Sections of the Texas Probate Code Amended in 2003

This compilation was prepared by Glenn M. Karisch. While he believes it to be accurate and complete, he cannot assure that this is the case. Also, until June 22, 2003, most of these bills are subject to being vetoed by the Governor.  Click on the bill number to see the full text of the bill, including the effective date provision.  Most bills are effective September 1, 2003.

 

2003 by Glenn M. Karisch



Table of Contents

Sec. 5. JURISDICTION [OF DISTRICT COURT AND OTHER COURTS OF RECORD] WITH RESPECT TO PROBATE PROCEEDINGS [AND APPEALS FROM PROBATE ORDERS].
Sec. 5A. MATTERS APPERTAINING AND INCIDENT TO AN ESTATE [AND OTHER PROBATE COURT JURISDICTION].
Sec. 5B. TRANSFER OF PROCEEDING
Sec. 8. CONCURRENT VENUE AND TRANSFER OF PROCEEDINGS
Sec. 10C. EFFECT OF FILING OR CONTESTING PLEADING
Sec. 37C. SATISFACTION OF DEVISE
Sec. 58c. EXERCISE OF POWER OF APPOINTMENT
Sec. 59A. CONTRACTS CONCERNING SUCCESSION
Sec. 67. PRETERMITTED CHILD
Sec. 84. PROOF OF WRITTEN WILL PRODUCED IN COURT
Sec. 222A. REINSTATEMENT AFTER REMOVAL
Sec. 245. WHEN COSTS ARE ADJUDGED AGAINST REPRESENTATIVE
Sec. 322. CLASSIFICATION OF CLAIMS AGAINST ESTATES OF DECEDENT
Sec. 322A. APPORTIONMENT OF TAXES
Sec. 333. CERTAIN PERSONAL PROPERTY TO BE SOLD
Sec. 378B. ALLOCATION OF INCOME AND EXPENSES DURING ADMINISTRATION OF DECEDENT'S ESTATE
Sec. 389. [repealed]
Sec. 438A. CONVENIENCE ACCOUNT
Sec. 439A. UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT FORM
Sec. 442. RIGHTS OF CREDITORS; PLEDGE OF ACCOUNT
Sec. 606. [DISTRICT COURT AND OTHER COURT OF RECORD] JURISDICTION WITH RESPECT TO GUARDIANSHIP PROCEEDINGS
Sec. 607. MATTERS APPERTAINING AND INCIDENT TO AN ESTATE
Sec. 608. TRANSFER OF GUARDIANSHIP PROCEEDING
Sec. 633. NOTICE AND CITATION
Sec. 634. SERVICE ON ATTORNEY
Sec. 645A. IMMUNITY
Sec. 665B. COMPENSATION OF CERTAIN ATTORNEYS
Sec. 682. APPLICATION; CONTENTS
Sec. 687. EXAMINATIONS AND REPORTS
Sec. 729. INVENTORY AND APPRAISEMENT
Sec. 743. REPORTS OF GUARDIANS OF THE PERSON
Sec. 745. SETTLING GUARDIANSHIPS OF THE ESTATE
Sec. 747. TERMINATION OF GUARDIANSHIP OF THE PERSON
Sec. 762. REINSTATEMENT AFTER REMOVAL
Sec. 765. SUCCESSORS' RETURN OF INVENTORY, APPRAISEMENT, AND LIST OF CLAIMS
Sec. 767. POWERS AND DUTIES OF GUARDIANS OF THE PERSON
Sec. 768. GENERAL POWERS AND DUTIES OF GUARDIAN OF THE ESTATE
Sec. 770. CARE OF WARD; COMMITMENT
Sec. 770A. ADMINISTRATION OF MEDICATION
Sec. 774. EXERCISE OF POWER WITH OR WITHOUT COURT ORDER
Sec. 776. AMOUNTS [SUMS] ALLOWABLE FOR EDUCATION AND MAINTENANCE OF WARD
Sec. 812. CERTAIN PERSONAL PROPERTY TO BE SOLD
Sec. 814. SPECIAL PROVISIONS PERTAINING TO LIVESTOCK
Sec. 854. GUARDIAN REQUIRED TO KEEP ESTATE INVESTED UNDER CERTAIN CIRCUMSTANCES
Sec. 855. STANDARD FOR MANAGEMENT AND INVESTMENTS [WITHOUT COURT ORDER]
Sec. 855A. RETENTION OF ASSETS
Sec. 855B. PROCEDURE FOR MAKING INVESTMENTS OR RETAINING ESTATE ASSETS
Sec. 856. OTHER INVESTMENTS
Sec. 857. INVESTMENT IN, OR CONTINUED INVESTMENT IN, LIFE INSURANCE OR ANNUITIES
Sec. 858. LOANS AND SECURITY FOR LOANS
Sec. 859 [repealed]
Sec. 860. GUARDIAN'S INVESTMENTS IN REAL ESTATE
Sec. 863. LIABILITY OF GUARDIAN AND GUARDIAN'S SURETY [FOR FAILURE TO LEND OR INVEST FUNDS]
Sec. 864. [repealed]
Sec. 868. TERMS OF MANAGEMENT TRUST
Sec. 868A. DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION OF TRUST
Sec. 875. TEMPORARY GUARDIAN----PROCEDURE
Sec. 883. INCAPACITATED SPOUSE



Sec. 5. JURISDICTION [OF DISTRICT COURT AND OTHER COURTS OF RECORD] WITH RESPECT TO PROBATE PROCEEDINGS [AND APPEALS FROM PROBATE ORDERS]. [HB 1473]

(a) [repealed] [HB 1473]

(b) In those counties in which there is no statutory probate court, county court at law, or other statutory court exercising the jurisdiction of a probate court, all applications, petitions, and motions regarding probate and administrations shall be filed and heard in the county court. In[, except that in] contested probate matters, the judge of the county court may on the judge's own motion [(] or shall on the motion of any party to the proceeding, according to the motion:

