“WINNING LITIGATION WITH DEAD PEOPLE”
Jerry Frank JonesOf Counsel
Ikard & Golden400 West 15 , Suite 975th
Austin, Tx 78701512 476 2929 voice512 472 3669 fax
With Most Able Assistance FromTerry W. Weldon
Austin, Tx
JERRY FRANK JONESof Counsel:
IKARD & GOLDEN, P.C.400 West 15 , Suite 975th
Austin, TX 78701
Education: Williams College, Williamstown, Mass., B.A. 1967; UT-Austin, J.D, 1971 Certification: Board Certified, Estate Planning and Probate by the State Bar ofTexas.
Bicycle Assembly and Maintenance, Barnett Bicycle Institute, 2004Fellow: American College of Trust and Estate CounselInstructor: U. of Texas, Legal Assistant Program, Estate Planning & Probate (1989-1995)Texas Monthly Super Lawyer: 2003, 2004, 2005Author:C “MYTHS AND FACTS: TEXAS PROBATE,” National College of Probate Judges,
Spring 2003 Conference, Galveston, Texas.C "A TOPICAL GUIDE: Advanced Estate Planning and Probate Course Articles" State Bar
of Texas, Annual Advanced Estate Planning and Probate Course 1992, 1997,1998 &1999, 2000, 2001, 2002, 2003, 2004 & 2005
C “‘HE’S DEAD?’ Real Estate in a Decedent’s Estate,” Advanced Real Estate DraftingCourse 2002
C “HE’S INCAPACITATED? Powers of Attorney.” Advanced Real Estate DraftingCourse, State Bar of Texas 2005.
C “TEXAS LEGISLATIVE REPORT” 2003, 2001, 1999, 1997 State Bar of Texas, AnnualAdvanced Estate Planning and Probate Course.
C “What’s Hot: GRATS, GRUTS, PRTS, QPRTS & FLPS,” ANNUAL TAXCONFERENCE, Travis County CPA Association. 1995.
C "The 706 for Country Lawyers and Other Simple People," Travis County Probate andTrust Law Section, 1994.
C "DEATH AND TAXES: An Introduction To Taxes Concerning A Probate Attorney,"prepared for the University of Texas Legal Assistant Program--1993.
C "Estate Planning for PWAs (Persons With AIDS)," State Bar of Texas, 16th AnnualAdvanced Estate Planning and Probate Course 1992.
C "Divorce: Effect Upon Life Insurance and Non Probate Assets," 1988, Probate &Property, magazine of the Real Property, Probate and Trust Section, American BarAssociation.
State Bar of Texas: Real Estate, Probate and Trust Law Section: Chair (2001-2002), Council(1994-1998) and Legislative Liaison (1997–2003 )Texas LegislatureC Legislative Liaison, Real Estate, Probate and Trust Law Section, State Bar of Texas
(1997--C Legislative Liaison, Texas Academy of Probate Lawyers (1997- )C Member, Texas Legislative Interim Study Committee on Community Property Laws
(1999-2000)
Certified Bicycle Mechanic. On December 2 2004, certified by Barnett’s Bicycle Institute nd
Alp d’Huez Climbers’ Club: October 2005.
WINNING LITIGATION WITH DEAD PEOPLE
TABLE OF CONTENTS
1. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Probate, Guardianship, Trust and Property Codes.. . . . . . . . . . . . . . . . . . . . 13. Do You Need A Guide? .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14. Two Statutes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
a. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b. Wrongful Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
5. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3a. “Probate.”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3b. “Probate Alternatives.”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3c. “Personal representative.”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
i. “Executor”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3ii. “Independent Personal Representative.” .. . . . . . . . . . . . . . . . 3iii. “Administrator.”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3iv. “Temporary Administrator.” . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
d. “Independent v Dependent Administration.” .. . . . . . . . . . . . . . . . . . . 4e. Letters Testamentary and Letters of Administration.. . . . . . . . . . . . . 4f. “Creditor: Interested Person.” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4g. “Debtor: Not An Interested Person.” . . . . . . . . . . . . . . . . . . . . . . . . . . 5h. “Beneficiaries, Heirs and Distributees.”. . . . . . . . . . . . . . . . . . . . . . . . 5
6. The Need for An Administration: Plaintiff’s Estate. . . . . . . . . . . . . . . . . . . . . 5a. When the Heirs Can Proceed Without An Estate.. . . . . . . . . . . . . . . . 5
i. No Probate Pending or Necessary... . . . . . . . . . . . . . . . . . . . . . 5ii. Family Settlement Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . 5iii. Derivative Actions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
b. Administration May Be Otherwise Necessary. . . . . . . . . . . . . . . . . . . 5c. Proceeding Without An Estate: No Administration Needed.. . . . . . . . 5d. When An Administration Is Necessary . . . . . . . . . . . . . . . . . . . . . . . . 6
i. Statute.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6ii. Other Reasons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
e. Court determination of No Administration Necessary.. . . . . . . . . . . . 67. The Need for An Administration: Defendant’s Estate.. . . . . . . . . . . . . . . . . . 6
a. Compelling Administration. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6b. Plaintiff As Interested Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6c. Proceeding Without An Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6d. No Administration Available. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8. All of the Heirs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69. The Personal Representative Will Not Proceed. . . . . . . . . . . . . . . . . . . . . . . 7
a. Court Order to Pursue or Defend. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7b. Removal.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7c. Impose or Increase Bond.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
d. Derivative actions... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 710. Claims Procedure.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
a. Liquidated Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8b. Four Month Letter... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Jurisdiction.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a. Statutory Probate Courts... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8b. County Courts and County Court at Law. . . . . . . . . . . . . . . . . . . . . . . 8
12. Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813. Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 914. Foreign Administrators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
a. Comply with Section 95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9b. Testate Only.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
15. Statute of Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9a. Death Tolls The Survival Statute... . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9b. Death Does Not Toll The Wrongful Death Statute. . . . . . . . . . . . . . . . 9c. Relation Back.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d. Suit Against Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10e. Temporary Administrators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
16. Estate Not an Entity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1117. Deathus Interruptus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
