a judgment in a suit

on the rejected claim. If an administrator rejects

a claim in a dependent administration, then the

creditor must, within ninety (90) days of

rejection, file suit or the claim is barred Section

313.

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

7

E. Classification of Claims.

1. Duty of Personal Representative.

In both an independent and dependent

administration, a personal representative is

required to classify claims; however, Section 146

provides that the independent executor classify

the claims free from the control of the Court in

the same order of priority, classification, and

proration described in the sections of the Code

dealing with dependent administration. In a

dependent administration, whenever a claim is

allowed by the personal representative, the Court

classifies the claim. Under Section 312(b) of the

Probate Code, the Court classifies a claim within

ten (10) days after the administrator has allowed

it and the claim has been placed on the claims

docket. The Court can approve the claim in

whole, in part or reject it.

Section 322 of the Probate Code sets forth

the eight classes in which the creditor’s claim

may be classified:

Class 1: funeral expenses and expenses

of last sickness for a reasonable amount to be

approved by the Court, not to exceed a total of

$15,000.00, with any excess to be classified and

paid as any other unsecured claim;

Class 2: expenses of administration and

expenses incurred in the p reservation ,

safekeeping and management of the estate

including fees and expenses awarded under

Section 243 (the last clause was added to change

the result reached in Hope v. Baumgartner, 111

S.W.3d 775 (Tex. App. - Fort Worth 203, no writ)

(Attorney’s fees awarded to unsuccessful will

contestant were a Class 8 claim under §322, not a

Class 2 claim))

Class 3: secured claims for money under

Section 306(a)(1), including tax liens, so far as

the same can be paid out of the proceeds of the

property subject to such mortgage or other lien

and when more than one mortgage, lien or

security interest shall exist upon the same

property, they shall be paid in order of their

priority;

Class 4: claims for the principal amount

of and accrued interest on delinquent child

support and child support arrearages that have

been confirmed and reduced to money judgment

as determined under Subchapter F, Chapter 157,

Texas Family Code (See Section 2 below);

Class 5: claims for taxes, penalties and

interest owed to the State of Texas;

Class 6: claims for cost of confinement

established by the institutional division of the

Texas Department of Criminal Justice;

Class 7: claims for repayment of medical

assistance payments made by the State under

Chapter 32, Human Resources Code, to or for the

benefit of the decedent; and

Class 8: all other claims.

If there is a deficiency of assets to pay all claims

of the same class, then such claims shall be paid

pro rata. Probate Code §321. This applies in

both independent and dependent administrations.

Bunting v. Pearson, 430 S.W.2d 470 (Tex. 1968).

2. Claims for Child Support.

a. Child Support Accrued Before

Death

If a parent who is obligated to make child

support obligations is in arrears at the time of

such parent’s death, the party to whom the child

support was owed may obtain a judgment against

the estate for the arrearages. The judgment must

be obtained from the Court which retains

jurisdiction over the minor child, commonly the

Family Court which handled the divorce. Tex.

Fam. Code Ann. §157.005 (Vernon Supp. 1999)

Texas Probate Code §322; Martin v. Adair, 601

S.W.2d. 543 (Tex. Civ. App.—Beaumont 1980,

on remand); Fleming v. Easton, 998 S.W. 2d 252

(Tex. App. – Dallas, no writ) (Probate Court

lacked jurisdiction to sign judgment for child

support arrearages; continuing exclusive

jurisdiction was in District Court that entered

Support Order). After a judgment for delinquent

child support is obtained, the next friend of such

minor child will be considered a creditor of the

decedent’s estate. Hutchings v. Bates, 393

S.W.2d 338 (Tex. Civ. App--Corpus Christi

1965), aff’d 406 S.W.2d 419 (Tex. 1966). The

next friend must then present a claim in the

amount of the judgement against the decedent’s

estate. If the decedent’s personal representative

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

8

denies the claim, the court handling the probate

proceedings is authorized to render judgment for

such debt against the decedent’s estate. Smith v.

Bramhall, 556 S.W.2d 112 (Tex. Civ. App--

Waco 1977, writ ref’d n.r.e.).

b. Child Support Accrued After

Death

The estate of a deceased person subject to a

child support order is not liable for child support

accruing after death unless agreed to in writing or

expressly provided in the Divorce Decree or

Child Support Order. Tex. Fam. Code Ann.

§154.006. However, one Court has held that

when a child support order is based on the

parties’ written agreement, the order is binding

on the obligor’s estate if it requires the payment

of child support for a definite amount and for a

definite period of time and does not require the

obligation to terminate at the obligor’s death.

Estate of Gorski v. Welch, 993 S.W. 2d 298 (Tex.

App. - San Antonio 1999, pet. denied).

c. Credit for Social Security Death

Benefits

There is a split of authority among Texas

courts as to whether a judgment against a

decedent’s estate for child support payments

should be reduced by the amount of social

security or other governmental death benefits

paid to the same claimant as a result of the

decedent’s death. Compare Estate of Gorski v.

Welch, 993 S.W.2d 298 (Tex. App-San Antonio

1999, pet. denied) (credit allowed even though

agreement silent); and Lake v. Lake, 899 S.W.2d

737 (Tex. App-Dallas, 1995, no writ) (no credit

allowed because agreement did not expressly

provide for the credit). Effective September 1,

2001, child support payment obligations are

reduced by disability benefits and social security

old age benefits paid to or for the benefit of the

child. Tex. Fam. Code §§154.132, 154.133.

3. Debts Due to the United States.

Amounts owed to the United States

Government must be addressed before the

representative can pay any of the claims which

are classified under §322 of the Code. The

Probate Code does not mention amounts which

may be owing to the United States Government.

Under 31 U.S.C.A. §3713(a), a claim of the

United States Government must be paid before

other claims against the estate. Section 3713(a)

provides as follows:

(a)(1) A claim of the United States

Government shall be paid first when -

(A) a person indebted to the

Government is insolvent and

(i) the debtor is without enough

property to pay all debts makes a

voluntary assignment of property;

(ii) property of the debtor, if absent, is

attached, or

(iii) an act of bankruptcy is

committed; or

(B) the estate of a deceased debtor, in the

custody of the executor or administrator, is

not enough to pay all debts of the debtor.

(b) A representative of a person or an estate . . .

paying any part of a debt of the person or estate

before paying a claim of the Government is liable

to the extent of the payment for unpaid claims of

the Government.

The cases have interpreted Section 3713 to

require payment to the IRS above other debts of

the estate; however, family allowances,

administration expenses and funeral expenses

have been determined not to be “debts” and

therefore not subject to the superior priority of

the United States’ claims. United States v.

Weisburn 48 F.Supp. 393 (E.D.Pa.1943); Rev.

Rul. 80-112, 1980-1 C.B. 306.; PLR 8341018

(1983); Schwartz v. Commissioner, 560 F.2d 311

(8 Cir.1977). Note that only administrationth

expenses have a priority over federal tax claims

which are secured by a lien. However, not all

cases are consistent on this matter and care

should be taken in insolvent estates in

determining payment of expenses, debts and

claims due to the Federal Government so as not

to make the personal representative personally

liable for such amounts if assets of the estate

were distributed to creditors, family members or

beneficiaries instead.

4. Order of Payment of Claims.

Although Section 322 provides for the

classification of claims, Section 320 provides the

order of payment of claims and when claims can

be paid. Basically, the order for payment of

claims is as follows: (a) funeral expenses and

expenses of last illness not to exceed $15,000.00;

(b) allowances made to surviving spouse and/or

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

9

children; (c) expenses of administration and

expenses incurred in preservation, safekeeping

and management of the estate; and (d) other

claims against the estate in order of their

classification. After the date letters are granted

and on application by the personal representative

stating that the personal representative has no

actual knowledge of any outstanding or

enforceable claims against the estate, other than

those claims that have already been approved and

classified by the Court, the Court may order the

personal representative to pay any claim that is

allowed and approved. No claims for money

against the estate of a decedent shall be allowed

by the personal representative, and no suit shall

be instituted against the personal representative

on any such claim after an order for the final

partition and distribution is made; but after such

an order has been made, the owner of the claim, if

it is not barred by limitations, shall have an action

thereon against the heirs, devisees, legatees or

creditors of the estate limited to the value of the

property received by them in distribution from

the estate. Probate Code §318.

5. Secured Creditors.

a. Election by Secured Creditor.

When a secured creditor files a claim for

money against an estate, the creditor must

specify, in addition to the other matters required

in a claim: (1) whether it desires to have the claim

allowed and approved as a mature secured claim

that may be paid in the due course of

administration, in which event, it shall paid if

allowed and approved; or (2) whether it is desired

to have the claim allowed, approved and fixed as

a preferred debt and lien against a specific

property securing the indebtedness and paid

according to the terms of the contract, in which

event it shall be so allowed and approved if it is a

valid lien; provided, however, the personal

representative may pay said claim prior to

maturity if it is in the best interest of the estate to

do so. Section 306(a).

b. Time for Election.

A secured creditor must make the election

described above within six months after the date

letters are granted, or within four months after the

date notice is received under Section 295 of the

Code, whichever is later. The secured creditor

may present its claim and specify whether the

claim is to be allowed and approved either as a

matured secured claim or a preferred debt and

lien. If the secured claim is not timely presented,

or if the claim is presented without specifying

how the claim is to be paid, it will be treated as a

claim being paid as a preferred debt and lien, and

no deficiency may be allowed against any other

assets of the estate. Probate Code §306(b).

c. c.Matured Secured Claims.