(1) [)] request [as provided by Section 25.0022, Government Code,] the assignment of a statutory probate court judge to hear the contested portion of the proceeding, as provided by Section 25.0022, Government Code; or

(2) transfer the contested portion of the proceeding to the district court, which may then hear the contested matter as if originally filed in district court. [HB 1473]

(b-1) If the judge of the county court has not transferred a contested probate matter to the district court at the time a party files a motion for assignment of a statutory probate court judge, the county judge shall grant the motion and may not transfer the matter to district court unless the party withdraws the motion. [HB 1473]

(b-2) A statutory probate court judge assigned to a contested probate matter as provided by Subsection (b) of this section [this subsection] has [for that matter] the jurisdiction and authority granted to a statutory probate court by Sections 5A and 5B of this code. On resolution of a contested matter, including an appeal of a matter, to which a statutory probate court judge has been assigned, the statutory probate court judge shall transfer the resolved portion of the case to the county court for further proceedings not inconsistent with the orders of the statutory probate court judge [The county court shall continue to exercise jurisdiction over the management of the estate with the exception of the contested matter until final disposition of the contested matter is made by the assigned judge or the district court]. [HB 1473]

(b-3) In contested matters transferred to the district court [in those counties], the district court has [, concurrently with the county court, shall have] the general jurisdiction of a probate court. On [Upon] resolution of a [all pending] contested matter, including an appeal of a matter, the district court shall transfer [matters,] the resolved [contested] portion of the case [probate proceeding shall be transferred by the district court] to the county court for further proceedings not inconsistent with the orders of the district court. [HB 1473]

(b-4) The county court shall continue to exercise jurisdiction over the management of the estate with the exception of the contested matter until final disposition of the contested matter is made by the assigned statutory probate court judge or the district court. [HB 1473]

(b-5) If a contested portion of the proceeding is transferred to a district court under Subsection (b-3) of this section [this subsection], the clerk of the district court may perform in relation to the transferred portion of the proceeding any function a county clerk may perform in that type of contested proceeding. [HB 1473]

(c) In those counties in which there is no statutory probate court, but in which there is a county court at law or other statutory court exercising the jurisdiction of a probate court, all applications, petitions, and motions regarding probate and administrations shall be filed and heard in those courts and the constitutional county court[, rather than in the district courts], unless otherwise provided by law. The judge of a county court may hear any of those matters regarding probate or administrations sitting for the judge of any other county court. In contested probate matters, the judge of the constitutional county court may on the judge's own motion, and shall on the motion of a party to the proceeding, transfer the proceeding to the county court at law or a statutory court exercising the jurisdiction of a probate court other than a statutory probate court. The court to which the proceeding is transferred may hear the proceeding as if originally filed in the court. [HB 1473]

(d) In those counties in which there is a statutory probate court, all applications, petitions, and motions regarding probate or administrations shall be filed and heard in the statutory probate court[, unless otherwise provided by law]. [HB 1473]

(e) A statutory probate court has concurrent jurisdiction with the district court in all personal injury, survival, or wrongful death actions by or against a person in the person's capacity as a personal representative, in all actions involving an inter vivos trust, in all actions involving a charitable trust, and in all actions involving a personal representative of an estate in which each other party aligned with the personal representative is not an interested person in that estate [testamentary trust]. [HB 1473]

(f) All courts exercising original probate jurisdiction shall have the power to hear all matters incident to an estate. When a surety is called on to perform in place of an administrator, all courts exercising original probate jurisdiction may award judgment against the personal representative in favor of his surety in the same suit. [unchanged in 2003]

(g) All final orders of any court exercising original probate jurisdiction shall be appealable to the courts of appeals. [unchanged in 2003]

(h) A statutory probate court has jurisdiction over any matter appertaining to an estate or incident to an estate and has jurisdiction over any cause of action in which a personal representative of an estate pending in the statutory probate court is a party. [HB 1473]

(i) A statutory probate court may exercise the pendent and ancillary jurisdiction necessary to promote judicial efficiency and economy. [HB 1473]

Sec. 5A. MATTERS APPERTAINING AND INCIDENT TO AN ESTATE [AND OTHER PROBATE COURT JURISDICTION]. [HB 1473]

(a) In proceedings in the constitutional county courts and statutory county courts at law, the phrases "appertaining to estates" and "incident to an estate" in this Code include the probate of wills, the issuance of letters testamentary and of administration, the determination of heirship, and also include, but are not limited to, all claims by or against an estate, all actions for trial of title to land incident to an estate and for the enforcement of liens thereon incident to an estate, all actions for trial of the right of property incident to an estate, and actions to construe wills, and generally all matters relating to the settlement, partition, and distribution of estates of deceased persons. [unchanged in 2003]

(b) In proceedings in the statutory probate courts [and district courts], the phrases "appertaining to estates" and "incident to an estate" in this Code include the probate of wills, the issuance of letters testamentary and of administration, and the determination of heirship, and also include, but are not limited to, all claims by or against an estate, all actions for trial of title to land and for the enforcement of liens thereon, all actions for trial of the right of property, all actions to construe wills, the interpretation and administration of testamentary trusts and the applying of constructive trusts, and generally all matters relating to the collection, settlement, partition, and distribution of estates of deceased persons. All statutory probate courts may, in the exercise of their jurisdiction, notwithstanding any other provisions of this Code, hear all suits, actions, and applications filed against or on behalf of any heirship proceeding or decedent's estate, including estates administered by an independent executor; all such suits, actions, and applications are appertaining to and incident to an estate. This subsection shall be construed in conjunction with and in harmony with Section 145 and all other sections of this Code dealing with independent executors, but shall not be construed so as to increase permissible judicial control over independent executors. Except for [All statutory probate courts shall have the same powers over independent executors that are exercisable by the district courts. In] situations in which [where] the jurisdiction of a statutory probate court is concurrent with that of a district court as provided by Section 5(e) of this Code or any other court, any cause of action appertaining to estates or incident to an estate shall be brought in a statutory probate court [rather than in the district court]. [HB 1473]

