Burdette & Rice Probate Law

Temporary Restraining Orders vs. Temporary Guardianship

Elliott Burdette — Thu, 07 Apr 2011 21:53:02 +0000

A temporary guardianship is a essentially an emergency proceeding designed to supervise and protect individuals who are “incapacitated” and whose assets or personal safety are in imminent danger. The main difference between a temporary injunction and a temporary guardianship is that a temporary guardianship restrains an attorney-in-fact from managing the principal’s property while a temporary guardianship grants a third-party the right to act positively for the principal. The Court must limit the power of a temporary guardian, however, to only those powers and duties necessary to protect the principal against the imminent danger shown. Unlike a permanent guardianship, a temporary guardianship does not automatically suspend the power of attorney-in-fact to act–unless the order appointing the temporary guardian explicitly so provides. To obtain a temporary guardianship, the Applicant must present substantial evidence that the proposed ward is an incapacitated person. In addition, the Court must have probable cause to believe that the proposed ward or the proposed ward’s estate requires the immediate appointment of a guardian. Section 875(g) states that the Court shall establish a temporary guardianship if there is substantial evidence that: (1) the proposed ward is incapacitated; and (2) there is imminent danger that the physical health or safety of the proposed ward will be seriously impaired, or that the proposed ward’s estate will be seriously damaged or dissipated unless immediate action is taken. A temporary guardianship only lasts for 60 days.

When seeking to gain quick control over a rogue attorney-in-fact, a temporary restraining order coupled with an application to establish a temporary guardianship can be extraordinarily effective. To support a temporary restraining order, the applicant, as next-friend for the principal, should also file a separate lawsuit against the attorney-in-fact for breach of fiduciary duty and possibly for conversion, if applicable. Seeking a temporary restraining order while also seeking a temporary guardianship offers several significant advantages.

First, Texas courts are reluctant to create temporary guardianships, which can drain the proposed ward’s resources and the court’s time. In addition, where a least restrictive alternative, like a temporary restraining order, is available to address the imminent danger posed to the principal, courts will often deny an application to establish for temporary guardianship. Seeking a temporary restraining order also provides the applicant with an alternative form of relief. Second, typically several days will elapse between the date the application for a temporary guardianship is filed and the hearing date. The court must appoint an attorney ad-litem to represent the principal who must have time to complete a preliminary investigation. Although the applicant is not typically required to notify the attorney-in-fact of the temporary guardianship proceeding, news among family and friends often travels fast. Assets can disappear during this “waiting” period. Immediate relief can be obtained when the Court can hear and sign an ex-parte temporary restraining order the day it is filed.

Attorney-In-Fact

Elliott Burdette — Tue, 01 Mar 2011 18:15:56 +0000

In Texas, an attorney-in-fact has a statutory duty to timely inform and account for actions taken pursuant to the power of attorney. This duty also encompasses the duty to maintain records for each action taken under the power of attorney. The primary challenge in obtaining information from the attorney-in-fact about the principal’s property is the issue of who has the legal standing to demand such information. Texas Probate Code section 489B(d) provides that the principal may demand an accounting from the attorney-in-fact. In cases where the principal lacks the capacity to request the accounting, many legal commentators note that only a guardian or an executor would have the standing to demand a statutory accounting or enforce the principal’s right to require the attorney-in-fact to disclose information. It addition, it appears from the language of section 489B(i) that the right to make a statutory demand for an accounting or other information extends to any person the principal designates. Unfortunately, few powers of attorney include such precautionary provisions.

If you know a family member who you believe is being taken advantage of by someone whom they have named as their power of attorney, you should contact an attorney immediately to understand your legal options relative to obtaining information about all actions taken by the attorney-in-fact. For more information or to discuss your options, please contact us at (972) 991-7700.

New Burdette & Rice Web Site Debuts

Elliott Burdette — Tue, 22 Feb 2011 10:42:46 +0000

Welcome to our newly redesigned web site, provided for us by the good folks over at mSeven Web Development! Please let us know if you have any questions or difficulties in navigating or using our new layout.

