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REPTL decedents' estates bill is worth a closer look

HB 2046 would make key changes affecting every estate planning and probate lawyer in Texas.

Rep. Will Hartnett (R-Dallas) filed HB 2046 Wednesday. This bill makes numerous changes to the Texas Probate Code that are supported by the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

Signing wills just once

Among the highlights of HB 2046 is a new way to handle will executions in Texas. Current law requires the testator and two witnesses to sign the will and then, if the will is self-proved, to separately sign the self-proving affidavit.  HB 2046 amends Section 59 to provide the option of having the testator and witnesses sign a combined will and self-proving affidavit so that each only has to sign once. This is a holdover change from 2009. The 2009 bill failed to pass because of a legislative logjam at the end of the session.

This change, along with others made in 2009 regarding the execution of declarations of guardian, medical powers of attorney and directives to physicians, should speed up document signings. Old foagies who like the current two-signature method may continue to use it.

Independent administration changes

Another holdover from 2009 are changes to independent administration. REPTL proposed these changes to clarify Texas's independent administration statutes in anticipation of their inclusion in the new Estates Code which takes effect January 1, 2014. If HB 2046 passes, these changes would take effect September 1, 2011, and be carried forward into the Estates Code.

The proposed independent administration changes will be covered in a separate post.

No need to file an inventory

Living trust proponents frequently tout the increased privacy of those plans over will-based plans since in a will-based plan an inventory must be filed with the court.  HB 2046 would change this for independent administrations in cases where there are no unpaid debts, except for secured debts, taxes and administration expenses. In that case, the independent executor could file an affidavit in lieu of an inventory. The affidavit must state that the independent executor has provided each beneficiary with a "verified, full, and detailed inventory." 

The changes to Section 250 would not do away with the requirement of preparing an inventory; it would do away with the filing of the inventory in some cases.  Interestingly, under current law the personal representative is not required to provide a beneficiary with a copy of the inventory, although doing so is good practice. The new law would require delivery of a copy in order to avoid the filing requirement.

As filed, it appears that dependent administrators also could file an affidavit in lieu of filing an inventory. A change is in the works to limit this procedure to independent administrations, for obvious reasons.

Overruling Holmes v. Beatty

Holmes v. Beatty, 290 S.W.3d 852 (Tex. 2009), caused shockwaves in the probate and estate planning community for two reasons:

  • First, and most importantly, the Supreme Court relaxed the standards for creating rights of survivorship with respect to community property, holding that a " joint tenancy" or " JT TEN" designation on an account is sufficient to create rights of survivorship in community property under Section 452 of the Texas Probate Code. 
  • Second, the Supreme Court held that stock certificates issued from a community property with right of survivorship brokerage account continue to be survivorship property even though the the certificates themselves do not meet the requirements for survivorship agreements.

Will Hartnett, Author of HB 2046HB 2046 overturns Holmes on the first of these points.  It would add this sentence to Section 452: "A survivorship agreement will not be inferred from the mere fact that the account is a joint account or that the account is designated JT TEN, Joint Tenancy, joint, or other similar abbreviation." Parallel language is added to Section 439, which governs non-community property multi-party accounts. HB 2046 specifically states that the bill is intended to overturn the ruling of the Texas Supreme Court in Holmes v. Beatty. 

The bill is silent on the other significant holding in Holmes, so stock certificates issued out of community property with right of survivorship accounts may continue to be survivorship property, at least to the extent described in Holmes.

Reasonable compensation for executors

Jose Rodriguez, Author of SB 1198The bill also would change the default basis for compensation of personal representatives of decedents' estates. Currently compensation is based on 5% of all sums received in cash plus 5% of all sums paid out in cash, subject to the limitations stated in Section 241. HB 2046 would replace this with a "reasonable compensation" standard. HB 1837 makes a similar change for guardianships. 

Update: On March 4, 2011, Sen. Jose Rodriquez (D-El Paso), filed SB 1198 as REPTL's decedent's estates bill in the Senate. 

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