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What are the requirements for a duly executed will?
- (1) T > 18 y/o
- a. Unless married or in armed forces
- (2) Signed by T
- a. Proxy ok
- b. Does not need to sign in front of witnesses
- c. Signature can appear anywhere on will
- (3) 2 Attesting Witnesses in T’s conscious presence
- a. Must sign in T’s conscious presence (T can see them by some slight physical exertion on his part)
- b. Witnesses need not sign in presence of each other
- c. Witnesses do not need to know that they are witnessing a will
What is the proper venue for probating a will?
- (1) County where decedent resided
- (2) If non-resident or no domicile or fixed place of residence, then:
- a. County where principal property is located, or
- b. County where decedent died
What do you need to prove-up a will at probate?
- (1) self-proving affidavit, or
- (2) testimony of at least one attesting witness in open court
- (3) If both witnesses dead, then
- a. Testimony of two persons as to the signature of T, or
- b. Testimony of two persons as to the signature of either attesting witness
What is an attestation clause?
Appears below T’s signature line; states that witnesses were asked to serve as witnesses by T and that they observed him sign the will > prima facie evidence of facts recited in the will.
What is a self-proving affidavit?
It is a sworn affidavit that serves as a substitute for a witness’ testimony in open court.
What is the effect of the signatures on a self-proving affidavit, when the will itself lacks the necessary signatures?
The SPA signatures can substitute for the necessary, yet missing, signatures on the will. However, they can no longer be used for SPA, and the will is not going to be self-proved (witness must testify in open court).
Who can sue an attorney for estate planning services?
Only the testator, EXCEPT in case of (1) bad tax planning or (2) mischaracterization, the estate can sue the attorney.
The beneficiaries CANNOT sue the attorney????
How can the contents of a safe deposit box be examined to determine if there is a will inside?
Contents of safe deposit box can be examined WITHOUT a court order, in the presence of a bank official, by spouse, child over 18, or person named as executor.
Will found in a safe deposit box may be delivered to executor or to the probate court.
What is the Interested Witness Statute?
This concerns a situations where an attesting witness in court is also a beneficiary under the will. This never affects the validity of the will, but will result in a void bequest to the witness UNLESS:
- (1) will can be proved w/out interested W’s testimony, or
- (2) the interested W’s testimony is corroborated by the testimony of a disinterested and credible person (anyone present when will was executed – lawyer, paralegal, bystander, etc.), or
- (3) the interested W would be an heir-at-law, in which case the interested W takes the lesser of (i) legacy under the will or (ii) intestate share.
What is a holographic will? What is required to prove-up a holographic will in court?
Will entirely in writing of testator and signed by T.
Must have 2 people testify that will is in T’s handwriting.
Can have a handwritten codicil to a typed will.
Conflict of Laws: law of state of domicile at death controls.
What is the surplusage rule as (in the context of holographic wills)?
Extraneous printed words, not necessary to complete the will or its meaning, are disregarded.
When does a gift under a will lapse?
When the beneficiary fails to survive the T (by 120 hours at statute unless will drafts around this). In this case, the gift returns to T’s residuary estate and passes according to the terms of his will or intestacy.
What is the Texas Anti-Lapse Statute?
If a pre-deceasing beneficiary (i) is a vertical descendent of T’s parents and (ii) has descendents who survive T by 120 hours, then a lapsed gift to that pre-deceasing beneficiary is given to the pre-deceasing beneficiary’s heirs (instead of returning to T’s estate).
Anti-Lapse statute applies to class gifts (if beneficiaries of class qualify as stated above).
What does a class close (for purposes of a class gift)?
- Naturally – no more members to the class are able to be born
- Rule of Convenience – once any member of the class is entitled to immediate possession, the class closes.
What is the result if a beneficiary under a will was dead at the time the will was executed?
Generally, the anti-lapse statute and surviving residuary beneficiary rules apply.
Exception: If class member was dead when the will was executed, anti-lapse statute does not apply in favor of the class member’s descendents (presumed that T didn’t want to include them in the class).
What is Per Capita and Per Stirpes distribution?
Per capita – by the head; each descendent gets an equal share
Per stirpes – by the root; each child is a root, so one share for each family line under T
When should use intestate succession rules?
- (1) Descendent didn’t leave a will
- (2) Descendent left an invalid will
- (3) Descendent left a will that didn’t completely dispose of the estate (“partial intestacy”)
- (4) An heir successfully contests the will and probate is denied.