Executor’s Right to a Fee

Elliott Burdette — Wed, 03 Nov 2010 17:22:10 +0000

Under certain situations, an Executor may receive a fee in connection with serving as Executor of an Estate. Texas Probate Code Section 241 (“Compensation of Personal Representatives”) presently governs the compensation of executors in Texas in the absence of a testamentary provision to the contrary. The statutory fee only applies when the Testator’s Will is silent as to how compensation is to be paid. If the Will says “reasonable compensation,” Section 241(a) does not apply.

Texas Probate Code Section 241(a) contains three major exceptions to the general rule that an executor will be entitled to a percentage commission on the receipt and payout of “cash” and expressly provides that:

No ordinary commission shall be allowed to an executor for receiving funds belonging to a testator or intestate estate which were on hand or were held for the benefit of the decedent at the time of death in a financial institution or a brokerage firm including cash or a cash equivalent held in a checking account or a savings account, certificate of deposit or money market account;
No ordinary commission shall be allowed on the collection of proceeds of any life insurance policy;
No commissions shall be allowed for paying out cash to the heirs or distributees of such in payment of their bequests or inheritance.

From the statutory exceptions listed above, it is clear that most cash funds that the executor will administer and distribute over the course of an administration will be excluded from the computation of the statutory commission. In addition, the independent executor must actually be appointed and render some services to an estate to be entitled to receive a commission. However, the services that are performed do not have to be directly or indirectly connected with the specific receipts of cash during the administration for the executor to receive a commission under Section 241. There is no statutory requirement that the independent executor actually “earn” its commissions on the receipts and/or payouts of cash on which the commission is based.

As a beneficiary, if you believe that the executor has taken a “fee” from the Estate, you should consult an attorney immediately to confirm whether such action was appropriate. If the “fee” was not appropriate, the executor may be liable for breach of fiduciary duty. The application of Section 241 can be tricky. While there are many instances where a fee is inappropriate, there are also many circumstances that often arise in even the most routine estate administrations that justify a fee.

Preparing your own will? Watch out.

Elliott Burdette — Sun, 24 Oct 2010 13:12:35 +0000

For those people who insist on preparing their own wills, beware of defeating the purpose of a Will by making the following mistake:

“I give the sum of $50,000.00 to my brother, all my household furnishings, appliances and personal property to my wife, and the sum of $75,000.00 to my two children from a previous marriage.”

This will is incomplete because it does not dispose of all the remaining property this individual may have at the time of his or her death. Accordingly, this person will be deemed to have died “intestate” (the legal term for dying without a will) with regard to all his property not disposed of by the above provisions in his will. His estate then is subject to significant additional expense in having the part of the estate not disposed of in the will administered in probate court.

A qualified attorney is always your best bet in preparing a will, but, if you must do it yourself, be sure to add a residuary clause that includes language which disposes of “all my remaining assets”.

Why should an 18-year-old prepare a will?

Elliott Burdette — Thu, 22 Jul 2010 19:27:19 +0000

Dying without a will creates additional hassle and expense for those who survive. Teenagers are best advised to prepare a will so that they begin to have a focus on having a financially successful life. Having a will helps teens think about their future as well as about what they own and how much such things might be worth.

Some fortunate teens will receive inheritances from grandparents and may have legal rights over that property at the time of attaining age 18. Other teens may have nothing more than a pet, a car or a music collection. However, specifying what they want done with the pet and to whom they want to receive their items of personal property can be important personal decisions.

Finally, young adults are often receptive to parental suggestions that reinforce their notion of independence. Accordingly, parents can suggest, as circumstances merit, that their young adult children open a bank account in their name, meet with a stockbroker or financial planner, and meet with an attorney to prepare a will.

Managing an Elderly Parent’s Bank Accounts

Elliott Burdette — Fri, 02 Jul 2010 19:47:37 +0000

More and more children are managing their parents’ finances without a trust, power of attorney, or guardianship in place. Usually, one of the parents has added one of their children to their bank account to allow them to pay their bills. Although this arrangement is convenient, it is often only a temporary solution and is usually inadequate to address all of the financial matters that arise. Moreover, many people do not understand the legal consequences of the account agreement; specifically the difference between the “power of withdrawal” and “ownership” of an account. Once the parent’s mental capacity to execute a power of attorney or trust becomes an issue, then a guardianship will mostly likely have to be created to adequately address all of the parent’s financial matters.