a. The Plaintiff Dies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11b. The Defendant Dies.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11c. The Personal Representative Dies or Ceases to Serve.. . . . . . . . . . 11d. Election: Surviving Parties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12e. Death Before Judgment... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
18. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1219. Guardians, Next Friends & Ad Litems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
a. Persons Requiring Representation.. . . . . . . . . . . . . . . . . . . . . . . . . . 12b. Attorney Ad Litem: Probate Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13c. Attorney Ad Litems: Publication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13d. Guardian Ad Litem:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13e. Guardian Ad Litem: Trust Code.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13f. Guardian Ad Litem: Rules of Civil Procedure.. . . . . . . . . . . . . . . . . . 14g. Next Friend.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14h. Virtual Representation.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15i. Surrogate Decision Makers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
20. Caveat: Ad Litems Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1521. Probate Alternatives.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
a. Proceeding to Declare Heirship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15b. Affidavit of Heirship.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15c. Small Estate Affidavit... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16d. Family Settlement Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16e. Administrations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16f. Muniment of Title.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16g. No Administration Necessary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
22. Settlement Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16a. No Administration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16b. Dependent: Probate Court Approval. . . . . . . . . . . . . . . . . . . . . . . . . . 17c. District Court Approval Will Not Do. . . . . . . . . . . . . . . . . . . . . . . . . . . 17d. Independent: No Approval Needed. . . . . . . . . . . . . . . . . . . . . . . . . . . 17e. Allocating Proceeds... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17g. Authority to Settle.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
23. Guardianship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1824. Court Created Trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1
WINNING LITIGATION WITH DEAD PEOPLE Jerry Frank Jones
1. Introduction. This outline willhighlight issues to be addressed when aparty is dead or dies when there arepersonal injury claims..
2. Probate, Guardianship, Trustand Property Codes.
a. The Texas Probate Codeis not a code under the Texas CodeConstruction Act. The Texas ProbateCode is all Sections from 1 to 905. Itincludes not only the provisionsregarding decedent’s estates, Sections1 to 435, it also includes the provisionsregarding “Non Testamentary Transfers,Section 436 to 473, the Durable Powerof Attorney Act, Section 481 to 506 and the Texas Guardianship Code, Sections601to 905. Sometimes references aremade to the Probate Code but areactually referring to sections concerningguardianships. Further, whenreferences are made to a section of theGuardianship Code, it is containedwithin the Probate Code.
Any references in thispaper to sections mean sections of theTexas Probate Code unless otherwisestated..
b. The Texas Trust Code(Sections 111.001 to 117.012) iscontained within the Texas PropertyCode. References to Trust Codesections are references to the Property
Code. Likewise, references to theProperty Code Sections 111.001 to117.012 are to the Trust Code.
3. Do You Need A Guide? Formost lawyers, it is helpful to have alawyer with particular expertise inprobate matters. The probate court is aspecialty court and can have a set ofbewildering rules that are not readilyobvious from the statutes. Further, anexperienced probate attorney may beable to see further down the “probateroad” than a plaintiff’s attorneys. Thisoutline will identify some of the moreobvious issues but is a poor substitutefor an experienced probate attorney.
4. Two Statutes. At common lawpersonal injury claims did not survivedeath, Russell v Ingersoll-Rand Co., 841S.W.2d 343,344 (Tex. 1992). Thelegislature has enacted two statutes thatallow suit by and against deceasedparties. Those statutes may require theinvolvement of the probate court. Or atleast an awareness of relevant probateissues.
a. Survival. The survivalaction, Texas Civil Practice andRemedies Code (CPRC) Section 71.021described the action.
i. Subsection (a) saysan action for person injury to the “health,reputation or personal” does not abate
2
because of the death of an injuredperson or the person liable for the injury.
ii. Further, subsection(b) says that the actions survives to andin favor of
(1) The heirs,(2) Legal
representatives, and(3) the estate of
the injured person.1
iii. Finally, subsection(c) says that the action may be pursuedas if the liable person was alive.
iv. While not set out inthe statute, it is clear that the claimsunder this statute are derived from thedecedent (plus funeral expenses). Theyare generally described as:
(1) Consciouspain and suffering,
(2) Medicalexpenses, and
(3) Funeralexpenses. See Russell v. Ingersoll-Rand Co., supra.
b. Wrongful Death. CPRCSection 71.001 et seq allows suits forwrongful death.
i. Subsection (a), thedamages are “for the exclusive benefitof the surviving spouse, children andparents of the deceased.”
ii. Subsection (b),allows one or more of those people tobring the action for the benefit of all.
iii. Subsection (c) saysthe personal representative of the estateshall (emphasis added) bring the actionif none of the listed people have suedwithin 3 months of the death unless allof the rightful claimants tell him not to.
iv. Subsection (c)raises several fiduciary duty questions:
(1) It raises thequestion about who gets the recovery.Does it somehow belong to the estatesince the personal representativecollected the funds. Probably not. Morelikely the personal representative mustpursue the claim for each of thewrongful death beneficiaries includingproving the amount that each shouldrecover. If that is right, then the personalrepresentative would have to hold therecovered amounts for the wrongfuldeath claimants. But, who thendetermines how much of the recoverypasses to each of those claimants. Itlooks like a job fraught with badconsequences (duty of impartiality forexample) for the personalrepresentative, that would be bestsolved by application to the court todeclare how the proceeds are to besplit.
(2) If thepersonal representative has to pursuethis for the wrongful death claimants, hemay have a conflict because of theclaim on behalf of the estate.
(3) Because ofthe “shall” language, it does not appearto be a job the personal representative
While this statute refers to the1
estate having a claim, do not be misled, it isclear that an estate is not an entity, seediscussion infra.