What are the laws of intestate descent and distribution with regard to community property?
If kids (if any) are all of the marriage, then 100% of community property goes to surviving spouse.
If 1+ kids (if any) are outside of the marriage, then kids equally divide 100% of decedent’s ½ share in community property (or otherwise stated, kids equally divide 50% of community property); spouse retains 100% of her ½ share in the community property (or otherwise stated, spouse retains 50% of community property).
What are the laws of intestate descent and distribution with regard to separate property?
- Separate Personal Property:
- If kids, then 1/3 to wife; 2/3 to kids
- If no kids, then all to wife.
- If no wife, passes according to laws of descent and distribution.
- Separate Real Property:
- If kids, 1/3 life estate to wife; 2/3 FSA to kids and 1/3 remainder to kids.
- If no kids, but wife and parents, ½ FSA to wife and ½ FSA to parents.
- Then according to the laws of descent and distribution.
What is the Bad Daddy Rule?
If parent abandoned, failed to support child or child’s mother during pregnancy, or criminally responsible for death or serious injury of child, then CANNOT INHERIT.
What special rules are there for half-blooded siblings in Texas?
When inheriting from an intestate sibling, half bloods inherit half as much as whole bloods.
What is a “child” for purposes of intestate distribution? How is paternity established?
Biological or adopted children are children under the code.
- --Under the Presumed Father Rule, fatherhood is presumed (and thus kid is his child) if:
- (1) Child born during (or w/in 300 days of) marriage or attempted marriage that is void or voidable.
- (2) Parties married after child’s birth AND man voluntarily asserted his paternity
- a. In a record filed with Bureau of Vital Statistics
- b. By consenting to be named father on birth certificate, or
- c. By promising in a record to support the child
- (3) During first two years of child’s life, he resided w/ child and represented to others that child was his
--Man can also sign a sworn statement acknowledging paternity
--Paternity can be established in a paternity suit.
--Paternity can be established in probate proceedings by clear and convincing evidence
Who can inherit in the case of adopted children?
Adopted children can inherit from their adoptive parents and their natural parents (unless in a decree terminating parent-child relationship, inheritance rights were expressly terminated). Exception: Adopted adults can only inherit from their adopting parents (NOT their biological parents).
Natural parents CANNOT inherit from their biological children who were adopted by someone else.
What is adoption by estoppel?
Based on a failed agreement to adopt on which to-be child relies.
What is the 120-hour rule as it pertains to intestacy?
Intestate heirs must survive a decedent by 120 hours in order to take by intestacy. This rule applies to everything including wills, intestate succession, life insurance policies, JTWROS, etc.
What is a disclaimer and what are its elements?
A disclaimer allows an heir or beneficiary to reject a bequest or their intestate inheritance.
- (1) written, signed, and acknowledged.
- (2) filed within 9 months of D’s death.
- (3) filed with probate court and copy sent to personal representative.
- (4) Can’t be partial – can’t disclaim part of an interest in a specific piece of property.
- (5) Parent (acting in capacity of a parent) CANNOT disclaim on behalf of minor child, but minor child CAN disclaim w/in 9 months after attaining age 21.
- (6) Executor or guardian can disclaim on behalf of whoever they represent.
- (7) In case of a trust, must disclaim w/in 9 months of the trust becoming irrevocable.
- (8) Charitable Beneficiary can disclaim 1 year after receiving notice of bequest or 6 months after an inventory is filed, whichever is later.
What is the effect of disclaimer?
Disclaiming beneficiary is treated as predeceasing the decedent. Lapse, anti-lapse, and 120-hour rule apply.
What is an advancement? What is a satisfaction? What are their elements?
Advancement – inter vivos transfer made during life meant to count towards any inheritance heir should receive from decedent’s intestate estate.
Satisfaction – inter vivos transfer made during life meant to count towards any inheritance beneficiary should receive under the terms of decedent’s will.
Life estates (or gifts made during lifetime) can’t be used as an advancement or satisfaction.
- (1) Grantor must state of time of inter vivos transfer that he is making an advancement/satisfaction, or
- (2) Grantee must state after advancement/satisfaction made that inter vivos transfer was an advancement/satisfaction, or
- (3) The will provides that bequests are to be reduced by such lifetime gifts.
What results from the unauthorized commercial use of decedent’s name or likeness?