If a secured claim is allowed as a matured

secured claim, the claim shall be paid in the due

course of administration, and the secured creditor

is not entitled to exercise any other remedies,

including foreclosure, in a manner that prevents

the preferential payment of claims and

allowances as described in the Code. Probate

Code §360(c).

d. Preferred Debt and Lien.

When an indebtedness is allowed as a

preferred debt and lien, no further claim shall be

made against the other assets of the estate by

reason of the claim, but the claim shall remain a

preferred lien against the property securing the

same, and the property shall remain as security

for the debt in any distribution or sale thereof

prior to final maturity or payment of the debt. If

property securing a claim that is allowed as a

preferred debt and lien is not sold or distributed

within six months from the date letters are

granted, the representative of the estate shall

promptly pay all maturities which have accrued

on the debt according to the terms of the contract

and shall perform all of the terms of any contract

securing the same. If the representative defaults

in such payment or performance, on application

of the claimant, the Court shall require the sale of

the property or authorize a foreclosure. The

procedures for a foreclosure and sale of the

property are set forth in Section 306.

F. Setting Aside Exempt Assets

In both a dependent and independent

administration, the personal representative is

required to set aside exempt assets for the use and

benefit of the surviving spouse, minor children

and unmarried children remaining with the family

of the deceased. Exempt property is considered

any property of the estate that is exempt from

execution of forced sale by the Constitution and

laws of the State of Texas. This includes the

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

10

homestead and any property exempt from

execution as set forth in the Texas Property Code.

1. Action by Personal Representative.

Section 271 provides that the personal

representative, immediately after the inventory,

appraisement and list of claims has been

approved, shall by order of the Court, set apart

for the use and benefit of the surviving spouse,

minor children, and unmarried children

remaining with the family, all of such exempt

property of the estate. An independent executor

shall set aside such exempt assets without order

of the Court. Before approval of the inventory,

the surviving spouse, or any person who is acting

or authorized to act on behalf of a minor child of

the decedent, or an unmarried child remaining

with the family of the deceased, may apply to the

Court to have exempt property set aside by filing

an application and verified affidavit listing all of

the property that the applicant claims is exempt.

The applicant bears the burden of proof by a

preponderance of the evidence at the hearing on

the application.

2. Delivery of Exempt Assets.

The exempt property set apart to the

surviving spouse and children shall be delivered

by the executor or the administrator without delay

as follows: (a) if there be a surviving spouse and

no children, or if the children be the children of

the surviving spouse, the whole of such property

shall be delivered to the surviving spouse; (b) if

there be children and no surviving spouse, such

property, except the homestead, shall be

delivered to such children if they be of lawful age

or to their guardian if they be minors; (c) if there

be children of the deceased of whom the

surviving spouse is not the parent, the shares of

such children in such exempt property, except the

homestead, shall be delivered to such children if

they be of lawful age or to their guardian if they

be minors; and (d) in all cases, homestead shall

be delivered to the surviving spouse if there be

one, and if there be no surviving spouse, to the

guardian of the minor children or to the

unmarried adult children, if any, living with the

family. Section 272.

3. Homestead.

A homestead can be defined as being either

urban or rural. An urban homestead is located

within a municipality or subdivision, and is

served by police protection, fire protection, and at

least three of the following: electricity, natural

gas, sewer, storm sewer and water. An urban

homestead can consist of no more than ten acres

of land in one or more contiguous lots, and

includes the improvements thereupon. A

homestead is also considered urban if it is both an

urban home and a place of business. A rural

homestead consists of not more than 200 acres

which may be in one or more parcels and the

improvements thereupon if the home is occupied

by a family; or if the rural home is occupied by a

single adult person, it may not be more than 100

acres.

4. Partition of Homestead.

The homestead rights of the surviving

spouse and children of the deceased are the same

whether the homestead be separate property of

the deceased or the community property between

the surviving spouse and the deceased, and the

respective interest of the surviving spouse and

children shall be the same in one case as in the

other. Probate Code §282. Upon the death of a

spouse, the homestead generally retains its prior

definition either as urban or rural; however, in the

case of a rural homestead, the homestead rights of

the decedent’s surviving spouse and children

continue, but only as to one hundred acres of the

rural homestead, as the spouse and child are at

that point determined to be single persons.

United States v. Blakeman, 750 F.Supp. 216

(N.D.Tex 1990), affirmed in part, reversed in

part, 997 F.2d. 1084 (5 Cir. 1992), cert denied,th

510 U.S. 1042 (1994). The homestead may not

be partitioned among the heirs of the deceased

during the lifetime of the surviving spouse, as

long as the survivor elects to use and occupy the

same as the homestead, or so long as the guardian

of the minor children of the deceased is permitted

under proper order of the Court to use and occupy

the same. Section 284. Note, however, if only an

unmarried adult child of the decedent is living in

the homestead, it may be partitioned. When a

surviving spouse dies or sells his or her interest in

the homestead, or elects to no longer use or

occupy the same as a homestead, or when the

proper court no longer permits the guardian of the

minor children to use or occupy the same as a

homestead, it may be partitioned among the

respective owners thereof in a like manner as

other property held in common. Probate Code

§285. The rights of the surviving spouse or child

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

11

entitled to homestead rights is considered a

homestead life estate under case law. The

homestead life tenant is required to pay

maintenance and upkeep on the property, taxes,

and interest on any mortgage against the

property. Principal payments on the mortgage

and insurance are the responsibility of the

remainder beneficiaries. Trimble v. Farmer, 157

Tex. 533, 306 S.W.2d 157(1957); Hill v. Hill,

623 S.W.2d 779 (Tex. App.-- Amarillo 1981, writ

ref’d n.r.e.).

5. Homestead Free from Debts.

Except as provided in Section 270 of the

Code, the homestead shall not be liable for

payment of debts of the estate. Consequently, if a

constituent family member survives the decedent,

then the homestead passes free from the claims of

creditors, except as to those creditors defined in

Section 270, forever. Constituent family

members include the spouse, minor children and

unmarried adult children remaining with the

family. In George v. Taylor, 296 S.W.2d 620

(Tex. Civ. App—Fort Worth 1956, writ refused

n.r.e.), the homestead is not liable for the

decedent’s debts following the death of the

widow. Anyone who inherits the property

receives it free from debt. Further, the homestead

passes free from debt if the decedent is survived

by a constituent family member whether or not

such family member inherits the house.

Consequently, if the decedent is survived by a

minor child, but such minor child’s guardian does

not elect to exercise the minor child’s homestead

rights to live in the home, the homestead passes

free from the claims of creditors to the ultimate

beneficiaries of the homestead. Nat’l Union Fire

Ins. Co. v. Olson, 920 S.W.2d 458 (Tex. App. --

Austin 1996, no writ).

6. Title to Exempt Assets.

The exempt personal property to be set aside

by the personal representative shall include any

property that is exempt from execution or forced

sale by the Constitution and the laws of the State

of Texas. This includes any property described in

Sections 42.001, et seq. of the Texas Property

Code. A traditional list of exempt assets is found

in Section 42.002, and certain retirement plans,

annuity contracts and life insurance are described

in Section 42.0021. The definition of exempt

property is important because the personal

representative has to determine whether or not the

estate is insolvent. An estate is considered

insolvent if the debts exceed the assets; however,

in ascertaining whether an estate is insolvent, the

exempt property set apart to the surviving spouse

or children, or the allowance in lieu thereof and

family allowance shall not be considered as assets

of the estate. Probate Code §280.

If an estate is insolvent, then upon final

settlement of the estate, the title of the surviving

spouse and children to the exempt properties and

allowances in lieu of exempt property shall

become absolute and are not liable for any of the

debts of the estate except for Class 1 claims.

Probate Code §279. If the estate is solvent, then

the exempt property, except for the homestead

and any allowance in lieu thereof, shall be subject

to partition and distribution among the heirs and

distributees of the estate in like manner as the

other property of the estate. This can be a very

powerful tool in an insolvent estate for setting

aside automobiles, household furnishings,

jewelry and other valuable exempt assets for the

benefit of the surviving spouse, minor children

and unmarried children remaining with the

family.

G. Setting Allowances

In both independent and dependentadministrations, the personal representativeof the estate is required to set certainallowances as required by the Code. In adependent administration, such allowancesare set by application and order of the Court.In an independent administration, thepersonal representative of the estate sets theallowances without approval of the Court.The author of this paper suggests that in anindependent administration, a memorandumof allowance be filed in the probateproceeding setting forth the allowances thathave been set by the independent personalrepresentative. This documents theallowances set. See Appendix B. Allowancessuch as the family allowance, allowance inlieu of exempt assets and allowance in lieu ofhomestead can allow the surviving spouseand children to retain more assets of thees t a t e . C onseq u e n t l y , p e r s o n a lrepresentatives must always be aware of thenecessity for setting such allowances.

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

12

1. Family Allowance

a. Time for Setting. Section 286 provides that immediately after

the inventory, appraisement and list of claims has

been approved, the Court shall fix the family

allowance for the support of the surviving spouse

and minor children of the deceased. However,

before approval of the inventory, a surviving

spouse and any person who is

authorized to act on behalf of the minor child of

the deceased, may apply to the Court for the

family allowance by filing an application and a

verified affidavit describing the amount necessary

for the maintenance of the surviving spouse and

minor children for one year after the date of death

of the decedent, and describing the spouse’s

separate property and any property the minor

children have in their own right. The applicant

bears the burden of proof by a preponderance of

the evidence at any hearing on the application.

The Court shall fix the family allowance for the

support of the surviving spouse and minor

children of the deceased.

b. Amount of Allowance.