3
can ignore. If he failed to pursue theclaim and it was then time barred, itappears a lawsuit could be broughtagainst the personal representative forfailing to carry out his fiduciary duties. Iffor some reason the personalrepresentative does not want to pursuethe claims, he should get a release fromall of the claimants or seek courtauthorization to not pursue.
5. Definitions
a. “Probate.” Probatemeans
i. Determining thesuccessors to the decedent. This maymean probating a will that states whothe beneficiaries are. Or it may meandetermining the intestate heirs becausethere was no valid will.
ii. Collecting theassets of the decedent. This would include pursuing any claims thatsurvived death.
iii. Paying thedecedent’s debts.
iv. Paying thedecedents taxes. This may be hisincome taxes but it may also includetransfer taxes (estate, gift andgeneration skipping).
v. Distributing theassets to the proper heirs orbeneficiaries.
b. “Probate Alternatives.” Itis not always necessary to have aprobate proceeding. There are severalprobate alternatives that are discussedinfra.
c. “Personalrepresentative.” Section 3(aa) of theTexas Probate Code defines personalrepresentative as executors,independent executors, administrators,independent administrators, andtemporary administrators. While eachof these types of personalrepresentatives have significant differentcharacteristics, they are often usedloosely and interchangeably. For a goodgeneral review see the commentaryfollowing Section 145 of Prof. StanleyJohanson’s Texas Probate CodeAnnotated. The different personalrepresentatives are:
i. “Executor” Anexecutor is a persona named in a will,usually but not always an independentexecutor..
ii. “IndependentPersonal Representative.” This iseither a personal representative namedin a will (executor) or chosen by all ofthe heirs. If the will says that the namedperson is to act independent of courtsupervision, it is an independentexecutor, Texas Probate Code Sections3(q).and 145 et seq. Despite beingnamed an independent executor, thispersonal representative may have topost a bond unless that requirement isspecifically waived, Texas Probate CodeSection 149.
Or all of the distributees of theestate, whether by a will or intestacy,can ask the court to appoint anindependent administrator, Section 145.
iii. “Administrator.”
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Administrator is a person (or qualifiedcorporate fiduciary) who is not named inan instrument but rather is appointed bya court. This appointment can bedependent or independent.
iv. “TemporaryAdministrator.” A temporaryadministrator is one appointed underSections 131A et seq when anadministrator is needed immediately orwhen there is a contest regarding theprobate of a will or the appointment of apermanent personal representative.
d. “Independent vDependent Administration.” If aprobate proceeding is independent ofcourt supervision, then once theinventory is filed, the personalrepresentative generally does not needpermission of the court to take action.
However, with adependent administration, almost all ofthe personal representatives actionsrequire prior approval of the court. Further, a bond is required, there areannual accounts and a final account.Despite these restrictions and additionalrequirements, heirs sometimes choosea dependent administration over anindependent administration.
For example, aplaintiff may want a bond and courtsupervision, if he is concerned that theheirs will distribute the estate before, hecan obtain and collect a judgment.
A personalrepresentative may prefer to be subjectto court authority if he does not getalong with the heirs or otherwise
believes they may criticize his actions. If he is dependent, he can, and most ofthe time has to, go to the probate courtbefore he acts. If the heirs have acomplaint they can make it to the court.
Most often, dependentadministrations are chosen becausethere are significant creditors. Adependent administration allows thepersonal representative to be sure thatthe debts are properly settled withoutany later liability on the personalrepresentative.
e. Letters Testamentaryand Letters of Administration. Afterqualifying as executor, the clerk of thecourt issues “letters testamentary.” Afterqualifying as administrator, the clerk ofthe court issues “letters ofadministration.” See Probate CodeSections 182, 183 and 186. These“letters” are the badge of office that apersonal representative may present tothird parties. These “letters” inform thirdparties that the holder is authorized toact on behalf of the estate including tosettle any claims, Probate Code Section188.
f. “Creditor: InterestedPerson.” Texas Probate Code Section3(r) defines interested persons toinclude creditors. This means thatcreditors have standing to participate inmost of the proceeding in a probatematter. However, that right is notuniversal. For example, a creditorcannot object to the probate of a will.The creditor’s rights are not impacted bywhether the decedent’s estate passesby intestacy or by will, Daniels v. Jones,
5
224 S.W.2d 476 (San Antonio 1920, writref’d). Also see general discussion atLogan v. Thomason, 202 S.W.2d 212(Tex. 1947).
g. “Debtor: Not AnInterested Person.” There is noauthority for a debtor, a defendant, toseek the appointment of a personalrepresentative of a dead plaintiff.
h. “Beneficiaries, Heirs andDistributees.” Heirs are the personswho inherit if a person dies intestate(there is no will); they are the intestatetakers (Section 3(o)). Beneficiaries arethose persons who take under a will (notdefined by the Probate Code). Distributees covers both categories,persons who take under a will or whotake by intestacy (Section 3(j))
6. The Need for AnAdministration: Plaintiff’s Estate. Thegeneral rule is that only the personalrepresentative of the decedent’s estatecan bring actions that belonged to thedecedent or that now belong to theestate. Russell v. Ingersoll-Rand Co.,supra.
a. When the Heirs CanProceed Without An Estate.
i. No ProbatePending or Necessary. There arenumerous cases allowing heirs toproceed when there is no administrationpending or necessary, Shepherd v.Ledford, 962 SW2d 98 (Tex. 1997).
ii. Family SettlementAgreement. Shepherd also says thatthe heirs can proceed without anadministration when the family hasagreed to a family settlement. Not just
any family settlement will do. It wouldhave to have all of the heirs, it wouldhave to agree on how debts were to bepaid (and probably that they are paid orpaid out of the proceeds) and that noadministration is necessary or will besought.