(c) [repealed] [HB 1473]

(d) [repealed] [HB 1473]

(e) [repealed] [HB 1473]

(f) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section 15.007, Civil Practice and Remedies Code. [HB 4]

Sec. 5B. TRANSFER OF PROCEEDING. (a) A judge of a statutory probate court, on the motion of a party to the action or on the motion of a person interested in an estate, may transfer to his court from a district, county, or statutory court a cause of action appertaining to or incident to an estate pending in the statutory probate court or a cause of action in which a personal representative of an estate pending in the statutory probate court is a party and may consolidate the transferred cause of action with the other proceedings in the statutory probate court relating to that estate. [HB 4]

(b) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section 15.007, Civil Practice and Remedies Code. [HB 4]

Sec. 8. CONCURRENT VENUE AND TRANSFER OF PROCEEDINGS

(a) Concurrent Venue. When two or more courts have concurrent venue of an estate, the court in which application for probate proceedings thereon is first filed shall have and retain jurisdiction of the estate to the exclusion of the other court or courts. The proceedings shall be deemed commenced by the filing of an application averring facts sufficient to confer venue; and the proceeding first legally commenced shall extend to all of the property of the estate. Provided, however, that a bona fide purchaser of real property in reliance on any such subsequent proceeding, without knowledge of its invalidity, shall be protected in such purchase unless the decree admitting the will to probate or granting administration in the prior proceeding shall be recorded in the office of the county clerk of the county in which such property is located. [unchanged in 2003]

(b) Proceedings in More Than One County. If proceedings for probate are commenced in more than one county, they shall be stayed except in the county where first commenced until final determination of venue in the county where first commenced. If the proper venue is finally determined to be in another county, the clerk, after making and retaining a true copy of the entire file in the case, shall transmit the original file to the proper county, and proceedings shall thereupon be had in the proper county in the same manner as if the proceedings had originally been instituted therein. [unchanged in 2003]

(c) Transfer of Proceeding.

(1) Transfer for Want of Venue. If it appears to the court at any time before the final decree that the proceeding was commenced in a court which did not have priority of venue over such proceeding, the court shall, on the application of any interested person, transfer the proceeding to the proper county by transmitting to the proper court in such county the original file in such case, together with certified copies of all entries in the minutes theretofore made, and administration of the estate in such county shall be completed in the same manner as if the proceeding had originally been instituted therein; but, if the question as to priority of venue is not raised before final decree in the proceedings is announced, the finality of such decree shall not be affected by any error in venue. [unchanged in 2003]

(2) Transfer for Convenience of the Estate. If it appears to the court at any time before the estate is closed that it would be in the best interest of the estate, the court, in its discretion, may order the proceeding transferred to the proper court in any other county in this State. The clerk of the court from which the proceeding is transferred shall transmit to the court to which the proceeding is transferred the original file in the proceeding and a certified copy of the index [entries in the minutes that relate to the proceeding]. [HB 1473]

(d) Validation of Prior Proceedings. When a proceeding is transferred to another county under any provision of this Section of this Code, all orders entered in connection with the proceeding shall be valid and shall be recognized in the second court, provided such orders were made and entered in conformance with the procedure prescribed by this Code. [unchanged in 2003]

(e) Jurisdiction to Determine Venue. Any court in which there has been filed an application for proceedings in probate shall have full jurisdiction to determine the venue of such proceeding, and of any proceeding relating thereto, and its determination shall not be subject to collateral attack. [unchanged in 2003]

Sec. 10C. EFFECT OF FILING OR CONTESTING PLEADING. (a) The filing or contesting in probate court of any pleading relating to a decedent's estate does not constitute tortious interference with inheritance of the estate. [HB 1473]

(b) This section does not abrogate any rights of a person under Rule 13, Texas Rules of Civil Procedure, or Chapter 10, Civil Practice and Remedies Code. [HB 1473]

Sec. 37C. SATISFACTION OF DEVISE. (a) Property given to a person by a testator during the testator's lifetime is considered a satisfaction, either wholly or partly, of a devise to the person if:

(1) the testator's will provides for deduction of the lifetime gift;

(2) the testator declares in a contemporaneous writing that the lifetime gift is to be deducted from or is in satisfaction of the devise; or

(3) the devisee acknowledges in writing that the lifetime gift is in satisfaction of the devise. [HB 1473]

(b) Property given in partial satisfaction of a devise shall be valued as of the earlier of the date on which the devisee acquires possession of or enjoys the property or the date on which the testator dies. [HB 1473]

Sec. 58c. EXERCISE OF POWER OF APPOINTMENT. A testator may not exercise a power of appointment through a residuary clause in the testator's will or through a will providing for general disposition of all the testator's property unless:

(1) the testator makes a specific reference to the power in the will; or

(2) there is some other indication in writing that the testator intended to include the property subject to the power in the will. [HB 1473]

Sec. 59A. CONTRACTS CONCERNING SUCCESSION. (a) A contract to make a will or devise, or not to revoke a will or devise, if executed or entered into on or after September 1, 1979, can be established only by:

(1) provisions of a written agreement that is binding and enforceable; or

(2) provisions of a will stating that a contract does exist and stating the material provisions of the contract. [HB 1473]

(b) The execution of a joint will or reciprocal wills does not by itself suffice as evidence of the existence of a contract. [unchanged in 2003]

Sec. 67. PRETERMITTED CHILD. (a) Whenever a pretermitted child is not mentioned in the testator's will, provided for in the testator's will, or otherwise provided for by the testator, the pretermitted child shall succeed to a portion of the testator's estate as provided by Subsection (a)(1) or (a)(2) of this section.

(1) If the testator has one or more children living when he executes his last will, and:

(A) No provision is made therein for any such child, a pretermitted child succeeds to the portion of the testator's separate and community estate to which the pretermitted child would have been entitled pursuant to Section 38(a) of this code had the testator died intestate without a surviving spouse owning only that portion of his estate not devised or bequeathed to the parent of the pretermitted child.