Section 287 provides that the amount of the

allowance shall be sufficient for the maintenance

of the surviving spouse and minor children for

one year from the time of death of the testator or

intestate. The allowance shall be fixed with

regard to the facts and circumstances then

existing and those anticipated to exist during the

first year. The allowance may either be paid in a

lump sum or in installments as the Court shall

order. The family allowance is a community debt

and therefore will be satisfied in part out of the

surviving spouse’s half of the community assets

under administration. Miller v. Miller, 235

S.W.2d 624 (Tex. 1951). No allowance shall be

made for the surviving spouse when the survivor

has separate property adequate for the survivor's

maintenance, nor shall such allowance be made to

the minor children when they have property in

their own right adequate for their maintenance.

Section 288. However, it appears that at least one

court does not consider property inherited by the

surviving spouse, or non-probate assets such as

life insurance received by the surviving spouse as

a result of the death of the decedent, when setting

the allowance, although there was no holding to

this effect by the Court. Churchill v. Churchill,

780 S.W.2d 913 (Tex. App.—Fort Worth 1989,

no writ).

c. Payment of Allowance.

The family allowance shall be paid in

preference to all other debts or charges against

the estate except Class 1 claims. Probate Code

§290. The family allowance shall be paid as

follows: (a) to the surviving spouse if there is a

surviving spouse for the use of the surviving

spouse and the minor children if such children be

the surviving spouse’s children; (b) if the

surviving spouse is not the parent of such minor

children or of some of them, the portion of such

allowance necessary for the support of such

minor children of which the surviving spouse is

not the parent shall be paid to the guardian or

guardians of such child or children; (c) if there be

no surviving spouse, the allowance to the minor

child or children shall be paid to the guardian or

guardians of such minor child or children; and

(d) if there be a surviving spouse and no minor

children, the entire allowance shall be paid to the

surviving spouse. Probate Code §291.

2. Allowances in Lieu of Exempt Property

a. Setting Allowances.

Section 273 provides for allowances in lieu

of exempt property if such exempt property is not

on hand

in the decedent’s estate. If there should not be

among the effects of the deceased all or any of

the specific articles exempted from execution or

forced sale by the Constitution and the laws of

the State, the Court may make a reasonable

allowance in lieu thereof to be paid to such

surviving spouse, minor children, and unmarried

children remaining with the family. An

allowance in lieu of a homestead cannot exceed

$15,000.00 and the allowance in lieu of other

exempted property shall not exceed $5,000.00,

exclusive of the allowance for support of the

surviving spouse and minor children. Instances

where an allowance in lieu of homestead might

be appropriate is when the decedent and the

family were living in rented property or if the

mortgage on the homestead is so high that the

surviving spouse or minor children cannot

reasonably be expected to pay the mortgage and

therefore, the home is unavailable for their

occupancy. Ward v. Braun, 417 S.W.2d 888

(Tex. Civ. App.—Corpus Christi 1967, no writ).

PITFALLS OF THE NOT SO “SIMPLE” PROBATE

13

The exempt property other than the homestead or

an allowance made in lieu thereof, shall be liable

for payment of Class 1 claims, but such property

shall not be liable for any other debts of the

estate, as provided in Section 281. Consequently,

an allowance in lieu of homestead is paid before

any other claims. An allowance in lieu of exempt

property may be liable for payment of Class 1

claims but has priority over all other claims.

Further, if the estate is determined to be insolvent

under Section 280, then the allowance in lieu of

exempt property shall be set aside for the

surviving spouse, minor children and unmarried

children remaining with the family above any

other debts of the estate, except in Class 1 claims.

b. Delivery of Allowances.

Section 275 provides that the allowance in

lieu of exempt property shall be paid as follows:

(1) if there be a surviving spouse and no children,

or if all of the children are the children of the

surviving spouse, the whole shall be paid to the

surviving spouse; (2) if there be children and no

surviving spouse, the whole shall be paid to and

equally divided among them if they be of lawful

age, but if any of such children are minors, their

share shall be paid to their guardian; and (3) if

there be a surviving spouse and children of the

deceased, some of whom are not the children of

the surviving spouse, then the surviving spouse

shall receive one-half (½) of the whole plus the

shares of the children of whom the survivor is the

parent, and the remaining share shall be paid to

the children of whom the survivor is not the

parent, or if they are minors, to their guardian.

3. Timely Setting Allowance.

By properly setting a family allowance and

allowances in lieu of exempt property, the

personal representative of the estate can have

more non-exempt assets set aside for the benefit

of the spouse and children over other claimants

against the estate. Consequently, this is an

important part of the duties of the personal

representative, and a personal representative can

be held liable for failure to properly set such

allowances. Further, many courts will not set a

family allowance if the request is made more than

one year after the date of death, the reason being

that if the surviving spouse or minor children

have managed for more than one year, there is

not a need to set allowances to support them for

that year.

H. Non-probate Assets

In most instances, creditors of an estate

cannot reach non-probate assets. Non-probate

assets such as life insurance, IRA’s and qualified

plan assets pass pursuant to the beneficiary

designations and are outside the reach of the

decedent’s creditors unless paid to the estate.

Parker Square State Bank v. Huttash 484 S.W.2d

429 (Tex. Civ. App—Fort Worth 1972, writ

refused); Pope Photo Records, Inc. v. Malone

539 S.W.2d 224 (Tex. Civ. App.—Amarillo 1976,

no writ). However, some non-probate assets,

such as multi-party bank accounts and joint

tenancy with rights of survivorship may be

subject to the claims of creditors. Section 442 of

the Code provides that any multi-party bank

accounts, including right of survivorship

accounts, may be made available as necessary to

pay the decedent’s debts, taxes and expenses of

the administration, including statutory allowances

to the surviving spouse and children if other

assets of the decedent’s estate are insufficient.

Further, any party receiving payment from a

multi-party account after the death of the

decedent shall be liable to account to the

decedent’s personal representative for such taxes

and debts of the decedent, up to the amount

passing to the person from the bank account.

However, in order for the payee to be liable, the

personal representative must receive a written

demand from the surviving spouse, a creditor, or

one acting on behalf of the decedent’s minor

child. Any such action must be brought within

two (2) years after the decedent’s date of death.

A financial institution will not be liable for

paying such sums on deposit to the payee or

beneficiary, unless it receives written notice from

the personal representative stating that the sums

on deposit are needed to pay debts, taxes and

expenses of administration.

II. R E C O V E R I N G T A N G I B L E

ASSETS

A. Right to Possession

A personal representative has both the right

of possession and the duty to acquire possession

of all estate assets. Probate Code § 37 provides:

[U]pon the issuance of letters

14

testamentary or of administration

upon any such estate, the executor

or administrator shall have the

right to possession of the estate as

it existed at the death of the

testator or intestate, with the

exception aforesaid; and he shall

recover possession of and hold

such estate in trust to be disposed

of in accordance with the law.

The personal representative “shall collect and

take into possession the personal property,

records books, title papers and other business

papers of the estate.” Probate Code §232. In

addition, the personal representative is required to

use ordinary diligence to recover possession of all

property of the estate provided there is a

reasonable prospect of recovering such property.

If the personal representative willfully neglects to

use such diligence, he will be personally liable.

Probate Code §233. The executor’s right of

possession is not limited by the fact that there are

no debts or that the one claiming the property is

the sole distributee. Atlantic Ins. Co. v. Fulfs,

417 S.W.2d 302, 305 (Tex. Civ. App. - Fort

Worth 1967, writ ref’d n.r.e); Bloom v. Bear, 706

S.W.2d 146, 147 (Tex. App. - Houston [14 th

Dist.] 1986, no writ) (Probate court was obligated

to sign order directing that prospective devisee

deliver decedent’s property to independent

executor).

Upon the issuance of Letters Testamentary,

the executor should immediately request that any

person having possession of assets, records or

other property of the decedent’s estate turn over

such items to the executor. If these informal

requests are not successful, the executor has

several options.

B. Show Cause Order

The most expeditious procedure is a show

cause proceeding. A show cause order is a

creature of the common law, but the case law is

sparse. See Texas Mexican Ry. Co. V. Locke, 63

Tex. 623, 1885 WL 7097 (1885); Turner v.

Turner, 576 S.W.2d 452 (Tex. App. - Houston [1st

Dist.] 1978); Green v. Green, 424 S.W.2d 479

(Tex. Civ. App. - Tyler 1968, no writ). Executors

and administrators are governed by the principles

of the common law, if they do not conflict with

the provisions of Texas Statutes. Probate Code

§32. A show cause Order is preliminary and

inconclusive in nature. It is not used to resolve

substantive legal issues. A show cause order

requires another to appear and show cause why

an order directing some action should not be

issued. If no such cause is shown, the order will

be entered.

Some courts have questioned the use of a

show cause order. In Francis v. Beaudry, 733

S.W.2d 331 (Tex. App. – Dallas 1987, writ ref’d

n.r.e.), the Administrator of an estate filed a

Motion to Show Cause requesting the court to

order two remaining stock holders of a

corporation of which the decedent owed an

interest to appear and show cause why they

should not be required to pay to the

Administrator a certain sum of money allegedly

owed to the decedent. The two stockholders

appeared, and the court conducted a full trial on

the issue and entered a money judgment against

them. Although the court of appeals affirmed the

judgment for other reasons, the court specifically

commented “in order that future litigants will not

be led astray by the procedure used” that the

proper procedure would have been to file an

original petition rather than a motion to show

cause. However, the court noted that the trial

court conducted the proceedings as though the

motion to show cause was in fact an original

petition and that neither of the defendants

objected to the procedure or raised any point of

error concerning the use of the motion to show

cause. This case may be distinguishable from

other cases on the basis that the show cause

proceeding was used to address what appeared to

be substantive legal issues. See also Poindexter

v. Brandon, 527 S.W.2d 824 (Tex. App. – El

Paso 1975, no writ).