In Cooper v Coe(Tyler 1995) the family entered into anagreement including how debts were tobe paid. However, the debts had notbeen paid. The court held that paymentwas not necessary, merely anagreement would suffice. While thiscase may be the proper law, it iscontrary to one of the primary purposesof probate: Settling claims of creditors. For example, such a family settlementagreement would not prevent a creditorfor filing a probate proceeding. A lawyershould be very cautions about relying onthis decision.
iii. Derivative Actions.The heirs may also
proceed, in a derivative action, when theadministrator has failed or refused toact. See discussion at “DerivativeActions,” infra Section 9d on page 6.
b. Administration May BeOtherwise Necessary. A probateproceeding may be necessary for other,non personal injury, purposes. Theremay be other assets that need to beadministered. There may be otherdebts. Or there may be other reasonsthat an administration is desirable.
c. Proceeding Without AnEstate: No Administration Needed.For heirs to be able to bring an actionwithout a personal representative theyhave to plead and prove that no
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administration is pending and none isnecessary, Shepherd v. Ledford, 962SW2d 98 (Tex. 1997).
d. When An Administration Is Necessary
i. Statute. Generally,an administration is necessary if thereare two or more debts or if it is desiredto have the court partition the estate,Texas Probate Code Section 178(b).
ii. Other Reasons. For other reasons that an administrationmay be required, or desirable, see thediscussion at Texas Practice Series,“Probate and Decedent’s Estates” byWoodward and Smith, Sections 624 and625.
e. Court determination ofNo Administration Necessary.Sometimes the heirs want to pursue anaction without taking out a probateproceeding. If in doubt as to whether ornot an administration is necessary, theycan apply to the probate court to enteran order that no administration isnecessary. Texas Probate CodeSections 139-142.
7. The Need for AnAdministration: Defendant’s Estate
a. CompellingAdministration. Sometimes, none ofthe family has sought the administrationof the dead defendant’s estate. Thismay be a tactic of those defending thedefendant’s interest or because there isno other asset requiring administration.
b. Plaintiff As InterestedParty. As a claimant, a plaintiff can
seek the appointment of a personalrepresentative of the defendant’s estate.Texas Probate Code Sections 3(r) and76. Section 77 even allows a creditor beappointed as the personalrepresentative. Even if the probatecourt were willing, this is generally notwise. The plaintiff should apply for theappointment of an administrator but askthe court to appoint someone else.
c. Proceeding Without AnEstate. The plaintiff, as a creditor of thedecedent, may bring an action directlyagainst the heirs of the dead defendantupon pleading that no administration ispending and none is necessary. SeeWoodward and Smith, supra, Sections174 to 176 for a full discussion.
d. No AdministrationAvailable. It is conceivable that .theplaintiff would be unable to establish anadministration: There is no will, there isonly one heir and no other debts. Insuch a case, the plaintiff would probablyhave to pursue the claims against theheir directly.
However, to pursue aclaim against heirs sounds like herdingcats and a plaintiff would be much betteroff with the personal representative ofan estate as the defendant.
8. All of the Heirs. It is critical toboth the plaintiff and the defendant thatall of the heirs are before the court.Defendants are not going to want tosettle without being sure that allclaimants have been quieted.
While not alwaysnecessary, the safest procedure is to
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have the heirship determined by aprobate court using the procedures setout in Texas Probate Code Section 48-56. Often the defendant will acceptproof (such as an affidavit of heirship)that all of the heirs are parties to thesettlement. However, this entails risks.Without a court determination ofheirship, the settlement would notbinding on any other heirs. Mosttypically they are common law spousesor descendants born outside of themarriage relationship.
A separate question iswhether or not the ruling of the probatecourt is binding on the other side in theseparate personal injury or deathlitigation, see _____________ infra.
9. The Personal RepresentativeWill Not Proceed. Sometimes there isa personal representative but he will notpursue a claim or will not defend aclaim.
a. Court Order to Pursue orDefend. While there are somelimitations regarding independentpersonal representatives, an interestedperson (heir or creditor) can seek anorder compelling the administrator tosue or defend. If they still fail to actthen it will add another grounds forremoval.
b. Removal. The obviousremedy for a personal representativethat will not pursue or defend a claim isto seek his removal, Sections 222 and149C.
c. Impose or IncreaseBond. An heir can also seek the
imposition or increase in a bond, TexasProbate Code See Sections 149 forindependent executors and Section 204to 206 for dependent administrators.When the bonding company finds outwhy a bond has been ordered orincreased, it probably will refuse toprovide a bond and the personalrepresentative can then be removed.
d. Derivative actions. If thepersonal representative will not pursue aclaim an heir may to pursue the claimon behalf of the estate. See, InterfirstBank-Houston, N.A. v QuintanaPetroleum Corporation, 699 S.W.2d 864(Hous 1 , 1985 writ ref’d n.r.e.),st
Richardson v Vaughn, 23 S.W. 640 (Tex1893), Tex Jur 3d, Decedent’s Estate,Section 834. The following is fromWoodward & Smith, supra, Section 171.
“The rule has been summarizedin the statement that the heirsmay sue when “it appears thatthe administrator will not orcannot act, or that his interest isantagonistic to that of the heirsdesiring to sue.”
10. Claims Procedure. Claimsinclude tort claims such as those forwrongful death and survival, Section3(c). For a discussion of probateclaims procedures see Featherston,“Handling Claims Against Decedent’sEstates,” 1995 Advanced EstatePlanning and Probate Course, Tab Jand the most recent update of BooneSchwartzel’s article which is attached toMark Schreiber’s “Creditor’s Claims inIndependent, Dependent andGuardianship Estates,” 2001 AdvancedEstate Planning and Probate Course,Tab 5.