(B) Provision, whether vested or contingent, is made therein for one or more of such children, a pretermitted child is entitled to share in the testator's estate as follows:

(i) The portion of the testator's estate to which the pretermitted child is entitled is limited to the disposition made to children under the will.

(ii) The pretermitted child shall receive such share of the testator's estate, as limited in Subparagraph (i), as he would have received had the testator included all pretermitted children with the children upon whom benefits were conferred under the will, and given an equal share of such benefits to each such child.

(iii) To the extent that it is feasible, the interest of the pretermitted child in the testator's estate shall be of the same character, whether an equitable or legal life estate or in fee, as the interest that the testator conferred upon his children under the will.

(2) If the testator has no child living when he executes his last will, the pretermitted child succeeds to the portion of the testator's separate and community estate to which the pretermitted child would have been entitled pursuant to Section 38(a) of this code had the testator died intestate without a surviving spouse owning only that portion of his estate not devised or bequeathed to the parent of the pretermitted child. [HB 1473]

(b) The pretermitted child may recover the share of the testator's estate to which he is entitled either from the other children under Subsection (a)(1)(B) or the testamentary beneficiaries under Subsections (a)(1)(A) and (a)(2) other than the parent of the pretermitted child, ratably, out of the portions of such estate passing to such persons under the will. In abating the interests of such beneficiaries, the character of the testamentary plan adopted by the testator shall be preserved to the maximum extent possible. [unchanged in 2003]

(c) A "pretermitted child," as used in this section, means a child of a testator who, during the lifetime of the testator, or after his death, is born or adopted after the execution of the will of the testator. [unchanged in 2003]

(d) For the purposes of this section, a child is provided for or a provision is made for a child if a disposition of property to or for the benefit of the pretermitted child, whether vested or contingent, is made:

(1) in the testator's will, including a devise or bequest to a trustee as authorized by Section 58(a) of this code; or

(2) outside the testator's will and is intended to take effect at the testator's death. [unchanged in 2003]

Sec. 84. PROOF OF WRITTEN WILL PRODUCED IN COURT. (a) Self-Proved Will. If a will is self-proved as provided in this Code, no further proof of its execution with the formalities and solemnities and under the circumstances required to make it a valid will shall be necessary. [unchanged in 2003]

(b) Attested Written Will. If not self-proved as provided in this Code, an attested written will produced in court may be proved:

(1) By the sworn testimony or affidavit of one or more of the subscribing witnesses thereto, taken in open court.

(2) If all the witnesses are non-residents of the county, or those who are residents are unable to attend court, by the sworn testimony of any one or more of them by deposition, either written or oral, taken in the same manner and under the same rules as depositions taken in other civil actions; or, if no opposition in writing to such will is filed on or before the date set for hearing thereon, then by the sworn testimony or affidavit of two witnesses taken in open court, or by deposition in the manner provided herein, to the signature or the handwriting evidenced thereby of one or more of the attesting witnesses, or of the testator, if he signed the will; or, if it be shown under oath to the satisfaction of the court that, diligent search having been made, only one witness can be found who can make the required proof, then by the sworn testimony or affidavit of such one taken in open court, or by deposition in the manner provided herein, to such signatures or handwriting.

(3) If none of the witnesses is living, or if all of such witnesses are members of the armed forces of the United States of America or of any auxiliary thereof, or of the armed forces reserve of the United States of America or of any auxiliary thereof, or of the Maritime Service, and are beyond the jurisdiction of the court, by two witnesses to the handwriting of one or both of the subscribing witnesses thereto, or of the testator, if signed by him, and such proof may be either by sworn testimony or affidavit taken in open court, or by deposition, either written or oral, taken in the same manner and under the same rules as depositions taken in other civil actions; or, if it be shown under oath to the satisfaction of the court that, diligent search having been made, only one witness can be found who can make the required proof, then by the sworn testimony or affidavit of such one taken in open court, or by deposition in the manner provided herein, to such signatures or handwriting. [unchanged in 2003]

(c) [(b)] Holographic Will. If not self-proved as provided in this Code, a will wholly in the handwriting of the testator may be proved by two witnesses to his handwriting, which evidence may be by sworn testimony or affidavit taken in open court, or, if such witnesses are non-residents of the county or are residents who are unable to attend court, by deposition, either written or oral, taken in the same manner and under the same rules as depositions taken in other civil actions. [HB 1473]

(d) [(c)] Depositions if No Contest Filed. If no contest has been filed, depositions for the purpose of establishing a will may be taken in the same manner as provided in this Code for the taking of depositions where there is no opposing party or attorney of record upon whom notice and copies of interrogatories may be served; and, in such event, this Subsection, rather than the preceding portions of this Section which provide for the taking of depositions under the same rules as depositions in other civil actions, shall be applicable. [HB 1473]

Sec. 222A. REINSTATEMENT AFTER REMOVAL. (a) Not later than the 10th day after the date the court signs the order of removal, a personal representative who is removed under Subsection (a)(1)(F) or (G), Section 222, of this code may file an application with the court for a hearing to determine whether the personal representative should be reinstated. [unchanged in 2003]

(b) On the filing of an application for a hearing under this section, the court clerk shall issue a notice stating that the application for reinstatement was filed, the name of the [ward or] decedent, and the name of the applicant. The clerk shall issue the notice to the applicant and to the successor representative of [, the ward, a person interested in the welfare of the ward,] the decedent's estate[, or the ward's estate and, if applicable, to a person who has control of the care and custody of the ward]. The notice must cite all persons interested in the estate [or welfare of the ward] to appear at the time and place stated in the notice if they wish to contest the application. [HB 1473]

(c) If, at the conclusion of a hearing under this section, the court is satisfied by a preponderance of the evidence that the applicant did not engage in the conduct that directly led to the applicant's removal, the court shall set aside an order appointing a successor representative, if any, and shall enter an order reinstating the applicant as personal representative of the ward or estate. [unchanged in 2003]

