The cast of characters involved in Texas estate disputes can rival that of some major motion pictures. Without understanding the roles of those involved, you would be hard-pressed to effectively pursue a Texas estate or Texas probate dispute. Do you know the difference between an “independent executor” and an “independent administrator,” as defined under Texas law? If not, before beginning any estate dispute, read this informative article prepared by our Texas probate and estate dispute attorneys
Probate and estate disputes take many different forms. Usually these disputes involve a third party seeking to compel a court appointed fiduciary, such as an independent executor, dependent administrator, or guardian to perform their required statutory duty. These cases focus often on fiduciary misconduct. In certain situations, the Texas Probate Code allows the recovery of reasonable and necessary attorneys’ fees for a party who successfully obtains compliance with a statutory duty that the fiduciary has neglected, or a party who successfully removes the fiduciary for good reason. However, the Texas Probate Code also allows a fiduciary to recover its reasonable and necessary attorney’s fees and expenses, even if removed, if he or she defended the removal action in good faith.
Personal representative – the term used to refer to either an independent executor or a dependent administrator.
Independent executor – the legal representative of an estate. They are the person appointed by the Court to collect all of the Decedent’s assets, resolve proper debts and distribute the remaining assets according to the Decedent’s last will and testament. With a few exceptions, an independent executor acts independently of the probate court’s control. Even these independent representatives must apply for the position and be approved by the court. Independent executors are also required to prepare an Inventory, Appraisement and List of Claims, and file proof of required legal notices to creditors and beneficiaries.
Independent administrator -similar to an independent executor, in that they administer the estate free of court supervision. An independent administrator may be appointed when all of the executors named in the will are either deceased, not qualified, or decline to serve. The court may also appoint an independent administrator when the will does not provide for an independent administration (for example, a holographic will) or when the Decedent died without a will, and all of the heirs agree on having an “independent administration.”
Dependent administrator -the legal representative of an estate. They are usually appointed when the Decedent died without a will. Like an independent executor, they collect all of the Decedent’s assets, resolve proper debts and distribute the remaining assets according to the laws of intestate succession. With a few exceptions, a dependent administrator acts almost entirely under the probate court’s control. Like independent executors, dependent administrators are required to prepare an Inventory, Appraisement and List of Claims, and file proof of required legal notices to creditors. Unlike independent executors, they must obtain approval to sell estate assets. They also must file annual accountings and request court approval to close the estate and distribute the estate to the heirs.
Probate Estate -all of the Decedent’s assets that are subject to his or her last will and testament.
Non-Probate Estate – all of the Decedent’s assets that pass by written contract–assuming the Decedent named a beneficiary–to the persons designated. Bank accounts, investment accounts, life insurance policies, and retirement accounts are common non-probate assets. When properly executed, the written contracts for these accounts allow them to pass to the persons designated by the Decedent, without regard to a will.
Beneficiaries -those persons who are entitled to receive the Decedent’s estate under the Decedent’s last will and testament (and any applicable codicils, which are amendments to a will).
Heirs -those persons who are entitled to receive the Decedent’s estate under the laws of intestacy (the law that applies in the absence of a will).
Perhaps one of the most common probate disputes in this area involves a interested party seeking information about the estate from an executor, in the form of an accounting. The Texas Probate Code provides that any time after 15 months from the date the independent administration was created, any interested person may demand an accounting from the independent executor. If an independent executor does not comply with this accounting demand within 60 days, the requesting party can compel compliance through filing a lawsuit. After hearing the evidence on such an action, the court can enter an order requiring an accounting to be made by the executor.
Another common probate dispute involves seeking distribution of estate assets from the independent executor. Any time after the expiration of 2 years from the date letters testamentary were first issued to the independent executor, any interested person in the estate (beneficiaries, creditors or even others) may file a lawsuit seeking an accounting and distribution. Unless the court finds a continued necessity for administration of the estate, the court will order the independent executor to distribute the estate’s assets to the persons entitled to receive them.
Actions seeking to remove and replace independent executors, dependent administrators, and guardians are also quite common. There are many grounds to remove these fiduciaries, but common grounds include:
- Misapplying or embezzling estate assets
- Failing to make an accounting required by law
- Gross misconduct or gross mismanagement in the performance of an executor’s duties, and
- Becoming legally incapacitated or incapable of performing fiduciary duties
Executors can also be removed for their failure to properly care for estate property, pay estate debts property, mischaracterize the marital (community or separate) character of the estate property or for using estate assets for their own personal gain.
Correspondence. Some of the most important evidence in disputes between beneficiaries and executors is the record of communications between the executor and the estate beneficiaries or other people. These records, or often the lack thereof, can be very compelling evidence of what was actually disclosed, or not disclosed, to estate beneficiaries.
Financial Records. Also important, are the financial records for both the Decedent, the estate and the executor (in his or her individual capacity). One of the most basic inquiries arising in these disputes is “What did the Decedent own on the date of death?” Many beneficiaries, who may or may not have had a close relationship with the Decedent in the years preceding death, might question whether the executor is making full disclosure of all of the assets that belong to the estate. For example, these beneficiaries may wonder whether the executor did anything improperly to assert individual ownership of certain “nonprobate” assets, such as bank accounts, annuities, and life insurance policies, or whether the executor or dependent administrator has properly characterized an asset as the Decedent’s separate or community property.
Another common hotly contested area concerns how the executor pays the decedent’s debts. More specifically, a typical concern might focus on which estate property is used to satisfy a particular debt. Usually, the Decedent’s last will and testament will direct that property and bequests must be used to pay debts in a certain order. When the decedent’s will fails to address this, the Texas Probate Code provides for a certain order by default, and the statutes direct property “abates,” or is used to pay for certain debts. In cases involving these issues, obtaining a copy of the will and analyzing the executor’s records regarding the nature, character and payment of the decedent’s debts are critical steps toward success.
Because even a removed fiduciary has the potential to recover their own attorneys’ fees and expenses for defending a removal action, these lawsuits should be brought after careful and measured consideration. Many litigators avoid seeking removal at the outset for this very reason. Instead, the dispute may center on claims against the fiduciary, individually, for breach of fiduciary duty in an attempt to put pressure on and intimidate the fiduciary into voluntarily resigning.
Although a beneficiary may not be able to compel an accounting until 15 months after an administration begins, the independent executor still owes the beneficiary the common law duty to provide full disclosure of all material facts affecting his or her interest. Beneficiaries who find themselves under the control, or at the mercy, of a non-communicative executor, should make documented requests for the disclosure of information.
These requests should summarize and provide a clear record of previous communication efforts. For example, “On April 10, 2012 I requested that you provide me with ________. Instead, two weeks later, you called me and told me that _______. I wrote you again and asked that you provide me with copies of ________. Some 30 days later, you only provided copies of _____. This information is insufficient because ___________________.”
Texas probate litigation is a decidedly complex subject. We hope this article starts you on the path to greater understanding of the subject, but your next step in considering a Texas estate dispute should be to secure an initial phone consultation with a Texas estate or probate litigation attorney. If you intend to investigate these matters further, by all means reach out to one of our Dallas, Texas, attorneys for an initial phone consultation. We are located in Dallas, but serve clients throughout North Texas – and from Waco to Amarillo to Wichita Falls to East Texas, and everywhere in between.