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a. Liquidated Claims. Theclaims procedure set out in TexasProbate Code Sections 294 to 329applies primarily to liquidated claims independent administrations. Thus it isnot necessary for a plaintiff to make aclaim and have it rejected before filingsuit.
b. Four Month Letter.However, Texas has a fairly newprovision for notice to creditors. TexasProbate Code Section 294(d). It statesthat a personal representative may senda certified mail notice to an “unsecuredcreditor having a claim for moneyagainst the estate...” Then that creditorhas four months to “present a claim.”
i. In the generalclaims statutes it has been held that“claims for money” does not apply tounliquidated claims, such as tort claims,Wilder v. Mossler, 583 S.W.2d 664(Hous 1 1979, no writ).st
ii. While there are nocases under this new Section 294(d), itspurpose (to promptly notify the personalrepresentative of all possible claimsagainst the estate) suggests it shouldapply to unliquidated claims.
iii. Since there are nocases at this time, if a plaintiff receivesthis notice, he should assume that hehas four months to make his claim.
iv. Then he has todecide what “presenting a claim” meansin this setting.
v. The claimsprocedure generally does not apply to
independent administrations, Bunting v.Pearson, 430 S.W.2d 470 (Tex. 1968).
vi. However, Section146(a)(2) states that an independentpersonal representative “may give thenotice permitted under Section 294(d)and bar a claim under that subsection;”
vii. In addition, Section314 says that a judgment cannot berendered in favor of a claimant “formoney” which has not been presented.
viii. While a personalrepresentative should be entitled tomake all claimants come forward, itdoes not help the process to subject tortclaimants to issues about making apresentment before filing suit and all ofthe rest of the thicket of probate claims.
11. Jurisdiction
a. Statutory ProbateCourts. Statutory probate courts havejurisdiction over wrongful death andpersonal injury matters in which apersonal representative appointed bythat court is a party, Texas ProbateCode Section 5(e).
b. County Courts and County Court at Law. These courts donot have jurisdiction over wrongful deathand personal injury cases. Seay v. Hall,677 S.W. 2d 19 (Tex. 1984). However,the jurisdictional statutes of theparticular county court at law may havea broader grant of jurisdiction.
12. Venue Probate courts onlyhave venue of wrongful death and
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personal injury matters if they are theproper county under the provisions ofthe Civil Practice & Remedies Code.Section 15.007 of the CPRC makesclear that it controls and not the ProbateCode when it comes to “personal injury,death or property damages.” Anylingering doubts about the meaning of15.007 were laid to reset in Gonzales v.Reliant Energy, Inc., 159 S.W.3d 615(Tex. 2005). Also see Probate CodeSection 5A(f).
13. Transfers Likewise, Gonzales,supra, made it clear that a statutoryprobate court may not transfer a suit for“personal injury, death or propertydamages” to itself unless it has venueunder the Civil Practices & RemediesCode.
However, Section 5B of theProbate Code will allow a transfer of apersonal injury suit filed in anothercounty. If a personal representative,appointed by a statutory probate court,is a party to a personal injury action inanother county, the statutory7 probatecourt may order the matter transferred ifvenue is proper under the CPRC.
14. Foreign Administrators Section71.012 CPRC allows a foreign personalrepresentative to pursue a claim as aplaintiff in Texas without seekingancillary letters testamentary. Twocaveats
a. Comply with Section 95.First, the statute require compliance withSection 95 of the Texas Probate Code.That section provides severalalternatives but the simplest is to file anattested copy of the will, order admittingit to probate (95(d). Notice that it
requires both the clerk and the judge ofthe foreign jurisdiction to sign.
b. Testate Only. Second,Section 95 applies only when there is awill in the foreign jurisdiction. If there ismerely an appointment of anadministrator without or without adetermination of heirship, the benefits of71.012 will not be available.
For reasons unknownSection 71.022 is identical to Section71.012.
15. Statute of Limitations
a. Death Tolls The SurvivalStatute. Statutes of limitation are tolledfor up to 12 months after the date of adeath, CPRC Section 16.062. However,if an administrator is appointed withinthat 12 months, then the tolling is onlyfrom the date of death to the date theadministrator “qualifies.”
b. Death Does Not Toll TheWrongful Death Statute. Note thatCPRC Section 16.062 only tolls theclaims on behalf of the decedent, not forthose making claims under the wrongfuldeath statute (CRPC 71.001 et seq.)
c. Relation Back. In AustinNursing Center, Inc. v Lovato, 171 S.W.3d 845 (Tex 2005), a woman suedbecause of the death of her mother.She sued within the statute of limitationindividually and as personalrepresentative of her mother’s estate. Infact she was not the personalrepresentative, although shesubsequently was appointed but after
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the running of the statute of limitations. The Court made several holdings worthnoting:
i. First and foremostthat the claims were not barred and thather claims as personal representativerelated back to her original filing.
ii. That this was acapacity issue, not a standing issue. Assuch it had to be raised by thedefendant in the trial court by verifiedpleading.
iii. It said that standingcould be raised for the first time onappeal because that had to do withsubject matter jurisdiction (849).
Also see, Lorentz v.Dunn, 171 S.W.3d 854 (Tex. 2005),decided the same on similar facts. Inthis case, the defendant also asked thatthe claim be dismissed as a sanction forthe plaintiff breaching Rule 13 byclaiming to be an administrator whenshe was not.
Covington v. Sistersof Charity, __________ S,W.3d________ (Amarillo 2005) was decidedafter Lovato and has a good discussionof its effect. In Covington the sister ofthe decedent brought an action forherself and “on behalf of the estate”even though one of the decedent’schildren had already been appointedadministrator. After being challenged,and after the statute of limitations hadrun, the sister amended her lawsuit toinclude the court appointedadministrator. The Amarillo court heldthat the relation back doctrine did notwork primarily because the sister was a
“stranger” to the lawsuit, she did nothave any claims.
This case is alsoworth noting because the administratordid not bring an action, as required byCPRC Section 71.001(c). This casedoes not discuss the administrator’spossible liabilty.
