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Welcome to the Texas Probate Web Site, your source for information on estate planning, probate and trust law in Texas.  This site is owned and maintained by Glenn Karisch of The Karisch Law Firm, PLLC, of Austin, Texas.  For older information, visit the legacy site at texasprobate.net.
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Monday
Mar072011

IRS releases a draft Form 709 for 2010 gifts


The Internal Revenue Service has posted a draft version of the Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return for gifts made during calendar year 2010. The draft is dated March 4, 2011, and can be seen here.

Since 2010 was, shall we say, an unusual year for gifts, it is helpful to see what the form may look like -- and not a moment too soon. The deadline for filing is April 15, 2011. While the deadline for filing a Form 706 federal estate tax return for decedents dying in 2010 was extended to September 19, 2011, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 did not extend the deadline for filing gift tax returns.

Thursday
Mar032011

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. 

Tuesday
Mar012011

Ad litem fees and attorneys' fees in guardianships: who pays?

Who should pay attorney ad litem fees, guardian ad litem fees, the applicant's attorneys' fees and other costs when someone applies for the creation of a guardianship? Three bills now pending in the Texas Legislature take different approaches.

Jane Nelson, Author of SB 220Under Section 665A of the Texas Probate Code, the proposed ward's estate is charged with attorney ad litem fees, guardian ad litem fees and other costs -- whether or not the application for appointment of a guardian is successful -- unless his or her estate is insufficient to pay those fees and costs, in which case the county bears the expense. 

Under Section 665B, if a guardianship or management trust is created, the court may order that any applicant's attorneys' fees be paid from the ward's estate, or from the county treasury, if the court finds that the applicant acting in good faith and for just cause.

Is it fair that the ward's or the proposed ward's estate is required to pay the costs of the attorney ad litem or guardian ad litem? Are there times when another party should have to bear those expenses? Should the county treasury be stuck with ad litem fees and costs and the applicant's attorneys' fees if the proposed ward's estate is insufficient to pay them? 

Chris Harris, Author of SB 286SB 286 would add this sentence to Section 665A: "The court may allocate attorney's fees taxed as costs under this section among the parties as the court finds is fair and just." This bill, authored by Sen. Chris Harris (R-Arlington), would allow the judge to make another party pay the costs of attorneys ad litem, guardians ad litem, interpreters, etc., if it is "fair and just" to do so. Section 665B is amended to permit the applicant's attorneys' fees to be allocated among the parties to the guardianship proceeding "as the court finds is fair and just," so long as a guardianship or management trust is created. SB 286 also requires ad litem fees under Section 665A and the applicant's attorneys' fees under Section 665B to be set in an amount which is "fair and just."

SB 220 takes a similar approach.  This bill, authored by Sen. Jane Nelson (R-Flower Mound), amends Section 665A to permit the court to "allocate amounts taxed as costs under this section among the parties as the court finds is just and equitable." It provides that, if the proposed ward's estate is unable to pay "the costs allocated to the proposed ward," the county is responsible for those costs. SB 220 also amends Section 665B to permit the applicant's attorneys' fees to be "allocated as the court finds is just and equitable," so long as the court creates a guardianship or management trust. 

Surely if it is "fair and just" to allocate costs and fees to a party under SB 286, it also will be "just and equitable" to do so under SB 220. Perhaps the bills could be reconciled so that costs and fees are allocated if it is "fair, just and equitable" to do so.

Will Hartnett, Author of HB 1325HB 1325 gives the court less authority to charge others with ad litem fees. This bill, authored by Rep. Will Hartnett (R-Dallas), would add subsection (b) to Section 665A: "If the proposed ward's assets are insufficient to pay for the cost of an attorney ad litem appointed under this chapter, the court may order the applicant in the guardianship proceeding to pay that cost." A similar change to Section 669 would provide the same treatment for guardian ad litem fees.