Other cases, however, have made no

objection to the show cause procedure. In Powell

v. Hartnett, 521 S.W.2d 896 (Tex. App. –

Eastland, 1975, no writ), the Administrator filed a

motion requiring an individual to appear and

show cause why he should not be required to

deliver certain money in his possession alleged to

belong to the decedent. The court ordered and

directed the individual to turn over the funds to

the Administrator. The court specifically stated

that the “order does not dispose of the issue of

ownership of the money or note, a fact

recognized by Powell. It merely places the items

under the care and control of the Probate Court

until a final determination of ownership be

made.” Similarly, in Brooks v. Norris, 1997 W.

15

L. 695588 (Tex. App. – Dallas) (not for

publication), a judgment creditor whose claim

had been allowed by the Administrator and

approved by the Probate Court obtained a show

cause order against Brooks requiring him to show

why he should not be required to vacate the

decedent’s house and deliver all of the decedent’s

assets to the Administrator. The Probate Court

ordered Brooks to vacate the house and surrender

the decedent’s property. The Court of Appeals

affirmed the judgment without commenting on

the use of the show cause procedure. See also

Texas Mexican R’y Co. v. Locke, 63 Tex. 623,

1885 W.L. 7097 (Tex.) (Although filing a

petition may have been better approach, show

cause was sufficient for purposes of this case).

The usual procedure is to first file a Motion

for Show Cause Order, present it to the Judge ex

parte and obtain an Order to Show Cause, which

directs the party to appear and show cause, if any,

why the requested order should not be made.

Citation must be served on the defendant and the

hearing date set after the Monday following at

least ten (10) days from the date of service.

Probate Code §33(f)(1). At the hearing, evidence

is presented, and an Order on the Order to Show

Cause will be signed either granting or denying

the requested action. Sample forms are attached

as Appendix C.

The Section 145(h) limitation on judicial

supervision of an independent executor should

not prevent an Independent Executor from

obtaining a show cause order. Such section

prohibits a court from interfering in an

independent executor’s administration of an

estate, but does not prohibit an independent

executor from accessing the courts. An

independent executor is entitled to the same

judicial relief available to other parties. As stated

in Etter v. Tuck, 91 S.W.2d 875 (Tex. Civ. App. -

Dallas 1936, writ dismissed);

An Independent Executor is not a law

unto himself. His “independence”

consist largely in his right in the

administration of such estate to do

without an order of the County Court

every act which he could do with such

an order, were he acting under the

control of such court . . . His

management of the estate is an

“Administration” of the same in

contemplation of the law, and for some

purposes the estate remains all the

while under the jurisdiction of the

County Court probating the Will under

which he is acting.

C. Order Under Sections 232, 233.

As previously mentioned, a personal

representative is required to immediately collect

and take into possession the personal property,

records books, title papers and other business

papers of the estate and to use ordinary diligence

to recover possession of all estate property.

Probate Code §§232, 233. Although the author

has not used this approach, these sections appear

to authorize the court to issue an order directing

an individual to turn over estate assets to the

personal representative. In Bloom v. Bear, 706

S.W.2d 146, 147 (Tex. App. – Houston [14 th

Dist.] 1986, no writ) the independent executor of

an estate had attempted on three separate

occasions to have the probate judge sign an order

directing an individual to deliver property

admittedly belonging to the decedent in such

individual’s possession, but the probate court had

refused. The independent executor filed a

mandamus action. Citing Sections 37, 232 and

233 of the Probate Code, the Court of Appeals

found that the executor’s right to possession and

duty to acquire such possession, are enforceable

by court order. The Court of Appeals found no

authority allowing the individual to maintain

possession of the property until the validity of her

claim was settled and held that the judge’s refusal

to sign the order constituted an abuse of

discretion.

D. File Suit and Seek Injunctive Relief

An executor or administrator may file suit to

recover estate property and should do so if there

is a reasonable prospect of recovering the

property. Probate Code §§232, 233, 233A. In

connection with such a lawsuit, a “mandatory”

temporary restraining order and/or temporary

injunction that compels the defendant to turn over

the disputed property to the Administrator

pending a final determination of ownership could

be requested. The rules governing injunctive

relief are found in Texas Civil Practice and

Remedies Code §65.001 et. seq.

A statutory county court exercising probate

jurisdiction or statutory probate court is

authorized to issue writs of injunction and all

16

writs necessary for the enforcement of the

jurisdiction of the court. Tex. Gov. Code

§25.0004. See Lucik v. Taylor, 596 S.W.2d 514

(Tex. 1980) (injunctive relief is “incident to an

estate” because it directly bears on the ultimate

collection and distribution of estate assets.);

Smith v. Lanier, 998 S.W.2d 324 (Tex. App. -

Austin 1999, writ denied); Dodson v. Seymour,

664 S.W.2d 158 (Tex. App. - San Antonio 1983,

no writ); and Edder v. Tuck, 91 S.W.2d 875 (Tex.

Civ. App. - Dallas 1936, writ dismissed). See

also Estate of Lee, 981 S.W.2d 288 (Tex. App. -

Amarillo 1998, writ denied). Based on the

administrator’s right to possession of the property

during the estate administration and his duty to

protect and preserve estate property, and the

beneficiarys’ right to receive the decedent’s

property, the elements of irreparable injury and

lack of an adequate legal remedy should be met.

E. Contempt Actions

1. Authority of the Court to Find Contempt

If a person ordered to turn over estate

property refuses to do so, the Court may use its

contempt powers. The statutory probate court,

the county court at law with probate jurisdiction,

the constitutional county court, and the district

court all possess authority to enforce their acts

and orders through the use of contempt powers.

These courts may punish acts of civil contempt

by a fine not exceeding $500, confinement in the

county jail for not more than six (6) months, or

both a fine and confinement. Tex. Gov. Code

§21.002(b). Alternatively, the court may order

confinement of the party until the contemptor

purges the contempt by complying with the court

order which gave rise to the contempt. Ex Parte

Werblud, 536 S.W.2d 542 (Tex. 1976). While it

is correct that a contemptor may be confined until

he or she has complied with the court order, a

habeas corpus action is proper where the

contemptor does not have the power to comply.

Ex Parte DeWees, 146 Tex. 564, 210 S.W.2d 145

(1948). In addition to general contempt

authority, the Probate Code also permits the

county or probate judge to confine executors,

administrators and guardians for up to three (3)

days for each offense of failure to obey court

orders. See Tex. Prob. Code Ann. §§24, 651.

2. Definitions

Criminal and civil contempt are both

subjective in nature and, therefore, should only

have decisions rendered on a case by case basis.

Neither the Texas Rules of Civil Procedure nor

the Texas Civil Practice and Remedies Code

furnish us with a definition of the term contempt.

Civil contempt has been defined, however, as

conduct which impedes, embarrasses, or obstructs

the Court; or interferes or prejudices parties or

witnesses; and places the authority for

administering the law in disrespect or impedes

the court’s operation. Black’s Law Dictionary,

Page 288 (5 ed. 1979).th

There are recognized two separate and

distinct types of contempt – criminal and civil.

Acts of criminal contempt are those which go

against the dignity of the Court. See Ex Parte

Landry, 65 Tex. Crim. App. 1912). These are

acts which show disrespect to the court or to its

process or which obstruct the administration of

justice. Ex Parte Arapis, 157 Tex. 627, 306

S.W.2d 884 (1957). Criminal contempt has

sometimes been called direct contempt and is an

appropriate response for conduct in open court

which denounces, insults and slanders the court

and which paralyzes its proceedings. Mayberry

v. Pennsylvania, 400 U.S. 455, 91 S.Ct. 499, 27

L.Ed.2d 532 (1973).

Contrary to criminal contempt actions which

are usually assessed as punishment, civil

contempt or constructive contempt actions are

generally instituted to preserve and enforce the

rights of private parties to suits and to compel

obedience to court orders and decrees. See Ex

Parte Padron, 565 S.W.2d 921 (Tex. 1978). A

contempt proceeding is generally by its very

nature considered criminal, whether it arises out

of a criminal or civil action. Willson v. Johnston,

404 S.W.2d 870 (Tex. Civ. App. – Amarillo

1966, no writ). The only recourse provided for a

contempt judgment is a habeas corpus in the

appellate court. In a habeas corpus proceeding,

the guilt or innocence of the person is not at issue

and it is only the legality of the detention that is

in question. Ex Parte Friedman, 808 S.W.2d 166

(Tex. Civ. App. – El Paso - 1991, no writ).

Additionally, there exist two subcategories of

contempt, direct and constructive, each of which

is discussed below.

3. Direct Contempt

Acts of direct contempt are those which take

place in the presence of the court and which are

17

subject to summary punishment. Ex Parte

Werblud, supra at 546. In such cases, punishment

may take the form of fine or commitment to jail,

without charges, without notice and without a

hearing. Tex. Gov. Code §21.002. A finding of

direct contempt may be oral and the judge may

summarily punish the offender by fine and/or

confinement. Ex Parte Norton, 144 Tex. 445,

191 S.W.2d 713 (1946). The procedural

requirements for a direct contempt order are:

a. The court must have

jurisdiction of both the

subject matter and of the

parties. Typically, the

court has continuing

j u r i s d i c t i o n o v e r

dependent estates or

guardianships; however,

in independent estates,

one must make sure that

the jurisdiction of the

Court has been invoked

b e fo re seek in g th is

extreme relief.

b. T h e r e m u s t b e

substantial evidence to

validate the contempt

j u d g m e n t . M e r e

s u s p i c i o n o f

d i s o b e d i e n c e o r

interference will not do.