Caveat. In bothcases the plaintiffs said they were thepersonal representative when they werenot. It is not clear that the result wouldhave been the same if they had suedoriginally only individually.
d. Suit Against Estate. Ifthere is a suit against the estate, andthe personal representative does notappear or participate, it appears that thejudgment is void, Estate of C.M. v. S.G.,937 S.W.2d 8 (Hous 14 , 1996, no writ)th
and the statute may have run.
e. TemporaryAdministrators. At best a permanentpersonal representative cannot beappointed until the first Monday 10 daysafter the application is filed and citationis posted. Texas Probate Code Section128 and 33(f)(2).
i. If the statute oflimitations will run before anadministrator can be appointed, thecourt can appoint a temporaryadministrator. That temporaryadministrator should be authorized toaccept service on the personal injury orwrongful death action, notify theinsurance carrier of the lawsuit anddemand defense and indemnity and toco-operate with the insurance company.
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ii. The court should beasked to appoint someone of itschoosing, that will properly carry outthese duties.
iii. If the plaintiffs areasking that an administrator beappointed of the defendant’s estate,they should decline to serve and askthat an independent third partyappointed.
iv. If the deceaseddoes not have any assets (or at leastnot any non exempt assets), theapplicant may have to pay thetemporary administrator’s fees andexpenses.
v. The temporaryadministration procedure is set out inTexas Probate Code Sections 131A etseq, Also see the discussion atSections 461-480 of Woodward andSmith, supra.
vi. Temporaryadministrations should be avoided if atall possible. It will double theadministration costs. Also, someprobate judges are openly hostile toestablishing a temporary administrationbecause a plaintiff’s attorney has notbeen diligent
16. Estate Not an Entity. Do notsue an estate. It is clear under Texaslaw, that an estate is not an entity andcannot be sued, Henson v. Estate ofCrow, 734 S.W.2d 648 (Tex. 1987).However, if the personal representativeappears or participates, the judgmentwill not be set aside, see Dueitt v.
Dueitt, 802 S.W.2d 859 (Houston 1 ,st
1991, no writ). Mere service on thepersonal representative will not solvethe problem, Henson v Estate of Crow,supra.
17. Deathus Interruptus. If a partydies after suit has been filed, a notice ofdeath must be filed and a scire faciasissued.
a. The Plaintiff Dies.
i. If a plaintiff dies, thepersonal representative (or the heirs ifpermitted as discussed above) mayappear and continue with the lawsuit.Rule 151, Texas Rules of CivilProcedure.
ii. If no one appears,the defendant makes a suggestion ofdeath and the clerk issues a scire faciasfor the heirs or administrator.
iii. If no one appearsthe defendant may move to have thesuit dismissed.
b. The Defendant Dies.
i. If the defendantdies, TRCP, Rule 152 provides thatupon a suggestion of death or a petitionby the plaintiff, that the clerk will issue ascire facias for the administrator or heirsof the defendant.
ii. Upon return the suitwill continue.
c. The PersonalRepresentative Dies or Ceases toServe. If the personal representative
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dies, Rule 153, TRCP, provides that thelawsuit shall proceed against thesuccessor “upon like proceedings beinghad as provided in the two precedingrules, or the suit may be dismissed.”
d. Election: SurvivingParties. If there are 2 or more plaintiffsor two or more defendants and there isa death, Rule 155, TRCP, allows theproceedings to go forward in the nameof the surviving parties. However, thisconstitutes an election and the partiescannot later complain or pursue thedead party’s personal representative.First National Bank v. Hawn, 392S.W.2d 377 (Dallas, 1965, writ ref’dn.r.e.)
e. Death Before Judgment.If a party dies after the close ofevidence but before a judgment isentered, the judgment may be enteredas if all parties were still living. Rule 156.
18. Contracts. Section 233 of theTexas Probate Code governs contractsbetween lawyers and personalrepresentatives.
a. If a contract is with adependent personal representative, itmust be approved by the probate court.Subsection (b).
b. If the contract is with anindependent executor, the contract mustbe approved if it is for more than onethird.
c. Subsection (b) limits theamount of attorneys fees to one third. While the statute is not very clear, thereimbursable expenses are in addition
to that one third.
d. A court may approve acontract greater than one third underSubsections (c) and (d).
e. It requires the contract tobe approved before the attorneyperforms any legal services.
f. Any contract in violation ofthis section is “void” unlesssubsequently “ratified or reformed” bythe court.
g. Subsection (d) sets out thecriteria the court should look to indetermining the amount of thecontingent fee.
h. At paragraph 21 g, thereis a discussion of contracting with a“next friend” if the fee is greater thanone third.
19. Guardians, Next Friends & AdLitems. Someone has to represent theinterests of those who do not havecapacity. For a general discussion in theprobate and trusts context see, JohnRound, “Virtual Representation: Role ofAd Litem in Non-Guardianship Cases,”Chapter 42, State Bar of Texas,Advanced Estate Planning and ProbateCourse.
a. Persons RequiringRepresentation. The following maygive rise to additional representation.
i. minor,ii. incapacitated
persons,iii. Missing persons,
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iv. Unknown persons,and
v. Unborn orunascertained persons.
b. Attorney Ad Litem:Probate Code Probate Code Sections34A, 53 and 601(1) authorize a probatecourt to appoint an attorney ad litem. Anattorney ad litem is the attorney for theappointed person. As such the attorneyhas duties to the client the same as if hehad been privately hired.
i. Section 34A allowsthe court to appoint an attorney ad litemto represent “person having a legaldisability, a nonresident, an unborn orunascertained person, or an unknownheir” in any probate proceedings.
ii. Section 53 compelsa probate court to appoint an attorneyad litem in all proceedings to determineheirship. It also authorizes theappointment of a guardian ad litem.
iii. Section 601(1) ofthe guardianship code gives the cleardefinition of an attorney ad litem as anattorney appointed by a court to“represent and advocate on behalf of anincapacitated person. While thisdefinition is not included in thedefinitions for decedent’s estates, it ishonored by most probate judges.
iv. The court mustappoint an attorney ad litem in allguardianship matters, Section 646. Theduties are set out in Section 647.