Recovery for damages, profits obtained, exemplary damages, and attorney’s fees (absent a contrary disposition).
- (1) ½ to surviving spouse and ½ to descendants
- (2) All to spouse if no descendants
- (3) All to descendants if no spouse
What happens if T marries after executing a will and the will does not provide for the new spouse? What claims can the new spouse assert?
- (1) probate of homestead – right to occupy rent-free
- (2) If no residence owned - $15,000 cash allowance in lieu of homestead
- (3) Family allowance – amount needed for support for period of one year
- (4) Exempt personal property – up to $60K of tangible personal property items (or $5K allowance in lieu of)
What happens if a T divorces after a will is executed?
Divorce or annulment of a marriage revokes all gifts and fiduciary appointments in favor of former spouse and relatives of the former spouse (who are not relatives of the T).
Court will read and distribute the estate as though the former spouse (and her relatives) predeceased T.
What is a pretermitted child? What are the consequences of a T having a pretermitted child?
A child born after the execution of T’s latest will or codicil who is not mentioned in the will and not otherwise provided for at death.
If no other child when will executed, pretermitted child takes intestate share of all property not bequeathed to other parent of child.
If other children when will executed, and those children ARE NOT provided for in the will, pretermitted child takes intestate share of all property not bequeathed to other parent of child.
If other children when will executed, and those children ARE provided for, child’s share limited to gifts to other children; nobody else’s gift is reduced (children split gifts in equal shares).
How can a will be revoked?
- (1) subsequent testamentary instrument executed with like formalities (i.e. formalities required for a will), OR
- (2) a physical act by T destroying or canceling the will or causing it to be done in his presence
When does a presumption of revocation arise?
- (1) where will is last seen in T’s possession or control and not found after death
- (2) where will is last seen in T’s possession or control and later found in torn or mutilated condition.
- (3) DOES NOT ARISE where will last seen in possession of someone adversely affected by its contents.
- (4) Note: Evidence is admissible to rebut the presumption of revocation where wil cannot be found or is found in damaged condition.
What is the 3-part test to prove a lost will?
- (1) Due execution must be proved as in any other case
- (2) Cause of will’s non-production must be proved (i.e. present evidence to rebut presumption)
- (3) Contents must be substantially proved by one who has read will, heard it read, or can ID a copy of the will.
What is the effect of changes made on the face of the will?
Cross-outs, strike-throughs, etc. HAVE NO EFFECT.
Exception = holographic wills (where two witnesses can testify that strike-outs in T’s handwriting)
What is a revival? Is this permissible in Texas?
Texas applies the common law doctrine of NO revival of revoked wills.
BUT, Per Dependent Relative Revocation, where T revokes a will based on a mistake of law or fact as to the validity of another disposition (ex: T thinks revoking his 2nd will revives the 1st), a court may disregard the revocation.
What is the effect of having multiple wills and no revocation language in later wills/
Read the will together; subsequent wills are treated as codicils to the first.
BUT, if the 2nd will is wholly inconsistent with the 1st, then we have revocation by implication.
Revocation of a later codicil does not revoke the will; just read original instrument as if codicil didn’t exist.
What are the different types of devises/bequests?
- (1) Specific devise/bequest – I devise BA to my son John
- (2) General legacy – I bequeath $10K to my nephew Jed
- (3) Residuary gift – I give all the rest, residue, and remainder of my estate to B
- (4) Demonstrative legacy – General amount from specific source; I bequeath $25K to be paid out of sale of Exxon stock.
What is abatement?
- Where there are not enough assets to cover devises/bequests. In this case, devises and legacies abate pro rata in the following order:
- (1) Intestate Property
- (2) Residuary Estate (personal property)
- (3) Residuary Estate (real property)
- (4) General legacies of personal property
- (5) General legacies of real property
- (6) Specific bequests of personal property (demonstrative treated as specific for abatement)
- a. Is a specific source does not cover the entire legacy then the amount received from the specific source is treated as a specific bequest and any amount above that is treated as a general legacy.
- (7) Specific devises of real property.
- (8) Note: If the will makes a bequest of $25K to be paid out of the proceeds of the sale of My Exxon Stock, to S, but the Exxon stock was only worth $16K at T’s death, for abatement purposes, $16K = specific bequest; $9K = general legacy
What is the Pro Rata Apportionment of Estate Taxes?
