Texas executors face several legal obligations after they become appointed by a Texas court. Our last post discussed the legal hurdles that executors face before being appointed. We now turn our attention to the tasks waiting on the other side of qualification. Please note that most Texas probate courts require that executors are represented by legal counsel, so if you are preparing to become executor, one of your first steps should be calling a Texas probate attorney.
Independent Executors in Texas Must Follow Several Mandatory Legal Requirements
Most executors in Texas are independent executors. That means they are free from the court’s supervision, apart from a few specific tasks they must complete. In contrast, executors in dependent administrations must ask the court for permission to do almost anything involving the deceased person’s estate. The court order that appoints the executor will specify whether the administration is independent or dependent.
Independent administrations are designed to reduce costs, promote flexibility, and rely on the discretion and management of the executor rather than the supervision of the court. That said, independent executors must complete a few mandatory tasks that are supervised by the court. Several common ones are described below.
General notice to creditors. Independent executors must publish a general notice to creditors within one month after their appointment. The notice usually appears in the classified section of a local newspaper. The notice identifies the name of the deceased person, the name of the independent executor and their date of appointment, the address where creditor claims may be served, and an instruction that creditors may now present their claims. The independent executor must then file an affidavit with the court, which shows they complied with this requirement.
Specific notice to secured creditors. In addition, independent executors must present a specific notice to secured creditors within two months after their appointment. That means creditors against the deceased person whose claims are secured by the deceased person’s property. The most common secured creditors are providers of mortgages and auto loans. The notice briefly states that the deceased person’s estate is pending, and that an executor was appointed. The independent executor must then file an affidavit with the court showing notice was given.
Notice to beneficiaries. Independent executors must serve all beneficiaries with a copy of the decedent’s will and a notice that the estate is pending. Then, within 90 days after appointment, the independent executor must file an affidavit stating that the beneficiaries were properly served.
Inventory, appraisement, and list of claims. Independent executors must file with the court an inventory, appraisement, and list of claims within 90 days of their appointment. Because the official name is quite a mouthful, it’s often referred to simply as an inventory. Essentially, the inventory provides a snapshot of the assets owned by the deceased person at the time of death, along with the value of those assets. Courts have different requirements about the level of detail required; for example many courts require executors identify financial accounts by the last 3 or 4 digits of the account number. The inventory organizes the deceased person’s property into different sections: personal property, real property, and legal claims held by the deceased person—for example, loan payments due to the deceased person. Note that claims asserted against the deceased person are not included in the inventory. If the deceased person was married at the time of death, probate courts require that the inventory is further organized into sections for community property and separate property. Please see our article on community property rights in our series on inheritance disputes for further information on this topic.
Unsupervised requirements. Apart from the tasks described above, independent executors are free to administer the deceased person’s estate free from the supervision of the court. That doesn’t mean they can act however they’d like, however. If they fail to follow Texas law, they may be removed as executor, forced to take certain actions, personally sued by beneficiaries, or even criminally prosecuted. Generally, the requirements fit into several categories. First, independent executors must find, take control of, and protect the assets owned by the deceased person. Second, they must pay valid debts and creditor claims owed by the deceased person. And third, they must distribute the deceased person’s estate according to the terms of the deceased person’s will.
Texas Executors in Dependent Administrations Are Subjected to Constant Court Supervision
Some executors have it more difficult than others. Those in dependent administrations must follow the same requirements as independent executors, which are described above. In addition, they must engage in legal filings and hearings at every turn. Essentially, if they want to do anything with estate assets, they must first ask permission from the probate court. The specific requirements are too voluminous to list here, but some of the more common acts requiring court supervision are discussed below.
Selling or disposing of estate property. Sometimes executors need to raise funds to pay for estate expenses. Other times, an estate asset is too expensive to maintain. Executors in dependent administrations must ask the court for permission before they sell or dispose of any estate asset, then file proof of sale with the court afterwards.
Leasing or lending estate property. Executors in dependent administrations must seek and obtain court approval before they lease an estate property to renters or loan estate money.
Accountings. Executors in dependent administrations must file accountings every year and again upon closure of the estate. In the accounting, the executor swears to the current status and recent history of the estate administration, including a list of estate assets under the executor’s control, details for every transaction involving estate property, a list of creditor claims and how the executor dealt with them, the status of taxes owed and paid by the estate, estate cash on hand and available to the executor, and documents to support the information in the accounting. In bigger counties, a probate court auditor will review the accounting; often the court will require that the executor revise and refile the accounting with additional information and clarifications. To say the least, accountings can be time-consuming and costly.
Claims procedure. Dependent executors must obtain court approval related to the payment of estate creditors. This multi-step process involves several court filings and may require a hearing.
Judicial discharge and final distribution. Independent executors can close an administration without any court supervision at all. In contrast, executors in dependent administrations must follow a multi-step process to close the administration, including but not limited to filing a final accounting.
With a few exceptions, independent administrations are usually preferable to dependent administrations. The dependent administration procedures described above are costly and time-consuming, in addition to the stress imposed on the executor. All executors, however, have fiduciary duties in addition to the statutory requirements described in this post. Our next post will identify and discuss those fiduciary duties.
Our Dallas, Texas probate lawyers regularly help executors administer estates and follow statutory requirements. If you need assistance with your tasks as executor, please contact us. Our attorneys are ready to assist clients in Dallas, Plano, Frisco, McKinney, Denton, Fort Worth, Garland, Irving, Austin, Houston, San Antonio, Nacogdoches, Lufkin, and Center.