HB 1325 would allow the court to relieve the county treasury of the obligation to pay an attorney ad litem or guardian ad litem if the proposed ward's estate was unable to bear that cost. It would not permit assessing these costs against the applicant or other parties if the proposed ward's estate is able to bear them. The authority of the court to assess costs and the applicant's attorney's fees in SB 220 and SB 286 does not depend on whether or not the proposed ward is unable to pay those costs and fees.

Some judges have wanted the power to assess costs and fees in guardianships against litigants whose conduct demonstrates that they should bear them. SB 220 and SB 286 give them that authority. HB 1325 does not.

Monday
Feb282011

Case Update -- Jarvis v. Feild

Jarvis v. Feild, 327 S.W.3d 918 (Tex. App.—Corpus Christi-Edinburg 2010, no pet. h.).

ESTATE ADMINISTRATION -- Venue


Litigant objected to the court’s venue to probate a will.  Because Litigant did not object until Litigant appealed the admission of the will to probate, the court held that she waived her venue argument.

Moral:  Objections to venue should be timely filed or else they will be deemed waived.

ESTATE ADMINISTRATION -- Inventory


Litigant appealed asserting that an approved inventory was incomplete and misstated the value of the listed property.  However, her appeal did not specifically indicate she was appealing the inventory order but rather objected to the approval of the account for final settlement which the court issued many months later.  Litigant argued that the two orders were linked so the appeal of the account for final settlement automatically appealed the approval of the inventory.  Although there was no support for Litigant’s argument, the court decided to review the inventory approval because appellate issues should be liberally construed so the right to appeal is not lost.  After examining the evidence, the court determined that the trial court did not err in approving the inventory.

Moral:  A person dissatisfied with the court’s approval of an inventory should take action in a timely manner and clearly indicate the court order to which the person is objecting.

For summaries of other recent Texas cases, please follow this link: http://www.professorbeyer.com/Case_Summaries/Texas_Case_Summaries.htm

Gerry W. Beyer
Governor Preston E. Smith Regents Professor of Law
Texas Tech University School of Law
1802 Hartford St.
Lubbock, TX 79409-0004
voice (806) 742-3990, ext. 302
fax (978) 285-7941
e-mail gwb@professorbeyer.com
web http://www.ProfessorBeyer.com
blog http://lawprofessors.typepad.com/trusts_estates_prof/
SSRN (articles) http://ssrn.com/author=461383 
Twitter Gerry_Beyer 

Monday
Feb282011

Case Update -- In re Guetersloh

In re Guetersloh, 326 S.W.3d 737 (Tex. App.—Amarillo 2010, no pet. h.).

TRUSTS -- Pro Se


Trustee attempted to represent himself pro se, that is, without an attorney, in both his capacity as a trustee and in his individual capacity.  The appellate court held that Trustee had no right to proceed pro se in his representative (trustee) capacity but could proceed without an attorney with regard to claims in his individual capacity.

The court explained that allowing Trustee to proceed pro se in his representative capacity would be the unauthorized practice of law.  The court stated that “if a non-attorney trustee appears in court on behalf of the trust, he or she necessarily represents the interests of others, which amounts to the unauthorized practice of law.”  The court relied on Steele v. McDonald, 202 S.W.3d 926 (Tex. App.—Waco 2006, no pet.) in which the court held that a non-lawyer may not appear pro se in the capacity as an estate’s independent executor.

Moral:  A trustee who is not an attorney may not appear in court pro se in the trustee’s representative capacity.

For summaries of other recent Texas cases, please follow this link:http://www.professorbeyer.com/Case_Summaries/Texas_Case_Summaries.htm.

Gerry W. Beyer
Governor Preston E. Smith Regents Professor of Law
Texas Tech University School of Law
1802 Hartford St.
Lubbock, TX 79409-0004
voice (806) 742-3990, ext. 302
fax (978) 285-7941
e-mail gwb@professorbeyer.com
web http://www.ProfessorBeyer.com
blog http://lawprofessors.typepad.com/trusts_estates_prof/
SSRN (articles) http://ssrn.com/author=461383 
Twitter Gerry_Beyer

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