Estate taxes are equitably apportioned among all estate beneficiaries (eveyone’s interest is reduced pro rata).
Exception: Gifts that qualify for the marital or charitable deduction not subject to apportionment.
What is ademption?
Where specifically devised property is no longer in the estate at death. Applies only to specific gifts, not to demonstrative or general legacies.
What is the effect of the following situation: “I give my 100 shares of IBM stock to Alice. I give 100 shares of Kodak stock to Ben.” T then sells both IBM and Kodak stock and invests the shares in new stock.
Effect: Alice gets nothing because T owned no IBM stock at death; but Ben gets the date of death value of 100 shares of Kodak stock b/c we treat this as a general legacy since there is no “my” to make it specific.
What does specific bequests of stock include?
- (1) Stock produced by a stock split
- (2) Stock dividends declared after execution of will
- (3) NOT cash dividends declared before death
Are the liens on specific gifts of encumbered property exhonorated?
Wills executed before Sept. 1, 2005 – absent contrary provisions, liens of specific devised property are exonerated from the residuary estate.
Wills executed after Sept. 1, 2005 – exoneration of liens doctrine abolished by statute
What are the elements of Incorporation by Reference?
- (1) writing must be in existence when will executed
- (2) will must show an intent to incorporate the writing; and
- (3) document must be clearly identified by language in will such that there can be no mistake as to the identity of the document referred to
What are Acts of Independent Significance?
It is a lifetime act with a lifetime motive or purpose, even though it affects the will. These are ok. Ex: I give the car I own at my death to my son. This is acceptable even though you have to examine a document outside the will to determine the document and that document doesn’t meet the incorporation by reference standards (why? Because the act of buying a car is a lifetime act with a lifetime motive or purpose).
What is the general presumption regarding or ambiguities in a will?
Absent suspicious circumstances, it is conclusively presumed that T read the will and intended all of its contents.
Is extrinsic evidence allowed to prove the meaning of terms in a will?
If there is no ambiguity, extrinsic evidence is not allowed.
If there is a latent ambiguity (i.e. facts and circumstances outside the will establish that an ambiguity exists), then extrinsic evidence is allowed. Ex: I give $10,000 to my nephew John Paul Jones. T has 2 nephews – James Peter Jones and Harold Paul Jones, who takes?
If there is a patent ambiguity (i.e. ambiguity on the face of the will), then extrinsic evidence is allowed. Ex: I give my son twenty-five dollars ($25,000).
What is the result if extrinsic evidence cannot resolve an ambiguity?
The gift fails.
What is required in order to establish a contract to make a will or to not revoke a will?
- (1) provisions in the will stating that a contract does exist and stating the material provisions of the contract, OR
- (2) a binding enforceable written agreement
Does the execution of a joint reciprocal will suffice to show a contract?
No, not on its own.
What is the result if a contractual will is established?
- (1) new will that purports to revoke the agreed-upon disposition under the contract is admitted to probate; and
- (2) a constructive trust is imposed in favor of the beneficiaries under the contractual will.
What is a non-probate asset?
- An interest that passes at death other than by will or intestacy, including:
- (1) property passing by right of survivorship
- (2) property passing by contract (ex: life insurance, employee death benefits)
- (3) property held in trust
- (4) property over which D held a power of appointment
What is a Negative Bequest?
Words of disinheritance.
In Texas, words of disinheritance in a will are given full effect even when there is a partial intestacy. The disinherited person is treated as if they predeceased the T.
What is a General Power of Appointment?
“To such person, including B’s estate, as she appoints by her last will.”
- (1) Permits the life beneficiary to designate the remainderman
- (2) Will must expressly exercise power of appointment or else it will pass through the residuary
- (3) Exercise by implication: if trust assets subject to power are bequested
What is a Special Power of Appointment?
“To such of B’s descendants as she shall appoint by her last will.”
Where holder of power is limited in the class of person to whom she can appoint.
How do you exercise a Power of Appointment?
To exercise a power of appointment, there must be a specific reference to the power (i.e. with respect to the power of appointment given by mother’s will, I hereby appoint…)
How do you prove T had sufficient capacity in a will contest?
Proving sufficient capacity (based on circumstances AT TIME OF EXEUTION):
- (1) understands the nature of the act he was doing (i.e. he was writing a will/codicil)?
- (2) Knows the nature and approximate value of his property?