v. Unless there issome continuing need, the ad litem isdischarged when the guardian is
appointed. The most common reason iswhen there is a potential conflict suchas the both the guardian and the wardhave claims against in the same lawsuit.
vi. This isdistinguished from a guardian ad litem,infra, who is to act in the best interest ofan incapacitated person. In someinstances the court will also appoint aguardian ad litem
c. Attorney Ad Litems:Publication Rule 244, Texas Rules ofCivil Procedure requires a court toappoint an attorney to represent theinterest of those persons served bypublication.
d. Guardian Ad Litem: TheProbate Code Sections 53 and 645, 583and 694A authorize the appointment ofguardian ad litems.
i. As stated above, aguardian ad litem is to act in the bestinterest of the incapacitatedperson.(Section 601(12)). As withattorney ad litems, while this definition isset out only in the guardianship portionof the code, probate judges tend torespect and follow these distinctionseven in a probate content.
ii. It is also worthnothing that a guardian ad litem, but notan attorney ad litem, has immunity forsome purposes , Section 645A.
e. Guardian Ad Litem:Trust Code. While the distinctionbetween attorney ad litems andguardian ad litems are fairly clear in the
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Probate Code, the Trust Code seems toconfuse the two.
i. Section 115.014says a court, in trust litigation, mayappoint a “guardian ad litem” torepresent the interest of “anincapacitated person, unborn orunascertained person, or person whoseidentify or address is unknown.” While itis important to have someone representthose interests it seems the clear role ofan attorney not a guardian ad litem.
ii. At the same time,Section 115.014(c) (which was addedby the 2005 Legislature) allows that adlitem to consider the general benefitaccruing to the living members of aperson’s family.
f. Guardian Ad Litem:Rules of Civil Procedure. Rule 173 ofthe Texas Rules of Civil Procedure putyet another face on the office ofguardian ad litem.
i. Under 173 the court“must appoint a guardian ad litem for aparty represented by a next friend or aguardian only if:” there is a conflict orthe parties agree. It is not clear if thoseare the only circumstances in which acourt may make an appointment or ifthose are the only mandatorycircumstances.
ii. Once appointedunder 173, the role of the ad litem is“...as an officer and advisor to thecourt.” This sounds like a guardian adlitem acting for the best interest of theminor or incapacitated person, but it isnot clear.
iii. The duties of thisad litem appear to be only to determineif a conflict exists, advise the court if thesettlement is in the best interest of theminor or incapacitated person andparticipate in reaching a settlement.
iv. Rule 173.4(d)prohibits the guardian ad litem fromtaking part in “discovery, trial or anyother part of the litigation,” except foradverse interest matters and as directedby the court.
v. Interestingly, Rule173.5 makes clear that allcommunications between the ad litemand the incapacitated person, and nextfriend, guardian and their attorneys areprivileged. The Rule even says “as if the guardian ad litem were theattorney for the party.”
g. Next Friend. Rule 44,Texas Rules of Civil Procedure allowsan action to be brought by someone asthe next friend of the minor orincapacitated person provided there isno guardianship pending. However, it isnot clear, that someone can, acting asnext friend, represent a defendant whois a minor or incapacitated. For ageneral discussion of these variousactors, see Saldarriaga v. Saldarriaga,121 S.W.3d 493 (Tex.App.-Austin,2003,no writ hist.).
Rule 44 says a next friendshall have the same rights as aguardian. This has been construed tomean that a contract with a next friendfor more than one third has to beapproved pursuant to Section 665(c),just like it would for a guardian. Presumably, such an approval could
15
come from the court in which thelitigation is pending and not a probatecourt.
h. Virtual Representation. Ifone party has the same interests asanother and there are no conflicts ofinterest, they may be virtuallyrepresented. If virtually represented,the court may be able to dispense withthe appointment of one of these courtcreated ad litems. Starcrest Trust v.Barry, 926 S.W.2d 343, 355 (Austin,1996, no writ) and Mason v. Mason,366 S.W.2d 352 (Tex. 1963).
i. Surrogate DecisionMakers. Section313.001 et seq of theTexas Health and Safety Code allowsthe following people to make medicaldecisions for a person who is comatoseor otherwise incapacitated. They are inthe following order of priority:
i. The patient’sspouse;
ii. Adult child of apatient who has the consent of the otheradult children;
iii. A majority fo theadult children;
iv. the patient’sparents; or,
v. a person clearlyidentified by the patient to act.
20. Caveat: Ad Litems Etc. Adlitems have real clients, with real legalrights. Ad litems owe real duties tothem. Those clients (or theirsuccessors in interest) are absolutely
entitled to sue the ad litem years laterfor malpractice the same as any clientwho hires an attorney for cash on thebarrelhead.
A good general discussion of theduties of an ad litem has been written byFt. Worth Probate Judge Steve M. King. This article has been presented atvarious seminars and can be found as“Ad Litems 2002: A Probate Odyssey,the Roles of Attorneys and Guardian AdLitem.”Chapter 3. State Bar of Texas,Guardianship 2002: an Elder andMental Health Perspective.
All too often, a lawyer is lookingfor a friend to rubber stamp his deal.Beware!!!