(d) If the court sets aside the appointment of a successor representative under this section, the court may require the successor representative to prepare and file, under oath, an accounting of the estate and to detail the disposition the successor has made of the property of the estate. [unchanged in 2003]

Sec. 245. WHEN COSTS ARE ADJUDGED AGAINST REPRESENTATIVE. When a [the] personal representative [of an estate or person] neglects to perform a required [the performance of any] duty [required of him, and any costs are incurred thereby,] or if a personal representative [he] is removed for cause, the personal representative [he] and the sureties on the personal representative's [his] bond are [shall be] liable for: (1) costs of removal and other additional costs incurred that are not authorized expenditures, as defined by this code; [,] and (2) [for] reasonable attorney's fees incurred in removing the personal representative or [him and] in obtaining [his] compliance regarding any statutory duty the personal representative [he] has neglected. [HB 1473]

Sec. 322. CLASSIFICATION OF CLAIMS AGAINST ESTATES OF DECEDENT. Claims against an estate of a decedent shall be classified and have priority of payment, as follows:

Class 1. Funeral expenses and expenses of last sickness for a reasonable amount to be approved by the court, not to exceed a total of Fifteen Thousand Dollars, with any excess to be classified and paid as other unsecured claims. [unchanged in 2003]

Class 2. Expenses of administration and expenses incurred in the preservation, safekeeping, and management of the estate, including fees and expenses awarded under Section 243 of this code. [HB 1473]

Class 3. Secured claims for money under Section 306(a)(1), including tax liens, so far as the same can be paid out of the proceeds of the property subject to such mortgage or other lien, and when more than one mortgage, lien, or security interest shall exist upon the same property, they shall be paid in order of their priority. [unchanged in 2003]

Class 4. Claims for the principal amount of and accrued interest on delinquent child support and child support arrearages that have been confirmed and reduced to money judgment, as determined under Subchapter F, Chapter 157, Family Code. [unchanged in 2003]

Class 5. Claims for taxes, penalties, and interest due under Title 2, Tax Code; Chapter 8, Title 132, Revised Statutes; Section 81.111, Natural Resources Code; the Municipal Sales and Use Tax Act (Chapter 321, Tax Code); Section 451.404, Transportation Code; or Subchapter I, Chapter 452, Transportation Code. [unchanged in 2003]

Class 6. Claims for the cost of confinement established by the institutional division of the Texas Department of Criminal Justice under Section 501.017, Government Code. [unchanged in 2003]

Class 7. Claims for repayment of medical assistance payments made by the state under Chapter 32, Human Resources Code, to or for the benefit of the decedent. Class 8. All other claims. [unchanged in 2003]

Sec. 322A. APPORTIONMENT OF TAXES. (a) In this section:

(1) "Estate" means the gross estate of a decedent as determined for the purpose of estate taxes.

(2) "Estate tax" means any estate, inheritance, or death tax levied or assessed on the property of a decedent's estate, because of the death of a person, imposed by federal, state, local, or foreign law, including the federal estate tax and the additional inheritance tax imposed by Chapter 211, Tax Code, and including interest and penalties imposed in addition to those taxes. Estate tax does not include a tax imposed under Section 2701(d)(1)(A), Internal Revenue Code of 1986 (26 U.S.C. Section 2701(d)).

(3) "Person" includes a trust, natural person, partnership, association, joint stock company, corporation, government, political subdivision, or governmental agency.

(4) "Person interested in the estate" means a person, or a fiduciary on behalf of that person, who is entitled to receive, or who has received, from a decedent or because of the death of the decedent, property included in the decedent's estate for purposes of the estate tax, but does not include a creditor of the decedent or of the decedent's estate.

(5) "Representative" means the representative, executor, or administrator of an estate, or any other person who is required to pay estate taxes assessed against the estate. [unchanged in 2003]

(b)

(1) The representative shall charge each person interested in the estate a portion of the total estate tax assessed against the estate. The portion of each estate tax that is charged to each person interested in the estate must represent the same ratio as the taxable value of that person's interest in the estate included in determining the amount of the tax bears to the total taxable value of all the interests of all persons interested in the estate included in determining the amount of the tax. In apportioning an estate tax under this subdivision, the representative shall disregard a portion of the tax that is apportioned under the law imposing the tax, otherwise apportioned by federal law, or apportioned as otherwise provided by this section.

(2) Subdivision (1) of this subsection does not apply to the extent the decedent in a written inter vivos or testamentary instrument disposing of or creating an interest in property specifically directs the manner of apportionment of estate tax or grants a discretionary power of apportionment to another person. A direction for the apportionment or nonapportionment of estate tax is limited to the estate tax on the property passing under the instrument unless the instrument is a will that provides otherwise.

(3) If under Subdivision (2) of this subsection directions for the apportionment of an estate tax in two or more instruments executed by the same person conflict, the instrument disposing of or creating an interest in the property to be taxed controls. If directions for the apportionment of estate tax in two or more instruments executed by different persons conflict, the direction of the person in whose estate the property is included controls.

(4) Subdivisions (2) and (3) of this subsection do not grant or enlarge the power of a person to apportion estate tax to property passing under an instrument created by another person in excess of the estate tax attributable to the property. Subdivisions (2) and (3) of this subsection do not apply to the extent federal law directs a different manner of apportionment. [unchanged in 2003]

(c) Any deduction, exemption, or credit allowed by law in connection with the estate tax inures to a person interested in the estate as provided by Subsections (d)-(f) of this section. [unchanged in 2003]

(d) If the deduction, exemption, or credit is allowed because of the relationship of the person interested in the estate to the decedent, or because of the purpose of the gift, the deduction, exemption, or credit inures to the person having the relationship or receiving the gift, unless that person's interest in the estate is subject to a prior present interest that is not allowable as a deduction. The estate tax apportionable to the person having the present interest shall be paid from the corpus of the gift or the interest of the person having the relationship. [unchanged in 2003]