- (3) Knows the natural objects of his bounty?
- (4) Understands the disposition he was making?
Can a legally incapacitated person have sufficient capacity to make a will?
Yes, if he had a Lucid Interval (a fleeting moment where he had capacity).
What is the statute of limitation and burden of proof in will contests?
Contestants generally have 2 years after will admitted to probate to contest.
- (1) fraud/forgery, in which case contestants have 2 years from discovery to contest).
- (2) Contestant under disability, in which case can contest w/in 2 years after disability removed.
If will contested at time offered for probate, then burden on the proponents. After will admitted to probate, then burden on the contestants.
Can a person who accepts benefits under a will contest the will?
Generally no, but that person can contest if he had full knowledge of the facts on which the contest might be based when he accepted the distribution.
Who has standing to contest a will? Who does not have standing?
- (1) Only interested parties can bring a will contest (i.e. persons who have an economic interest that would be adversely affected by the will’s probate).
- a. Heirs, legatees, etc. under earlier will whose interest would be defeated if will probated.
- b. Executor named in will #1, having duty to offer it for probate and defend it, HAS STANDING to contest will #2 which would revoke it.
- (2) Close personal friends, not named as legatee DO NOT HAVE STANDING.
What is undue influence and who has the burden of proof?
- Undue influence elements:
- (1) existence and exertion of the influence
- (2) effect was to overpower the mind and will of the T; and
- (3) product was will (or gift in will) that would not have been made BUT FOR the influence.
- (4) Also discuss lack of testamentary capacity on essay (even though this is not a requirement)
BOP on the contestant to prove undue influence.
What is an “in terrorem” clause, and is it valid?
This is a no-contest provision in a will that says if a beneficiary contests the VALIDITY of the will (and never dismisses the suit voluntarily), they forfeit their gift under the will.
In terrorem clauses are given full effect UNLESS the trial court finds that the contest was brought in good faith and with probable cause.
In terorem clauses are strictly construed and DO NOT apply to will construction suits or action brought against executor b/c these suits don’t challenge the validity of the will.
If a T executes a will that gives a gift to (1) the lawyer who drafted the will, (2) the lawyer’s parents and/or their descendents, (3) the lawyer’s employee, or (4) the lawyer’s spouse, what is the result?
The gift is void, UNLESS beneficiary related to T w/in 3rd degree of consanguinity (birth or adoption) or affinity (marriage).
When can an action to annul a marriage be filed on the basis that T lacked capacity?
- (1) can be filed if marriage took place w/in 3 years of T’s death, and
- (2) the action is filed w/in 1 year after T’s death
How long does a person to have to offer a will for probate?
Within 4 years of T’s death
What is an Independent Administration and when can it arise?
This is when an estate is administered w/out court supervision or involvement.
- Authorized when:
- (1) provided for in the will
- (2) all distributes agree
- (3) if will creates a trust, income beneficiaries must all agree
- (4) if distributee is minor or incapacitated, guardian can agree on their behalf
What statute was enacted to protect purchasers from IE (independent executors???) in 2011, and how does this statute work?
- (1) If will does not give IE power of sale, the order of appointment may grant a power of sale if beneficiaries who would receive any interest in the property give their consent;
- (2) Purchase of real property is protected if IE gives sworn affidavit stating that sale is for one of the statutory purposes (paying debts, administration expenses, and allowances).
What are the power of an independent executor?
(1) Has power to do anything a dependent administrator can be authorized to do with court order and anything a prudent person would do to manage the estate; however, this includes power to sell property if the sale is for purpose of paying debts, administration expenses, and allowances.
What must an independent executor do, and by when?
- Within 120 days, independent executor must:
- (1) post fiduciary bond w/in 20 days unless waived by will
- (2) publish notice of administration in newspaper of general circulation w/in 1 month
- (3) file inventory of estate w/in 90 days (unless extended by court)
- (4) give notice (and copy of will) to named Bs w/in 60 days after admitted to probate
What compensation is an independent executor allowed?
5% in, 5% out – PR entitled to a commission of 5% of all sums ACTUALLY received and 5% of all sums paid out in cash; does not apply to cash on hand or collection of life insurance proceeds; does not apply to automatic distributions to the Bs or heirs.
Who is entitled to an accounting from the IE, and when can they properly demand an accounting?
Interested parties are entitled to an accounting from IE.