Deramus v. Thornton,

160 Tex. 494, 333

S.W.2d 824 (1960).

c. A written order of

c o m m i t m e n t e i t h e r

separately, or as a part of

the contempt order, must

be submitted.

4. Constructive Contempt

Actions of constructive contempt are acts

which usually take place outside the presence of

the court. Constructive contempt is not presumed

to exist and the burden of proof is more stringent.

Ex Parte Cragg, 133 Tex. Crim. 118, 109 S.W.2d

479 (1937). The contemptuous acts must be

those which tend to belittle, degrade, obstruct,

interrupt, prevent or embarrass the administration

of justice. See Ex Parte Payle, 134 Tex. 148, 133

S.W.2d 565 (1939). The procedural requirements

for constructive contempt are:

a. The Court must have

jurisdiction of both the

subject matter and of the

parties.

b. There must be a specific

written complaint which

a l l e g e s t h e f a c t s

necessary to form the

b a s i s f o r t h e

contemptuous acts. The

person must receive full

a n d u n a m b i g u o u s

n o t i f i c a t io n o f th e

accusation of his or her

contemptuous conduct.

The notice should be in

the form of a show cause

order personally served

o n t h e a l l e g e d

contemnor, and should

state when, how and by

w h a t m e a n s t h e

contem nor has been

guilty of contempt. Ex

Parte Friedman, supra,

at 169.

c. Reasonable notice must

be given to the party

charged with the acts and

omissions.

d. There must be a hearing

conducted on the charges

of contempt. Where the

contempt sentence is

under six months, there

is no right to a jury trial.

At the hearing, the

alleged contemnor may

not be forced to testify

and may even refuse to

be sworn as a witness.

See Ex Parte Werblud,

supra, at 548. A jury

trial is guaranteed where

the cumulative amount

of punishment exceeds

six months. Punishment

for contempt cannot be

de term in ed p rior to

hearing. Ex Parte

18

Griffin, 682 S.W.2d

261 (Tex 1984),

states that it is

incumbent on the

trial judge to advise

the contemnor of his

right to a trial by

jury if the potential

p u n i s h m e n t h a s

“serious” overtones.

Ex Parte Sproull,

815 S.W.2d 250

(Tex. 1991), states

that the trial court

record must show

affirmative notice of

the right to a jury

trial and a waiver of

such right will not

be presumed. Ex

Parte Mathis, 822

S.W.2d 727 (Tex.

App. – Tyler 1991,

no writ).

e. E v id en c e m u s t b e

offered to prove the

contemptuous conduct.

Thus, where a will

contestant was ordered to

produce a diamond ring

taken at the deathbed of

decedent and failed to do

so, and then produced a

d i f f e r e n t r i n g ,

i m p r i s o n m e n t f o r

contempt was found to

be proper. See Clanton

v. Clark, 639 S.W.2d

929 (Tex. 1982).

f. The moving party must

a l s o s h o w b y a

preponderance of the

e v i d e n c e t h a t t h e

contemnor has violated a

court order. See Whatley

v. Whatley, 493 S.W.2d

299 (Tex. Civ. App. –

Dallas 1973, no writ).

g. A written order or

judgment reciting the

court’s jurisdiction and

the acts of misconduct

must be entered. Thus,

where an attorney agreed

to prepare an order to

appoint a temporary

administrator and to

t ra n s fe r a n d f re e ze

assets, and the order

freezing the assets was

never signed, there was

no basis for a contempt

proceeding. Without the

signed order there was

not violation upon which

a contempt could be

based. See Parham v.

Wilbon, 746 S.W.2d 347

(Tex. App. – Fort Worth

1988, no writ).

h. There must be a written

order of commitment, or

the commitment must be

a part of the judgment.

Ex Parte Barnett, 600

S.W.2d 252 (Tex. 1980).

5. Distinguishing Contempt

The method used most often to distinguish a

criminal or direct contempt from a civil or

constructive contempt is to look at the method

used for purging the contempt. When a criminal

contempt of court occurs, the penalty is typically

confinement for a finite number of hours or days

and/or a fine which is solely for the purpose of

punishing the contemnor. Beverly v. Roberts,

215 S.W. 975 (Tex. Com. App. 1919). In

contrast, the penalty for a civil contempt action is

coercive and remedial in nature, and the primary

purpose is not to punish, but to bring the

contemnor in compliance with the court’s order.

Imprisonment is conditional upon obedience and

therefore, the civil contemnor “carries the keys to

his prison in his own pocket.” Ex Parte Werblud,

supra, at 545.

6. Due Process

a. Notice

Where the court’s basis for contempt is not

founded on direct acts of the contemnor in open

court, a formal Motion for Contempt must be

filed and it must be served personally on the

person to be held in contempt. Ex Parte Avila,

659 S.W.2d 443 (Tex. Crim. App. 1983). The

19

importance of the type of notice provided must be

stressed in that a contempt judgment without

proper service is void. Therefore, personal

service is required regardless of whether the

contemnor has counsel. Ex Parte Herring, 438

S.W.2d 801, 803 (Tex. 1969).

To accommodate due process considerations

in a contempt action, complete and adequate

notice of the alleged acts must be furnished the

party to be charged. This notice must tell the

contemnor when, how, and by what means he or

she has been guilty of contempt. Ex Parte

Martin, 656 S.W.2d 443, (Tex. Crim. App.

1982); Ex Parte Bagwell, 754 S.W.2d 490 (Tex.

App. – Houston [14 Dist.] 1988, no writ).th

b. Pleadings

(1) Specificity - Any party

c h a r g e d w i t h

disobedience or failure to

comply with a court

order or direction, must

receive a copy of the

specific court order prior

t o t h e t i m e t h a t

compliance was ordered.

Ex Parte Blanchard, 736

S.W.2d 642 (Tex 1987).

Be aware that any show

c a u s e o r d e r w h ic h

merely directs a person

to appear at a date, place

and time certain without

more specific details

would be insufficient to

inform that person of the

accusations against him

and, thus, fail to support

an order of contempt. Ex

P a r te G o rd o n , 5 8 4

S.W.2d 686 (Tex. 1979).

A failure to extend the

minimum requirements

of due process to the

party renders a judgment

of contempt void. Ex

Parte Pink, 645 S.W.2d

262 (Tex. Crim. App.

1982).

(2) Ambiguity - A court

may not verbally order a

person found guilty of

constructive contempt

co n f in ed w i th o u t a

written order. Also, any

contempt order must be

reduced to writing within

a reasonable time. Ex

Parte Calvillo Amaya,

748 S.W.2d 224 (Tex.

1988). The contempt

o r d e r m u s t b e

unambiguous and correct

as to its findings. If the

o rd e r c o n ta in s tw o

grounds as a basis for

contempt and only one is

c o r r e c t , t h e e n t i r e

judgment is void. Ex

Parte Lee, 704 S.W.2d

15 (Tex. 1986); Ex Parte

Herrera, 820 S.W.2d 54

(Tex. App. – Houston

[14 . Dist.] 1991 noth

writ).

(3) Opportunity to Purge -

A court should, in

constructive contempt

situations, provide the

person, where possible,

an opportunity to purge

h i m s e l f f r o m h i s

contemptuous actions.

Thus, a judgment would

be void and habeas

corpus proper, where the

c o n d i t i o n s f o r t h e

purging of oneself from

contem pt can not be

performed. Ex Parte

Chennault, 776 S.W.2d

7 0 3 (T ex . A p p . –

Texarkana 1989, no

writ). It is important that

the substance of a motion

is not to be determined

from its caption or

heading, but from its

body and prayer for

relief. Therefore, the

grounds for contempt

and the actions needed to

cure such contempt must

be revea led to the

c o n t e m n o r b y t h e

pleadings. See Woodruff

20

v . C o o k , 7 2 1

S.W.2d 865 (Tex.

App. – Dallas 1986,

writ ref’d n.r.e.). Ex

P a r t e W e r b l u d ,

supra, at 545.

c. Miscellaneous Provisions

(1) Continuance of Hearings

- Where a contempt

action is warranted, and

ordered, but is then

suspended by agreement,

it may not be reurged

w h en noncom p liance

o c c u r s w i t h o u t a

subsequent hearing. In

like fashion, when the

o r i g i n a l o r d e r o f

contempt is suspended

for any reason, there

must be a subsequent

hearing, with notice and

evidence, before the

court may determine that

a b r e a c h o f t h e

c o n d i t i o n s o f t h e

suspension exist. In re:

Sanchez, 698 S.W.2d

462 (Tex. Civ. App. –

Corpus Christi 1985, no

writ); Ex Parte Pink,

supra, at 264; Re: Ross,

749 S.W.2d 289 (Tex.

App. – Houston [14 th

Dist.] 1988, no writ).

(2) Appointment of Counsel

– I n a c o n t e m p t

proceeding a probate

court or court exercising

p ro b a te j u r i s d i c t io n

could be required to

provide counsel to an

indigent person. When a

c o n te m p t ac t io n i s

instituted, due process

requires that before an

indigent person may be

charged with contempt,

he or she must be

p r o v i d e d w i t h t h e

assistance of counsel

where imprisonment may

b e i m p o s e d a s a

punishment. Ex Parte

Goodman, 742 S.W.2d

536 (Tex. App. – Fort

Worth 1987, no writ).

There is no specific

guidance on how the

court is to determine that

t h e c o n t e m p t o r i s

indigent.