(e) A deduction for property of the estate that was previously taxed and a credit for gift taxes or death taxes of a foreign country that were paid by the decedent or his estate inures proportionally to all persons interested in the estate who are liable for a share of the estate tax. [unchanged in 2003]

(f) A credit for inheritance, succession, or estate taxes, or taxes of a similar nature applicable to property or interests includable in the estate, inures to the persons interested in the estate who are chargeable with payment of a portion of those taxes to the extent that the credit reduces proportionately those taxes. [unchanged in 2003]

(g) To the extent that property passing to or in trust for a surviving spouse or a charitable, public, or similar gift or devise is not an allowable deduction for purposes of the estate tax solely because of an inheritance tax or other death tax imposed on and deductible from the property, the property is not included in the computation provided for by Subsection (b) of this section, and to that extent no apportionment is made against the property. The exclusion provided by this subsection does not apply if the result would be to deprive the estate of a deduction otherwise allowable under Section 2053(d), Internal Revenue Code of 1986, relating to deductions for state death taxes on transfers for public, charitable, or religious uses. [unchanged in 2003]

(h) Except as provided by Subsection (i)(3) of this section, an interest in income, an estate for years or for life, or another temporary interest in any property or fund is not subject to apportionment. The estate tax apportionable to the temporary interest and the remainder, if any, is chargeable against the corpus of the property or the funds that are subject to the temporary interest and remainder. [unchanged in 2003]

(i)

(1) In this subsection, "qualified real property" has the meaning assigned by Section 2032A, Internal Revenue Code of 1986 (26 U.S.C. Section 2032A).

(2) If an election is made under Section 2032A, Internal Revenue Code of 1986 (26 U.S.C. Section 2032A), the representative shall apportion estate taxes according to the amount of federal estate tax that would be payable if the election were not made. The amount of the reduction of the estate tax resulting from the election shall be applied to reduce the amount of the estate tax allocated based on the value of the qualified real property that is the subject of the election. If the amount applied to reduce the taxes allocated based on the value of the qualified real property is greater than the amount of those taxes, the excess shall be applied to the portion of the taxes allocated for all other property. This amount is to be apportioned under Subsection (b)(1) of this section.

(3) If additional federal estate tax is imposed under Section 2032A(c), Internal Revenue Code of 1986 (26 U.S.C. Section 2032A) because of an early disposition or cessation of a qualified use, the additional tax shall be equitably apportioned among the persons who have an interest in the portion of the qualified real property to which the additional tax is attributable in proportion to their interests. The additional tax is a charge against such qualified real property. If the qualified real property is split between one or more life or term interests and remainder interests, the additional tax shall be apportioned to each person whose action or cessation of use caused the imposition of additional tax, unless all persons with an interest in the qualified real property agree in writing to dispose of the property, in which case the additional tax shall be apportioned among the remainder interests. [unchanged in 2003]

(j) [repealed] [HB 1473]

(k) If the date for the payment of any portion of an estate tax is extended, the amount of the extended tax shall be apportioned to the persons who receive the specific property that gives rise to the extension. Those persons are entitled to the benefits and shall bear the burdens of the extension. [unchanged in 2003]

(l) If federal law directs the apportionment of the federal estate tax, a similar state tax shall be apportioned in the same manner. [unchanged in 2003]

(m) Interest on an extension of estate tax and interest and penalties on a deficiency shall be apportioned equitably to reflect the benefits and burdens of the extension or deficiency and of any tax deduction associated with the interest and penalties, but if the assessment or penalty and interest is due to delay caused by the negligence of the representative, the representative shall be charged with the amount of assessed penalty and interest. [unchanged in 2003]

(n) If property includable in an estate does not come into possession of the representative obligated to pay the estate tax, the representative shall recover from each person interested in the estate the amount of the estate tax apportioned to the person under this section or assign to persons affected by the tax obligation the representative's right of recovery. The obligation to recover a tax under this subsection does not apply if:

(1) the duty is waived by the parties affected by the tax obligation or by the instrument under which the representative derives powers; or

(2) in the reasonable judgment of the representative, proceeding to recover the tax is not cost-effective. [unchanged in 2003]

(o) If a representative cannot collect from a person interested in the estate an unpaid amount of estate tax apportioned to the person, the amount not collected shall be apportioned among the other persons interested in the estate who are subject to apportionment in the same manner as provided by Subsection (b)(1) of this section. A person who is charged with or who pays an apportioned amount under this subsection because another person failed to pay an amount of estate tax apportioned to the person has a right of reimbursement for that amount from the person who failed to pay the tax. The representative may enforce the right of reimbursement, or the person who is charged with or who pays an apportioned amount under this subsection may enforce the right of reimbursement directly by an assignment from the representative. A person assigned the right under this subsection is subrogated to the rights of the representative. A representative who has a right of reimbursement may petition a court to determine the right of reimbursement. [unchanged in 2003]

(p) This section shall be applied after giving effect to any disclaimers made in accordance with Section 37A of this code. [unchanged in 2003]

(q) Interest and penalties assessed against the estate by a taxing authority shall be apportioned among and charged to the persons interested in the estate in the manner provided by Subsection (b) of this section, unless, on application by any person interested in the estate, the court determines that the proposed apportionment is not equitable or that the assessment of interest or penalties was caused by a breach of fiduciary duty of a representative. If the apportionment is not equitable, the court may apportion interest and penalties in an equitable manner. If the assessment of interest or penalties was caused by a breach of fiduciary duty of a representative, the court may charge the representative with the amount of the interest and penalties assessed attributable to his conduct. [unchanged in 2003]

(r) Expenses reasonably incurred by a representative in determination of the amount, apportionment, or collection of the estate tax shall be apportioned among and charged to persons interested in the estate in the manner provided by Subsection (b) of this section unless, on application by any person interested in the estate, the court determines that the proposed apportionment is not equitable. If the court determines that the assessment is not equitable, the court may apportion the expenses in an equitable manner. [unchanged in 2003]