Entitled to accounting on demand 15 months after will admitted to probate, and successive accounting on demand 12 months after last accounting was rendered.
How may an Independent Executor close administration?
- (1) file closing report w/ verified affidavit
- a. must show (i) property initially received; (ii) debts and expenses paid; and (iii) names and addresses of distributes
- (2) file for declaratory judgment – seeking judicial discharge of IE from further liability
- (3) Note: Closing/distribution of estate may be compelled by interested party upon petition for distribution 2 years after IE appointed (must show cause at a hearing)
When may an Independent Executor be removed by court for cause?
- IE may be removed by court for cause if:
- (1) fails to return inventory w/in 90 days after appointment (unless extended by the court)
- (2) fails to give notice to Bs w/in 60 days after will admitted to probate, or fails to file certificate that Bs have been given notice w/in 90 days
- (3) misapplies or embezzles estate property, or causes others to believe he will do so imminently
- (4) fails to make a required accounting
- (5) guilty of gross misconduct or mismanagement
- (6) becomes incompetent or is sentenced to penitentiary
Which court has jurisdiction? (Identical in guardianship proceedings)
- (1) counties w/ only constitutional county courts
- a. uncontested matters = county court
- b. contested matters = transferred to district court on motion or a statutory probate judge will be appointed and returned to county court when contested matter resolved.
- (2) Counties w/ CCAL
- a. Can be filed in either constitutional county court or the CCAL but disputed matters go to CCAL, not the district court
- (3) Counties w/ Statutory Probate Court
- a. Action must be filed in the statutory probate court
What are alternate methods of estate administration?
- (1) independent administration
- a. if distributes agree and probate judge doesn’t veto
- (2) muniment of title (if T left a will)
- a. allows family to wind up D’s affairs informally and file a muniment of title in land records > cannot be entered unless there are no unpaid debts (other than mortgages on homestead)
- (3) statutory heirship proceedings (intestacy)
- a. judgment states that person died intestate, names and addresses of persons determined to be the heirs, and shares of the estate that each is entitled to take.
- b. Like muniment of title but for intestacy; can be used to collect a bank account in the D’s name
- (4) small estate administration
- a. if value of intestate D’s probate estate (not counting homestead + exempt PP) is less than $50K
- b. can be used to clear title to the D’s homestead
What is an Unqualified Community Administration (UCA)?
If no administration is pending, Wife has authority to sell any community assets as UCA for the purpose of paying community debts; if there is sufficient cash on hand to pay community debts, Wife does not have any power to sell assets as UCA.
What costs can executors who offer will for probate (that is later denied) collect?
Attorney’s fees from the estate for unsuccessful attempt to probate will, so long as offer for probate made in good faith.
Policy: we want wills to be offered into probate.
What is a temporary administrator?
Can be appointed and cannot exceed 180 days (unless appointed pending a will contest, then appointment continues until termination of the contest and appointment of a permanent representative).
How can a B show that he has record title to T’s land?
- (1) If will probated in Harris County, and T owns land in Travis County as well, will is of record in Harris County and shows record title to the land located there, and filing certified copies in Travis County of will and order admitting it to probate in Harris County will show that B has record title to the land in Travis County.
- (2) If T dies domiciled in Oregon and will is probated in Oregon, but owns land in Travis County, B can file certified copies of will and order admitting it to probate in Oregon in Travis County in order to establish title to lands T owned in Travis County.
What is the Personal Representative Priority?
- (1) executor named in will
- (2) surviving spouse
- (3) principal B named in will
- (4) any other B named in will
- (5) next of kin, in nearest order of kinship
Note: this does not apply to appointment of temporary administrator (any suitable person that is helpful in will contests).
Note: only #2 and #5 apply in intestate succession.
What type of notice must creditors with claims against the estate be given?
(1) notice by publication – w/in 1 month after being appointed, PR must publish notice in a newspaper of general circulation, requiring all person having claims against the estate to present them “within the time prescribed by law”
(2) permissive personal notice to unsecured creditors – PRs may give personal notice by RM or CM to general creditors having claims for money stating that the creditor must present the claim within 4 months after receipt of notice, otherwise claim will be barred
(3) personal notice to secured creditors – within 2 months after appointment, must give personal notice by RM or CM to secured creditors with valid liens.
How does the type of notice creditors must receive differ when there is an independent vs. a dependent administration?