(3) Officers of the Court -

T h e j u d g e i s n o t

permitted to summarily

punish an officer of the

court even where the

c o n d u c t i s d e e m e d

contemptuous. D ue

process requires that the

officer of the court be

granted a hearing before

another judge. Tex.

G o v . C o d e s e c .

21.002(d). See also, Ex

Parte Martin, supra, at

444. The officer of the

court should, in most

situations, be released on

h i s o r h e r o w n

recognizance, pending

th e h earing of the

con tem p t proceed in g

before another judge.

(4) Monetary Sanctions - It

is important to note that

while the imposition of

monetary sanctions may

be made by the trial

court, they must be

properly applied. Thus,

in Ex Parte Conway, 843

S.W.2d 765 (Tex. App. –

Houston [14 Dist .]th

1992, no writ), the court

denied the application

when faced with a claim

t h a t t h e m o n e t a r y

sanctions precluded the

litigant’s free access to

the courts. The imposing

of sanctions does not in

21

itself restrict access

where payment is

deferred until final

judgment. Branden

v. Downey, 811

S.W.2d 922, 929

(Tex. 1991). The

t r i a l c o u r t c a n

regulate trials, and

p u n i s h f o r

contempt. Ex Parte

Jones, 331 S.W.2d

202 (Tex. 1960).

But its power is not

unlimited. It must

re s t r ic t p aym en t

u n t i l t h e

proceedings have

concluded or hold a

hearing and make

specif ic f ind ings

that the sanction

does not violate the

l i t i g a n t ’ s

constitutional rights.

Thomas v. Capital

Security Service ,

Inc., 836 F.2d 866,

882-83 (5 Cir.th

1988).

(5) Delay - Where an order

of contempt was not

reduced to writing and

signed until three days

after the contemptor’s

confinement, the order

was void and habeas

corpus will issue Ex

P a r t e J o r d a n , 8 6 5

S.W.2d 459 (Tex. Civ.

App. 1993).

III. C O N V E R T I N G B E T W E E N

I N D E P E N D E N T A N D D E P E N D E N T

ADMINISTRATIONS

A. Converting from Independent to

Dependent

1. This might be considered if it is determined

that an estate is insolvent or has substantial

unanticipated debts, there are beneficiaries who

are unhappy, disputing or making inconsistent

demands, or the independent executor has

conflicts of interest. It is advisable to have the

court supervise the classification priority and

payment of claims in an insolvent estate. Where

there are substantial debts owed by the decedent,

application of the formal claims procedures may

eliminate certain creditors. Where there are

disputes among the beneficiaries and/or with the

independent executor, a dependent administration

will offer protection for all parties and avoid

unnecessary delay and expense.

2. In order to convert, the independent

executor would file an application to resign and

for the appointment of a successor. Probate Code

§221. If necessary, the court may immediately

appoint a successor without citation or notice.

Probate Code §§221, 220. Otherwise, the notice

and hearing requirements prescribed for original

applications would apply. Probate Code §223.

Under Section 145(r), a resigning independent

executor may be appointed as the dependent

executor or administrator. The resigning

independent executor probably would not be

required to file a Final Account, but due to the

successor’s duty to investigate the actions of the

predecessor, it may be advisable if the successor

is not the same person as the prior independent

executor. See DiPortanova v. Hutchinson, 766

S.W.2d 856 (Tex. App. -- Houston [1 Dist.]st

1989, no writ). Since the successor dependent

administrator is not named in the will, he will not

have the powers and duties given to the executor

named in the will. His powers and duties will be

conferred by the Probate Code. Probate Code

§224. In addition to the powers conferred by the

Probate Code, the court may grant to the

dependent administrator certain powers specified

in the will under certain circumstances. Probate

Code §154. The successor must file an

Inventory, Appraisement and List of Claims

within ninety (90) days after qualification.

Probate Code §227 . If the dependent

administrator is different from the independent

executor, the former independent executor must

deliver all of the property and records of the

estate to the successor. Probate Code §232.

Section 296 provides that the published notice to

creditors, the permissive notice to unsecured

creditors and the notice to secured creditors need

not be repeated by a successor personal

representative. However, this provision does not

appear to contemplate a change in the type of

administration. Due to the difference in the

requirement for the form and presentment of

claims in a independent administration and a

22

dependent administration, the safer approach

would be to reissue the notices to the creditors

whose time to file a claim has not expired.

B. C o n v ertin g f rom D ep en d en t to

Independent Administration

1. Converting from a dependent administration

to an independent administration will be required

if a lawful will is discovered after letters of

administration have been issued. Probate Code

§220(e). Conversion also might be considered

where an anticipated insolvent estate or one

involving substantial creditor or beneficiary

disputes turns out to be less controverted or the

problem areas are resolved and conversion would

save administration expenses.

2. The steps for converting from dependent to

independent are the same as discussed above

except that a resigning dependent administrator’s

application to resign must be accompanied by a

final account. The court may immediately accept

such resignation and appoint a successor if

necessary but shall not discharge the resigning

representative until his final account has been

approved. Probate Code §221.

3. Immediately upon the appointment of anindependent executor, the independentadministration begins and the formerdependent administration ceases, despite thefact that the dependent administrator has notyet been officially discharged. The probatecourt is not authorized to withhold funds inthe registry of the court from the independentexecutor pending final discharge of thedependent administrator. D’Unger v.DePena, 931 S.W.2d 533 (Tex. 1996).

IV. A D M I N I S T E R I N GC O M M U N I T Y P R O P E R T Y I NDISPUTED ESTATES

A. Introduction

Difficult issues can arise where the

surviving spouse is not the sole beneficiary of the

decedent spouse’s share of the community

property and the character of the property as

community or separate is in dispute. If the

named executor is not the surviving spouse and is

a beneficiary under the will, serving as the

personal representative presents tremendous

potential for conflicts of interest. The author

strongly suggests that, under such circumstances,

a beneficiary should decline to serve as the

personal representative or serve only as a

dependent administrator. Some of the potential

issues are discussed below.

1. Probate Code §177(b)

The personal representative of the

decedent’s estate administers all of the jointly

managed community property, including the

surviving spouse’s one-half, pursuant to Probate

Code Section 177(b), which provides as follows:

When an executor of the estate of a

deceased spouse has duly qualified,

such executor is authorized to

administer, not only the separate

property of the deceased spouse, but

also 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, as

surviving partner of the marital

partnership, is entitled to retain

possess ion an d con tro l o f a ll

community property, which was legally

under the sole management of the

s u r v i v i n g s p o u s e d u r i n g t h e

continuance of the marriage, and to

exercise over that property, all the

powers elsewhere in this part of this

Code authorized to be exercised by the

surviving spouse when there is no

administration pending on the estate of

the deceased spouse. The surviving

spouse may by written instrument filed

with the clerk waive any right to

exercise p ow ers as com m unity

survivor, and in such event, the

executor or administrator of the

deceased spouse shall be authorized to

administer upon the entire community

estate.

2. Fiduciary Duties

Since the executor of the deceased spouse’s

estate administering 177(b) property holds

property belonging to, and for the benefit of, the

surviving spouse, the executor is a fiduciary and

owes the fiduciary duties of a trustee in

23

connection with the administration of all of the

community estate. See Probate Code §37; Bailey

v. Cherokee Cty. Appraisal Dist., 862 S.W2d 581

(Tex. 1993); Ertoel v. O’Brien, 825 S.W.2d 17

(Tex. App. – Waco 1993, writ denied);

McLendon v. Mandel, 862 S.W.2d 662 (Tex.

App. – Dallas 1993, writ denied); Humane Soc’y

v. Austin Nat’l Bank, 531 S.W.2d 574, 577 (Tex.

1975). An Arizona case clearly defines this

fiduciary relationship. Estate of Shano v.

Fiduciary Services, Inc., 177 Ariz. 550, 869 P.2d

1203 (1994) (because the administrator was

entitled to possess and administer the survivor’s

community property, the administrator owed the

surviving spouse fiduciary duties.) The fiduciary

duty of loyalty prohibits the executor from using

his position to gain any benefit for himself at the

expense of any beneficiary. Slay v. Burnett Trust,

187 S.W.2d 377, 388 (Tex. 1945). A transaction

is unfair if the fiduciary significantly benefits

from it as viewed in light of circumstances

existing at the time of the transaction. Estate of

Towns v. Towns, 867 S.W.2d 414, 417 (Tex.

App. – Houston [14 Dist.] 1993, writ denied)th

The executor should not be allowed to benefit at

the expense of the Section 177(b) property, either

in an individual capacity or on behalf of the

estate. This type of conflict would arise if the

executor took a position regarding the character

of probate assets that was adverse to the

surviving spouse and beneficial to the executor as

a beneficiary (i.e., that certain assets were the

decedent’s separate property rather than

community property. Such a conflict probably

would render the administrator incapable of

performing his duties. See Hitt v. Dumitrov, 598

S.W.2d 355, 356 (Tex. Civ. App. – Houston [14 th

Dist.] 1980, no writ). In Estate of Shano v.

Fiduciary Services, Inc., the Arizona Court of

Appeals held that the competing interests

between the administrator of the decedent’s estate

in his role as manager of the survivor’s interest in

the com m unity p roperty p reven ted the

administrator from exercising the independent

judgment necessary to discharge his fiduciary

duty to the surviving spouse. The court quoted

an old proverb to define this dilemma, “no man

can serve two masters.” See Id. at 556. In Home

Insurance Company v. Wynn, 229 Ga. 220, 493

S.E.2d 622, 626 (1998), the Georgia Court of

Appeals also described this type of conflict of

interest:

It is generally, if not always, humanly

impossible for the same person to act

fairly in two capacities and to represent

antagonistic interests on behalf of two

interests in the same transaction.