(s) For the purposes of this section, "court" means a court in which proceedings for administration of the estate are pending or have been completed or, if no proceedings are pending or have been completed, a court in which venue lies for the administration of the estate of the decedent. [unchanged in 2003]

(t) A representative who has possession of any property of an estate that is distributable to a person interested in the estate may withhold from that property an amount equal to the person's apportioned share of the estate tax. [unchanged in 2003]

(u) A representative shall recover from any person interested in the estate the unpaid amount of the estate tax apportioned and charged to the person under this section, unless the representative determines in good faith that an attempt to recover this amount would be economically impractical. [unchanged in 2003]

(v) A representative required to recover unpaid amounts of estate tax apportioned to persons interested in the estate under this section may not be required to initiate the necessary actions until the expiration of 90 days after the date of the final determination of the amount of the estate tax by the Internal Revenue Service. A representative who initiates an action under this section within a reasonable time after the 90-day period is not subject to any liability or surcharge because any portion of the estate tax apportioned to any person interested in the estate was collectible at a time following the death of the decedent but thereafter became uncollectible. [unchanged in 2003]

(w) A representative acting in another state may initiate an action in a court of this state to recover a proportionate amount of the federal estate tax, of an estate tax payable to another state, or of a death duty due by a decedent's estate to another state, from a person interested in the estate who is domiciled in this state or owns property in this state subject to attachment or execution. In the action, a determination of apportionment by the court having jurisdiction of the administration of the decedent's estate in the other state is prima facie correct. This section applies only if the state in which the determination of apportionment was made affords a substantially similar remedy. [unchanged in 2003]

(x) A reference in this section to a section of the Internal Revenue Code of 1986 refers to the section as it exists at the time in question. The reference also includes a corresponding section of a subsequent Internal Revenue Code and the referenced section as renumbered if it is renumbered. [unchanged in 2003]

(y) The prevailing party in an action initiated by a person for the collection of estate taxes from a person interested in the estate to whom estate taxes were apportioned and charged under Subsection (b) of this section shall be awarded necessary expenses, including reasonable attorney's fees. [unchanged in 2003]

Sec. 333. CERTAIN PERSONAL PROPERTY TO BE SOLD. (a) The representative of an estate, after approval of inventory and appraisement, shall promptly apply for an order of the court to sell at public auction or privately, for cash or on credit not exceeding six months, all of the estate that is liable to perish, waste, or deteriorate in value, or that will be an expense or disadvantage to the estate if kept. Property exempt from forced sale, specific legacies, and personal property necessary to carry on a farm, ranch, factory, or any other business which it is thought best to operate, shall not be included in such sales. [unchanged in 2003]

(b) In determining whether to order the sale of an asset under Subsection (a) of this section, the court shall consider:

(1) the representative's duty to take care of and manage the estate as a person of ordinary prudence, discretion, and intelligence would exercise in the management of the person's own affairs; and

(2) whether the asset constitutes an asset that a trustee is authorized to invest under Chapter 117 [Section 113.056] or Subchapter F, Chapter 113, Property Code. [HB 2240]

Sec. 378B. ALLOCATION OF INCOME AND EXPENSES DURING ADMINISTRATION OF DECEDENT'S ESTATE. (a) Except as provided by Subsection (b) of this section and unless the will provides otherwise, all expenses incurred in connection with the settlement of a decedent's estate, including debts, funeral expenses, estate taxes, [interest and] penalties relating to estate taxes, and family allowances, shall be charged against the principal of the estate. Fees and expenses of an attorney, accountant, or other professional advisor, commissions and expenses of a personal representative, court costs, and all other similar fees or expenses relating to the administration of the estate and interest relating to estate taxes shall be allocated between the income and principal of the estate as the executor determines in its discretion to be just and equitable. [HB 2241]

(b) Unless the will provides otherwise, income from the assets of a decedent's estate that accrues after the death of the testator and before distribution, including income from property used to discharge liabilities, shall be determined according to the rules applicable to a trustee under the Texas Trust Code (Subtitle B, Title 9, Property Code) and distributed as provided by Chapter 116, Property Code, and Subsections (c) and [,] (d)[, and (e)] of this section. [HB 2241]

(c) The income from the property bequeathed or devised to a specific devisee shall be distributed to the devisee after reduction for property taxes, ordinary repairs, insurance premiums, interest accrued after the death of the testator, other expenses of management and operation of the property, and other taxes, including the taxes imposed on the income that accrues during the period of administration and that is payable to the devisee. [unchanged in 2003]

(d) The [Except as provided by Subsection (f) of this section, the] balance of the net income shall be distributed to all other devisees after reduction for the balance of property taxes, ordinary repairs, insurance premiums, interest accrued, [including interest accruing as provided by Subsection (f) of this section after the death of the testator,] other expenses of management and operation of all property from which the estate is entitled to income, and taxes imposed on income that accrues during the period of administration and that is payable or allocable to the devisees, in proportion to the devisees' respective interests in the undistributed assets of the estate. [HB 2241]

(e) [repealed] [HB 2241]

[Note the possible conflict in Section 378B(f) between HB 1473 and HB 2241]

(f) [repealed] [HB 2241]

(f) A devisee of a pecuniary bequest, whether or not in trust, shall be paid interest on the bequest at the legal rate of interest as provided by Section 302.002, Finance Code [Article 1.03, Revised Statutes (Article 5069-1.03, Vernon's Texas Civil Statutes)], and its subsequent amendments, beginning one year after the date the court grants letters testamentary or letters of administration. [HB 1473]

(g) Income received by a trustee under this section shall be treated as income of the trust as provided by Section 116.101 [113.103], Property Code. [HB 2241]