Upon applying for a guardianship, the court will closely examine the child’s prior management of his parent’s funds to determine whether or not the child is qualified to serve as guardian. Specifically, the court will examine how the child has managed his or her parent’s funds before the guardianship is established. It is critical, therefore, for the child to have taken all appropriate steps in managing his or her parent’s funds while accessing the account. For example, the child should never co-mingle his or her own funds with those of his parents. In addition, the child should make sure that the parent’s funds are used only for the parent’s benefit; not the child’s. Many guardianship disputes arise over “gifts” the child has made from the parent’s funds, loans, or other transfers. Keeping the other siblings informed on a regular basis about the management of the parent’s funds can often deter negative accusations that might derail the child’s guardianship application.

Exculpatory Provisions in Trusts

Elliott Burdette — Fri, 26 Feb 2010 20:44:43 +0000

Provisions contained within trust agreements called “Exculpatory Provisions” are those that relieve the trustee from liability for certain acts that could otherwise be considered to be a breach of duty(ies) as a Trustee. Examples: 1.) the settlor (the person who is creating the trust) can specify that the Trustee is relieved from liability for certain obligations for which it would otherwise be liable under either the Texas Trust Code or by common law; or 2.) can direct or permit the Trustee to do certain things that would otherwise violate a Trustee duty.

Bad Faith, Intent and Reckless Indifference

Section 114.007 (A) of the Texas Property Code (the Texas Trust Code is contained within the Texas Property Code) states that an exculpatory provision which would attempt to relieve a Trustee of liability for breach of trust is unenforceable to the extent it relieves a Trustee from liability for breaches of trust committed in bad faith, intentionally, or with reckless indifference to the interest of a beneficiary.

While the settlor of a trust can provide for a reduction of possible future liability for the Trustee, there are certain acts which the Trustee, regardless of the language in the trust agreement, cannot undertake without incurring legal liability. Accordingly, the rights of the beneficiaries will be protected against Trustees who take actions as Trustees in bad faith, intentionally, or with reckless indifference to the interests of a beneficiary.

Removal of the Independent Executor

Elliott Burdette — Fri, 19 Feb 2010 19:41:00 +0000

In Texas, the testator (the person making a will) has the power to designate his or her executor to be an “independent executor”. Proper use of the term “independent” to describe the executor in the will means that the independent executor may, after the will has been admitted to probate and Letters Testamentary have been issued to the independent executor, take virtually all estate related action free of the need for any hearings or approval by a Probate Court. Unfortunately, some executors take advantage of this far reaching freedom to abuse their power(s) as an executor (an executor is also a fiduciary). The Texas Probate Code allows a court, after a hearing, to remove the person designated as the independent executor of the estate when any of the following grounds have been proved to the presiding judge:

The executor fails to timely file an inventory of the estate;
Sufficient grounds appear to support belief that the executor has misapplied or embezzled, or that he is about to misapply or embezzle all or any part of the estate;
The executor fails to make an accounting which is required by law to be made;
The executor fails to timely file the notice to a governmental or charitable organization named in a will as required by Section 128A of the Probate Code;
The executor is proved to have been guilty of gross misconduct or gross mismanagement in the performance of estate duties;
The executor becomes an incapacitated person or is sentenced to the penitentiary or for any other cause becomes legally incapacitated from property performing his fiduciary duty.

When can a court make changes to an irrevocable trust?

Elliott Burdette — Sat, 13 Feb 2010 03:44:33 +0000

Any kind of action in which a court is asked to change, modify or otherwise amend the terms of the trust instrument, or to prohibit or permit a trustee to take actions that are not authorized by the terms of the trust, or to terminate a trust either in its entirety or in part, is referred to as a trust modification. Trust modifications are regulated by Section 112.054 of the Texas Trust Code.

Some examples of when the trust code will allow a court to “modify a trust” are:

When circumstances that were not known to or anticipated by the settlor (the person originally creating the trust, also referred to as the grantor or trustor) of the trust and when the requested order will further the purposes of the trust;
If continuing the trust is not necessary to achieve any clear purpose of the trust provided all the beneficiaries consent;
A modification is necessary to achieve certain tax objectives and is not otherwise contrary to the settlor’s intention;
Whenever the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill; and
When a modification of certain terms of the trust is necessary or appropriate to avoid impairment of the trust administration.