- Dependent Administration
- (1) General creditor must file n authenticated claim supported by affidavit w/ probate court or administrator, then administrator must write memo allowing or rejecting it w/in 30 days, if no action taken conclusive presumption that claim was rejected.
- (2) Creditor must file suit on claim w/in 90 days after rejection or it is barred
- (3) Creditor cannot bring an action on a “claim for money” unless claims is first presented to the administrator and rejected by the court, but rule does not aply to unliquidated or contingent claims
- Independent Administration
- (1) executor must give notice by publication and personal notice to secured creditors, and may give permissive personal notice to general creditors.
If someone has a claim against an estate, who should they sue?
Lawsuits must be brought against the personal representative. The estate is not an entity and cannot be sued.
How can secured creditors get paid?
- Secured creditors can get paid out of the general assets of the estate if (i) 6 months from date of PRs appointment or (ii) 4 months after receipt of personal notice, whichever is later, secured creditor must file its claim as mature second claim (with court approval).
- (1) If he fails to file it as a matured secured claim, it is classified as preferred debt and lien and then creditor can only look to security interests, can foreclose but no deficiency judgment is allowed.
- (2) New foreclosure rule: secured creditor who elects matured secured claim cannot f/c on a mortgage with approval of independent executor or court approval. Secured creditor who elects (or is regulated to) preferred debt and lien cannot exercise f/c rights within the first 6 months of administration.
- (3) A Preferred Debt and Lien creditor has superiority and gets paid even before funeral expenses.
In what order are claims against the estate paid?
- Note: secured creditor w/ preferred debt and lien takes 100% of foreclosure sale proceeds
- (1) funeral expenses and expenses of last illness, up to $15K [funeral paid before family allowance]
- (2) expenses of administration
- (3) secured claims, to extent covered by the lien (if creditor filed matured secured claim)
- (4) child support arrearages reduced to judgment
- (5) state taxes
- (6) claims for repayment of Medicaid assistance paid by state
- (7) costs of confinement if D imprisoned in TX prison
- (8) ALL other claims, including funeral, last sickness expenses exceeding $15K
- (9) IRS claims for unpaid federal income takes priority over all claims except funeral and last sickness expenses of administration.
What are the procedural steps for the sale of real property in a court-supervised administration?
- (1) file application for sale describing property, amount of outstanding creditors’s claims, property on hand available to pay creditors, other facts showing need to sell real estate for authorized purpose; funeral and administration expenses, debts, family allowance
- (2) Date for hearing set, and notice given to all persons interest in the estate
- (3) Hearing held, at which court orders sale, specifying terms of sale
- (4) Property is sold, sale reported to court within 30 days
- (5) After notice to interested parties, confirmation hearing is held and court affirms sale
- (6) PR gives deed to purchaser
What is a rural homestead? What is an urban homestead?
- Rural Homestead:
- (1) Family = 200 acres; individual = 100 acres
- (2) Need not be contiguous
- (3) Used for business/residence
- Urban Homestead:
- (1) 10 acres
- (2) 1 or contiguous lots
- (3) Used for business/residence
What are the benefits of having a homestead?
- (1) Both spouses must join in conveyance or mortgage of homestead property
- (2) Free from creditors claims, except of
- a. Purchase money mortgage lien
- b. Taxes
- c. Federal tax liens
- d. Mechanic’s; materialman’s lien for improvements on homestead where written contract, signed by H/W, entered into before improvements are made, and recorded
- e. Loan to enable parties to divide homestead on divorce
- f. Equity loan for up to 80% of the value of the equity (FMV-purchase money mortgage)
- (3) Surviving spouse gets right to occupy homestead rent-free for life or as long as she chooses to occupy it as a homestead
What is a homestead allowance? What is the family allowance?
Homestead Allowance – Surviving spouse can get $15K in lieu of homestead if D did not own homestead; $5K in lieu of exempt personal property.
Family Allowance – support for giving surviving spouse, minor children, incapacitated adult children, for support for one year.
What is the effect of conveyance of the homestead to a revocable trust on creditor protection?
Conveyance of homestead to revocable trust does not cause loss of creditor protection even though trustee holds legal title.
What happens if the homestead is subject to a forced sale?
The homestead exemption is not subject to attachment, execution, or forced sale for creditor’s claims. If the homestead is sold, the sale proceeds are exempt from creditors for 6 months, giving seller time to invest in another homestead.