21. Probate Alternatives. Thefollowing is a list of alternate probateproceedings that may be helpful insome instances.
a. Proceeding to DeclareHeirship. Sections 48-56 allow aprobate court to determine the heirs ofthe decedent. If in doubt about who theheirs are (common law spouse ordescendants outside of marriage ordistant relatives), it is prudent to seek acourt determination. However, anheirship determination in the probatecourt may not be binding on thedefendant, Buster v. MetropolitanTransit Authority, 835 S.W.2d 236(Hous 1 1992).st
b. Affidavit of Heirship.These affidavits have been in ourjurisprudence forever. In 2001 thelegislature enacted Probate CodeSection 52A which is a form for
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affidavits of heirship. Especially insmaller matters they are an excellentsubstitute for a probate proceeding.
c. Small Estate Affidavit.Section 137-135 allows heirs of smallestates to file an affidavit with the courtand have the court find it complies withthe statute. A certified copy of thataffidavit and the court’s finding can bepresented to third parties to collectassets. This affidavit is limited toestate’s worth less than $50,000 whenthere is no administration pending.Further, it only applies to real estate thatis the decedent’s homestead.
d. Family SettlementAgreements. Texas has long favoredsettlements by heirs and beneficiaries.In fact this is one of the ways to avoidhaving an administrator pursue anyclaims, Shepherd v. Ledferd, 962S.W.2d 28 (Tex. 1998)
e. Administrations. Seeprior discussion regarding probate andpersonal representatives.
f. Muniment of Title. If thereis no need for the administration of anestate, a will can be admitted to probateas a muniment of title, Sections 89A,89B and 89C. Generally, noadministration means no debts and thestatute requires that be specificallyproved.
g. No AdministrationNecessary. It is possible to obtain froma court a determination that noadministration is necessary. See supra.
22. Settlement Agreements
a. No Administration.Sometimes, and especially in smallerclaims or when the damages exceed theavailable insurance, there will be asettlement with little or no litigation andwithout a probate proceeding.
The attorney, or adjustor.For the insurance company will want theadministrator to sign the settlement.
It is possible for thedefendants to safety settle thesematters without the expense and delayof a probate proceeding. Many of the“Probate Alternatives” discussed abovemay work.
However, the mostcommon and most effective is theaffidavit of heirship coupled with certainrepresentations and indemnities. Theaffidavit of heirship has beensatisfactorily used in Texas forgenerations. In 1995 the TexasLegislature codified this practice andprovided a form in Probate CodeSection 52A.
If there is noadministration pending, and none isnecessary, this affidavit and anagreement signed by all of the heirsshould be sufficient to dispense with therequirement that an administrator be aparty to the proceeding.
Finally, if the defendantsagree to accept an alternative toprobate, they should not issue anychecks that include the administrator ofthe estate. This all too often happensand it is the responsibility of the plaintiffs
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attorney to emphasize that noadministrator should be included on thecheck.
b. Dependent: ProbateCourt Approval. In a dependentadministration, the personalrepresentative cannot bind the estatewithout court permission. Alwaysinclude in any agreement that it issubject to probate court approval. Thisapproval is necessary in any probatecourt, not just a statutory probate court.
c. District Court ApprovalWill Not Do. An approval by the districtcourt will not suffice if there is aguardianship or a dependentadministration. The district courtapproval is not binding on the probatecourt.
d. Independent: NoApproval Needed. If the administrationis independent, it is not necessary to getcourt approval. However, that does notmean a beneficiary of an estate will notchallenge a settlement.
e. Allocating Proceeds. Ifthe plaintiff’s attorney is representingmore than one plaintiff, there will beconflict issues.
i. Lawyers havefiduciary duties to their clients. A breachof those duties has many consequencesincluding the risk of forfeiture of fees,Burrow v. Arce, 997 S.W.2d 229 (Tex.1999).
ii. The distributees ofan estate may be different from thewrongful death claimants. And even if
they are the same, there interests in theestate may be different from theirindividual claims.
iii. In determine theshare for the estate, the administrator(and his lawyer) must consider, theclaims of the estate (medical, funeral,conscious pain and suffering). If thedecedent was married the personalrepresentative must also determinewhat parts of the settlement areseparate and what parts are community.
iv. In settling, even inan independent administration where nocourt approval is needed, theadministrator is not a free agent. Hehas to consider the fair value of theestate’s claims. If all of the distributeesof the estate are happy with thesettlement, he still has responsibilities.He has to make sure the distributees,who are approving, have full and fairdisclosure of all facts effecting thesettlement and their rights.
v. The administratoralso has duties to the creditors of theestate. It is risky business to agree thatlittle or nothing pass to the estate, if theresult is that the creditors will take littleor nothing.
f. Confidentiality. Whileprobate courts will honor requests ofconfidentiality and seal the records uponproper request, in a dependentadministration, the proceeds will have tobe reported on an annual or finalaccount.
i. The agreementshould be clear that it is not a violationof the confidentiality provisions if
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disclosure is required by other law, suchas annual or final accountings..
ii. Even if independent, the personalrepresentative will have to report andaccount to the creditors andbeneficiaries for the funds received.
g. Authority to Settle. Aprudent defense attorney will demandproof that he is settling with someoneproperly authorized to represent thedecedent’s estate. That will includedemanding a current copy of letterstestamentary or letters of administration. By providing a current copy of the lettersthe defendants may be certain that thepurported personal representative hasnot been removed.
A prudent defense attorneywould also examine the probate file tonot only make certain that the personalrepresentative is in good standing butalso to make certain that there isnothing else that would raise an issueabout settlement authority.
23. Guardianship. When there is aminor or an incapacitated person, acourt may appoint a guardian to act onbehalf of that incapacitated person. Generally, a guardian requires courtpermission to take action and is verysimilar to the rules set out above fordependent administrations.
a. There is no specificrequirement that a guardian getpermission to file a suit,
b. However, a guardianshould get permission to employ anattorney. Even if the attorney is to bepaid on an hourly rate, the guardiancannot make those payments withoutthe prior approval, of the court.
c. And, the guardian, even ifthe employment has been approved,should submit an application to the courtfor payment of each bill.
d. A guardian must havepermission to settle a lawsuit andshould include in any settlementagreement that it is subject to approvalof the probate court.
24. Court Created Trusts Courts areauthorized to create trusts underSection 142 et seq of the TexasProperty Code. Probate Courts cancreate trusts under Section 867 of theTexas Probate Code. The best articleon these trusts and there use is "Court-Created Trusts in Texas," Glen Karisch,Advanced Drafting: Estate Planning andProbate Law Course (1995). This article hasbeen updated and is on Mr. Karisch’swebsite, www.texasprobate.com.