Consciously or unconsciously [s]he

will favor one side as against the other.

If one of the interests involved is that

of trustee personally, selfishness is apt

to lead [her] to give [her]self an

advantage. If permitted to represent

antagonistic interests the trustee is

placed under temptation and is apt in

many cases to yield to the natural

prompting to give [her]self the benefit

of all doubts.

The executor would have a conflict of

interest in taking any position regarding the

character as estate property as community or

separate and would violate his duty of loyalty to

the surviving spouse if any community funds

were spent to pursue a position adverse to the

surviving spouse. These conflicts are less likely

to occur in a dependent administration because

court approval is required to take any action,

including expenditure funds, payment of claims,

and filing suit. If these issues arise after an

independent administration has been established,

consideration should be given to converting to a

dependent administration to avoid breach of

fiduciary duty claims against the executor. If this

is not practical, it may be necessary to recognize

that the personal representative may not be able

to serve both as executor of the decedent’s estate

and as manager of the Section 177(b) property.

3. Inventory

If the character of property as separate or

community is in dispute, even the filing of an

inventory can present potential fiduciary issues

for the executor. The inventory is required to

specify what property is separate and what is

community property. Probate Code §250. The

executor should not file the inventory in a manner

that is beneficial to some beneficiaries and

harmful to others if there is a bonafide dispute.

Although an inventory that has been approved

does not conclusively determine the character of

the property, it does serve as prima facie evidence

of the property’s character. Also, an order

approving an inventory is a final, appealable

order. McKinley v. McKinley, 496 S.W.2d 540

(Tex. 1973); Krueger v. Williams, 163 Tex. 545,

359 S.W.2d 48 (1962); Garner v. Long, 106

S.W.3d 260 (Tex. App. – Fort Worth 2003, no

24

pet. h.). Thus, if an inventory is filed pending a

dispute that is contrary to a beneficiary’s

position, the beneficiary should object to the

inventory. If the inventory is approved, the order

should be appealed. Otherwise, the order

approving the inventory will become final and

would appear to reverse the community property

presumption. In order to comply with the

fiduciary duty of loyalty to all beneficiaries of the

property under administration, the executor

should remain neutral in connection with

disputed matters. The author suggests that where

the separate and community property character of

estate assets are in dispute, that a preliminary

inventory be filed reflecting the disputed property

without characterizing it as separate or

community, indicating the nature and existence of

the dispute, and stating that an amended

inventory will be filed when the dispute has been

resolved.

4. Probate Code §156

Section 156 provides that the decedent’s

sole management community property and the

joint management community property continue

to be subject to the deceased spouse’s liabilities

upon death. The personal representative of the

deceased spouse’s estate must keep a “separate,

distinct account of all community debts allowed

or paid in the administration and settlement of

such estate.” Should the decedent’s personal

representative also segregate the surviving

spouse’s one-half interests in the community

property or in the disputed community property?

In order to properly account to the surviving

sp ouse, p roperly allocate rece ip ts an d

expenditures and pay community debts,

segregation would seem to be required.

5. Powers of Executor

In a 177(b) administration; the issue is

whether the executor of the deceased spouse’s

estate derives his powers and duties relating to

the administration of the surviving spouse’s

interests in the community estate from the

decedent’s will or from the Probate Code.

Although no Texas case has addressed this issue,

it would seem that the powers should be

governed by the Probate Code rather than the

decedent’s will since the will covers only the

decedent’s property. This raises numerous issues

regarding the executor’s ability to take actions

relating to the surviving spouse’s property,

including the need for prior court approval to

expend or sell any of the §177(b) property,

compensation of the executor (which probably

would be limited to the statutory commission

under §241(a) as to the survivor’s property under

administration), accountings by the executor,

bond requirements, and the allocation and

p aym en t o f ex p en ses re la t in g to th e

administration of community property. For

further discussions of these issues, See Ikard,

A D M I N I S T R A T I O N O F C O M M U N I T Y

PROPERTY AFTER A SPOUSE’S DEATH, 1996

Annual Advanced Estate Planning and Probate

Course; and Hopwod & Patterson, PROBATE

D I S P O S I T I O N - C O M M U N I T Y

ADMINISTRATION, 2003 Annual Advanced

Estate Planning and Probate Course.

V. DEALING WITH THE NON-

PAYING CLIENT

A. Representing the Independent Executor

1. Engagement Letter

As with all clients, it is important to have an

engagement letter that specifies the scope and

nature of the legal representation, the relative

responsibilities of the attorney and the client, and

defines the attorney’s compensation and

reimbursement of expenses. The engagement

letter should state that the attorney represents the

executor solely in his fiduciary capacity and not

individually, if he also is a beneficiary of the

estate. In addition, the engagement letter should

state that attorney’s fees and expenses are estate

administration expenses payable out of estate

assets. If the estate has liquidity problems, the

agreement should specify how legal fees will be

paid. If a sale of property will be necessary in

order to pay fees, it may be advisable to specify

the property to be sold to avoid any

misunderstandings. The terms of the will and the

abatement provisions of Section 322B of the

Probate Code should be considered in

determining what property would be sold.

Section 322B provides for the sale of a

decedent’s property for debts and expenses of

administration (other than estate taxes) in the

following order:

(1) p r o p e r t y n o t

disposed of by will,

b u t p a ss in g b y

intestacy;

(2) personal property of

25

the residuary

estate;

(3) real property of the

residuary estate;

(4) general bequests of

personal property;

(5) general devises of

real property;

(6) specific bequests of

personal property;

and

(7) specific devises of

real property.

The above provisions apply absent a different

intent expressed in the will. Similarly, if the

executor will need to borrow money to pay

administration expenses, this should be specified.

The agreement also should include a right to

withdraw for non-payment of fees.

2. Retainer

Attorney’s fees for representing the executor

are administration expenses payable from estate

assets. Unless the executor also is the sole or

primary beneficiary of the estate, it may be

difficult to obtain a significant retainer prior to

probate of the will. The fee agreement could

provide for payment of a specific retainer upon

admission of the will to probate and qualification

of the executor.

3. Non-payment

If the independent executor fails to pay

attorney’s fees and expenses, the attorney may

withdraw from the representation. Rule

1.15(b)(5) of the Texas Disciplinary Rules of

Professional Conduct. As a creditor of the estate,

the attorney may file suit against the estate to

recover fees for services rendered for the benefit

of the estate. As in any suit to recover fees from

a former client, the risk of a malpractice

counterclaim exists. However, this claim would

be tried before a probate judge having special

expertise in the subject matter of the

representation.

If a judgment for fees is obtained, the

attorney, as a judgment creditor, could seek to

require the heirs or the independent executor to

post bond for an amount equal to the creditors

claim under Sections 148 and 149, respectfully.

If an order requiring a bond is signed, it suspends

the powers of the executor and he may not pay

out any money of the estate or do any other

official act, except to preserve estate property,

until the new bond has been approved. Probate

Code §207. If the bond is not timely filed, the

executor may be replaced. Probate Code §213.

B. R e p r e s e n t i n g t h e D e p e n d e n t

Administrator

Non payment of attorneys’ fees should not

be an issue in a dependent administration because

attorneys’ fees are approved and ordered paid by

the court.

C. Representing a Beneficiary

It is important to have a specific engagement

letter when representing a beneficiary as they

often are inexperienced in legal matters and in

dealing with attorneys. A retainer is highly

recommended as a “reality check” for what is

often a highly emotionally-charged situation for

the client. The attorney may want to consider a

provision in the fee agreement by which the

beneficiary agrees that the executor may pay his

or her attorney’s fees and expenses directly to the

attorney out of the beneficiary’s share of the

estate. The Agreement also should provide for

costs, particularly litigation costs such as

depositions, medical, bank or other records and

expert witness fees, to be paid directly by the

client. The agreement also should include a right

to withdraw for non-payment of fees.

26

APPENDIX A

SAMPLE OF LETTER

Date

«FirstName» «LastName», «JobTitle»

«Company»

«Company2»

«Address1»

«City», «State» «PostalCode»

RE: «Decedent»

«AccountNo»

Dear «Title» «LastName»«Company»:

You are hereby given notice that «Decedent» is deceased. He/She died on «Dateofdeath».

Letters of Administration were issued to «Administrator» on «Dateofletters» in Cause No.

«CauseNo» in the Probate Court Number «Probatecourt» of Tarrant County, Texas. Our

records indicate that «Company» «Company2» may have a claim against the estate. You must

properly present a claim for the amounts owed to you within four (4) months after the date of

receipt of this notice or your claim is barred (if your claim is not already barred by the general

statutes of limitation). The claim should be addressed to «Administrator», c/o

_______________________.

I represent the Administratrix of the Estate and therefore cannot provide you with legal

assistance on your requirements in filing this claim with the Court. If you have additional

questions regarding your duties in filing a claim, you should consult with an attorney in Texas.

Sincerely yours,

APPENDIX B

NO. ________________

ESTATE OF § IN THE PROBATE COURT

§

__________________ § NO. ___________

§

DECEASED § TARRANT COUNTY, TEXAS

MEMORANDUM OF ALLOWANCES

TO THE HONORABLE JUDGE OF SAID COURT:

Now comes ________________, Independent Executor of the Estate of ___________________ and

files this his/her Memorandum of the allowances set aside by Independent Executor in accordance with

the Texas Probate Code. Prior to the approval of the Inventory, Appraisement and List of Claims in

this Estate, the Independent Executor in accordance with Section 146 of the Texas Probate Code set

aside a family allowance in the amount of $_____________ to compensate the surviving spouse and

minor child for one year taking into account the circumstances of the family. The family allowance was

delivered to the surviving spouse since the minor child is also the child of the surviving spouse.

