The 84th Regular Session of the Texas Legislature passed several bills that directly affect probate in Texas. This post briefly examines key changes in legislation, effective September 1, 2015.
Transfer on Death Deeds
Similar to a “pay-on-death” account, a Transfer on Death Deed allows an individual to transfer his interest in real property to one or more beneficiaries upon his death. Texas Estates Code Chapter 114, an entirely new chapter, describes in detail the requirements for such deeds. Chapter 114 should be read carefully and in its entirety to understand how to draft such deeds, and to see how other instruments affect these deeds.
Expansion on the Effects of Dissolution of Marriage
The September 1 legislation added contexts in which a former spouse is treated as if he or she predeceased the decedent. Now, if a provision in a Will disposes of property to an irrevocable trust of which a former spouse is a beneficiary, the former spouse and all relatives of the former spouse who are not also a relative of the testator shall be treated as if they had disclaimed the interest granted in the provision. This applies when the irrevocable trust confers a beneficial interest or a general or special power of appointment to the former spouse and all relatives of the former spouse who are not also a relative of the testator. There are exceptions of course, which are explained more fully in Texas Estates Code Section 123.001.
Additionally, if a decedent designates a spouse or relative of a spouse who is not a relative of the decedent as a pay-on-death payee or beneficiary or a multiple-party account, and the decedent’s marriage is later dissolved, the designation provision on the account is not effective as to the former spouse or the former spouse’s relative, and instead the account is payable to the alternative payee or beneficiary.
Courts can order access to intestate’s account information
An interested person may now apply to the court to issue an order requiring a financial institution to release to the person named in the order information concerning the balance of each account that is maintained at the financial institution of a decedent who dies without a will. A court may also issue such an order on its own motion.
This section directly addresses the issue many people face when dealing with a financial institution concerning a decedent: the financial institution almost always wants a court order, even when there are no pending probate proceedings. Hopefully this new section will bring life back to the small estates affidavit and help those individuals who know the decedent had an interest in an account, but do not know the decedent’s exact interest or the amount in the account.
Wills can be modified or reformed
A personal representative may petition the court to order that the terms of a Will be modified or reformed, and that the personal representative be directed or permitted to perform acts that are not authorized or that are prohibited by the terms of the will, or that the personal representative be prohibited from performing acts required by the terms of the will.
Such an order is allowed only in the following contexts:
1) Modification of certain administrative, nondispositive terms of the will is necessary or appropriate to prevent waste or impairment of estate administration;
2) The order is necessary or appropriate to achieve the testator’s tax objectives, or to qualify a distributee for government benefits; or
3) The order is necessary to correct a scrivener’s error (an order of this nature may be issued only if the testator’s intent is established by clear and convincing evidence).
More safeguards in the context of guardianships
The September 1 legislation includes significant changes related to the initiation of guardianship proceedings. Notably, an application for the appointment of a guardian must include whether alternatives to guardianship and available supports and services to avoid guardianship were considered, whether they are feasible, and whether they would avoid the need for a guardianship. The attorney ad litem in a guardianship proceeding must discuss with a proposed ward whether alternatives to a guardianship would meet the proposed ward’s needs and therefore could be explored to avoid creation of a guardianship. Section 1002.0015 sets out a list of alternatives to guardianship that should be considered.
Before September 1, an interested person could write a letter to the court investigator advising of a need for a guardianship, but now an interested person can also intervene in a guardianship proceeding by simply filing a timely motion to intervene that is served on the parties. The court has the discretion to grant or deny the motion, and must consider whether the intervention will unduly delay the proceedings and whether the proposed intervenor has an adverse relationship with the ward (or proposed ward).
The Texas Estates Code as it relates to guardianship should be read carefully and in its entirety, as several provisions were changed significantly and many completely new provisions were added. If the reader has questions on estate, trust, or probate issues under Texas law, please contact our law firm by email or call 972-991-7700.