Also, in accordance with Section 146 of the Texas Probate Code, Independent Executor delivered to

surviving spouse an allowance in lieu of exempt property in the amount of $___________ to

compensate the surviving spouse and minor child for exempt assets not on hand at the time of death.

This allowance was delivered to the surviving spouse since he is also the parent of the minor child. The

total allowances were allocated to the community estate.

Respectfully submitted,

SWORN TO AND SUBSCRIBED before me this ______ day of _____________________, 200_,

by ________________, ___________________, of the Estate of __________________________, to certify

which witness my hand and seal of office.

Notary Public in and for the

State of Texas

My Commission Expires:

APPENDIX C

NO. 1234-P

IN RE: ESTATE OF § IN THE PROBATE COURT§

JOHN SMITH, § OF§

DECEASED § DALLAS COUNTY, TEXAS

MOTION FOR ISSUANCE OF SHOW CAUSE ORDER TO JANE SMITH

_________________________, Independent Executor of the Estate of John Smith,

Deceased (“Movant”), files this Motion for Issuance of Show Cause Order to Jane Smith (“Jane

Smith”) and, in support thereof, would respectfully show the Court as follows:

1. John Smith (“Decedent”) died on October 1, 2003, survived by his fourth wife, Jane

Smith, and his two natural children and two step-children. The Last Will and Testament of John

Smith (the “Will”), was admitted to probate in this cause, and Movant was appointed

Independent Executor of the Estate of John Smith (the “Estate”).

2. Disputes have arisen among the beneficiaries of the Estate regarding the ownership

and/or character of certain property as being the Decedent’s separate property of the community

property of Decedent and Jane Smith.

3. All records relating to Decedent’s separate property and the community property of

Decedent and Jane Smith jointly controlled during their marriage, Decedent’s personal

memorabilia and separate property as well as the community personal property of Decedent and

Jane Smith (the “Items”), are in the possession, custody and/or control of Jane Smith or her

agents. As the Independent Executor, Movant is entitled to possession of these Items. Despite

having the legal right to possession of the Items, Movant has made many attempts to work out a

fair and mutually agreeable arrangement to give the Estate and all the beneficiaries equal and

unrestricted access to the Items, but all such attempts have been either rejected or ignored by

Jane Smith. Jane Smith has refused, and continues to refuse, to deliver the Items to Movant.

Cause No. 1234-P

4. Jane Smith resides at ________________________________. Movant requests the

Court to order Jane Smith to appear at a time and place to be set by the Court and Show Cause

why she should not deliver, or cause to be delivered, to Movant all of the Items described above;

and to account for the Items that are no longer in her possession, custody and/or control.

5. Due to the actions of Jane Smith, it has been necessary for Movant to incur attorney’s

fees and expenses. Movant requests that the Court order Jane Smith to pay Movants’ reasonable

and necessary attorney’s fees and costs incurred to obtain the records described herein.

WHEREFORE, PREMISES CONSIDERED, the Independent Executor of the Estate of

John Smith, Deceased, requests the Court to order Jane Smith to appear at a time and place set

by the Court and show cause why she should not deliver, or cause to be delivered, to Movant all

Items described above, to account for the Items that are no longer in her possession, custody

and/or control, and for any other further relief, at law or in equity, to which they may show

themselves to be justly entitled.

Respectfully submitted,

______________________________________Attorneys for Independent Executor

NO. 1234-P

IN RE: ESTATE OF § IN THE PROBATE COURT§

JOHN SMITH, § OF§

DECEASED § DALLAS COUNTY, TEXAS

ORDER TO JANE SMITH TO SHOW CAUSE

ON THIS day came on to be considered the Motion for Issuance of Show Cause Order to

Jane Smith filed by the Independent Executor of the Estate of John Smith, Deceased (“Movant”),

and the Court, after considering said Motion, is of the opinion that the Motion should be

GRANTED.

IT IS, THEREFORE, ORDERED that Jane Smith appear before this Court at _________

o’clock, _____ a.m. on the ___ day of ___________, 2004, and Show Cause why she should not

deliver, or cause to be delivered, to Movant all records relating to John Smith’s separate property

and the community property of John Smith and Jane Smith jointly controlled during their

marriage, John Smith’s personal memorabilia and separate personal property, as well as the

community personal property of John Smith and Jane Smith that are in the possession, custody

and/or control of Jane Smith or her agents, and to account for such items that are no longer in her

possession, custody and/or control.

IT IS, FURTHER, ORDERED, that the Clerk of this Court issue Notice to be personally

served on Jane Smith at _______________________, Dallas Texas, together with a copy of the

Motion for Issuance of Show Cause Order to Jane Smith and a copy of this Order, by any Sheriff

or Constable of the State of Texas or by any other person who is not a party and is not less than

eighteen (18) years of age, directing and requiring that Jane Smith appear in the Courtroom of

the Probate Court of Dallas County, Texas at ___ o’clock, at ___.m, on the __________ day of

________________, 2004, to Show Cause why she should not deliver, or cause to be delivered,

to Movant all records relating to John Smith’s separate property and the community property of

John Smith and Jane Smith jointly controlled during their marriage, John Smith’s personal

memorabilia and separate personal property, as well as the community personal property of John

Smith and Jane Smith that are in the possession, custody and/or control of Jane Smith or her

agents, and to account for such items that are no longer in her possession, custody and/or control.

Signed this ___ day of _______________, 2004.

______________________________________JUDGE PRESIDING

NO. 1234-P

IN RE: ESTATE OF § IN THE PROBATE COURT§

JOHN SMITH § OF§

DECEASED § DALLAS COUNTY, TEXAS

ORDER ON ORDER TO SHOW CAUSE

On the ___ day of __________________, 2004 at a regular term of court pursuant to Order

to Jane Smith to Show Cause and to appear before the court on _____________ __, 2004, Jane

Smith appeared in person and by and through her attorney of record, and

___________________________, Independent Executor of the Estate of John Smith, Deceased,

appeared in person and by and through her attorney of record, and the Court proceeded to call

the matter on the Court’s docket, and the parties announced in open court that an agreement had

been reached in regard to certain matters addressed in the Order to Jane Smith to Show Cause;

and the Court having sworn Jane Smith and __________________ as witnesses inquired of each

of them whether the agreement that had been reached was in fact their agreement and based upon

such agreement the court makes the following orders.

IT IS ORDERED that Jane Smith make available, on or before ______________ ___, 2004,

the premises known as ______________________________, Dallas, Texas for inventorying and

appraising the personal property located in such premises as well as the premises at a storage

facility in Dallas for inventorying and appraising such property located in such storage unit and

to deliver the property in such storage unit to ______________________, Independent Executor

of the Estate of John Smith, Deceased; and

IT IS FURTHER, ORDERED that Jane Smith deliver a ________________ automobile and

_________________ owned by the Estate of John Smith, Deceased to

_____________________, Independent Executor of the Estate immediately; and

Cause No. 1234-P

IT IS FURTHER, ORDERED that this matter be continued on the court’s docket until

further orders of the Court.

SIGNED this ____ day of ____________________, 2004.

______________________________________JUDGE PRESIDING

APPENDIX D

NO. 1234-P

IN RE: THE ESTATE OF § IN THE PROBATE COURT§

JOHN SMITH, § OF§

DECEASED § DALLAS COUNTY, TEXAS

APPLICATION TO APPOINTPERSONAL REPRESENTATIVE OF ESTATE

COMES NOW, BANK OF TEXAS and files this application, pursuant to Article III of the

Last Will and Testament of John Smith, for the appointment of a successor corporate personal

representative and would show the Court as follows:

I.

BANK OF TEXAS has submitted and filed its resignation as Independent Executor of the

Estate of John Smith, Deceased.

II.

The Estate of John Smith, Deceased, is still in administration and a necessity exist for the

continued administration of such estate.

III.

The Last Will and Testament of John Smith provides in Article III that in the event of the

resignation of Bank of Texas, the Probate Court of Dallas County, Texas, upon application made

therefore, shall appoint a successor corporate independent executor, who shall be a bank or trust

corporation situated in the City of Dallas, Texas having trust powers and having an unimpaired

capital and surplus of not less than Ten Million Dollars ($10,000,000.00). Pursuant to such

provision, this Court should appoint a successor corporate independent executor.

IV.

In the event that this Court is unable to find a bank or trust corporation meeting the

requirements provided in the Last Will and Testament of John Smith, which is willing to serve as

successor independent executor, Bank of Texas would be willing to serve as Dependent

Administrator With Will Annexed under the Probate Code.

WHEREFORE, PREMISES CONSIDERED, BANK OF TEXAS prays that the Court hear

this application and appoint a successor corporate independent executor pursuant to the terms of

the Will of John Smith, or, in the alternative, appoint a successor Dependent Administrator With

Will Annexed, and grant such other and further relief as the Court may deem appropriate.

Respectfully submitted,

__________________________________Attorneys for Applicant

STATE OF TEXAS §§

COUNTY OF DALLAS §

I, _______________________, a Vice President of Bank of Texas acting for and on behalf

of Bank of Texas do by these presence acknowledge that I have read the above and foregoing

Application to Appoint Personal Representative of Estate and that the contents thereof are true

and correct to the best of my knowledge and belief.

_________________________________________________________________

SWORN TO AND SUBSCRIBED TO before me by the said___________________________ on this day of ___________________, 2004.

______________________________________Notary Public, State of Texas