(h) In this section, "undistributed assets" includes funds used to pay debts, administration expenses, and federal and state estate, inheritance, succession, and generation-skipping transfer taxes until the date of payment of the debts, expenses, and taxes. Except as required by Sections 2055 and 2056 of the Internal Revenue Code of 1986 (26 U.S.C. Secs. 2055 and 2056), and its subsequent amendments, the frequency and method of determining the beneficiaries' respective interests in the undistributed assets of the estate shall be in the executor's sole and absolute discretion. The executor may consider all relevant factors, including administrative convenience and expense and the interests of the various beneficiaries of the estate in order to reach a fair and equitable result among beneficiaries. [unchanged in 2003]

(i) Chapter 116, Property Code, prevails to the extent of any conflict between this section and Chapter 116, Property Code. [HB 2241]

Sec. 389. [repealed] [HB 1470]

Sec. 438A. CONVENIENCE ACCOUNT. (a) If an account is established at a financial institution by one or more parties [a party] in the names of the parties [party] and one or more convenience signers [a cosigner] and the terms of the account provide that the sums on deposit are paid or delivered to the parties [party] or to the convenience signers [cosigner] "for the convenience" of the parties [party], the account is a convenience account. [HB 2238]

(b) The making of a deposit in a convenience account does not affect the title to the deposit. [unchanged in 2003]

(c) A [The] party to a convenience account is not considered to have made a gift [of one-half] of the deposit or of any additions or accruals to the deposit to a convenience signer [the cosigner]. [HB 2238]

(d) On the death of the last surviving party, a convenience signer [the cosigner] shall have no right of survivorship in the account and ownership of the account remains in the estate of the last surviving party. [HB 2238]

(e) If an addition is made to the account by anyone other than a [the] party, the addition and accruals to the addition are considered to have been made by a [the] party. [HB 2238]

(f) All deposits to a convenience account and additions and accruals to the deposits may be paid to a [the] party or to a convenience signer [the cosigner]. The financial institution is completely released from liability for a payment made from the account before the financial institution receives notice in writing signed by a [the] party not to make the payment in accordance with the terms of the account. After receipt of the notice from a [the] party, the financial institution may require a [the] party to approve any further payments from the account. [HB 2238]

(g) If the financial institution makes a payment of the sums on deposit in a convenience account to a convenience signer [the cosigner] after the death of the last surviving party and before the financial institution has received written notice of the last surviving party's death, the financial institution is completely released from liability for the payment. If a financial institution makes payment to the personal representative of the deceased last surviving party's estate after the death of the last surviving party and before service on the financial institution of a court order prohibiting payment, the financial institution is released to the extent of the payment from liability to any person claiming a right to the funds. The receipt by the representative to whom payment is made is a complete release and discharge of the financial institution. [HB 2238]

Sec. 439A. UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT FORM. (a) A contract of deposit that contains provisions substantially the same as in the form provided by Subsection (b) of this section establishes the type of account selected by a party. The provisions of this part of Chapter XI of this code govern an account selected under the form, other than a single-party account without a P.O.D. designation. A contract of deposit that does not contain provisions substantially the same as in the form provided by Subsection (b) of this section is governed by the provisions of this chapter applicable to the account that most nearly conforms to the depositor's intent. [unchanged in 2003]

(b) A financial institution may use the following form to establish the type of account selected by a party:

UNIFORM SINGLE-PARTY OR MULTIPLE-PARTY ACCOUNT SELECTION FORM NOTICE: The type of account you select may determine how property passes on your death. Your will may not control the disposition of funds held in some of the following accounts.

Select one of the following accounts by placing your initials next to the account selected:

___ (1) SINGLE-PARTY ACCOUNT WITHOUT "P.O.D." (PAYABLE ON DEATH) DESIGNATION. The party to the account owns the account. On the death of the party, ownership of the account passes as a part of the party's estate under the party's will or by intestacy.

Enter the name of the party:

______________________________

___ (2) SINGLE-PARTY ACCOUNT WITH "P.O.D." (PAYABLE ON DEATH) DESIGNATION. The party to the account owns the account. On the death of the party, ownership of the account passes to the P.O.D. beneficiaries of the account. The account is not a part of the party's estate.

Enter the name of the party:

______________________________

Enter the name or names of the P.O.D. beneficiaries:

______________________________

______________________________

___ (3) MULTIPLE-PARTY ACCOUNT WITHOUT RIGHT OF SURVIVORSHIP. The parties to the account own the account in proportion to the parties' net contributions to the account. The financial institution may pay any sum in the account to a party at any time. On the death of a party, the party's ownership of the account passes as a part of the party's estate under the party's will or by intestacy.

Enter the names of the parties:

______________________________

______________________________

______________________________

___ (4) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP. The parties to the account own the account in proportion to the parties' net contributions to the account. The financial institution may pay any sum in the account to a party at any time. On the death of a party, the party's ownership of the account passes to the surviving parties.

Enter the names of the parties:

______________________________

______________________________

___ (5) MULTIPLE-PARTY ACCOUNT WITH RIGHT OF SURVIVORSHIP AND P.O.D. (PAYABLE ON DEATH) DESIGNATION. The parties to the account own the account in proportion to the parties' net contributions to the account. The financial institution may pay any sum in the account to a party at any time. On the death of the last surviving party, the ownership of the account passes to the P.O.D. beneficiaries.

Enter the names of the parties:

______________________________

______________________________

Enter the name or names of the P.O.D. beneficiaries:

______________________________

______________________________

___ (6) CONVENIENCE ACCOUNT. The parties [party] to the account own [owns] the account. One or more convenience signers [The cosigner] to the account may make account transactions for a [the] party. A convenience signer [The cosigner] does not own the account. On the death of the last surviving party, ownership of the account passes as a part of the last surviving party's estate under the last surviving party's will or by intestacy. The financial institution may pay funds in the account to a convenience signer [the cosigner] before the financial institution receives notice of the death of the last surviving party. The payment to a convenience signer [the cosigner] does not affect the parties' [party's] ownership of the account.

Enter the names [name] of the parties [party]:

______________________________

______________________________

Enter the names [name] of the convenience signers [cosigner]:

______________________________

______________________________

___ (7) TRUST ACCOUNT. The parties named as trustees to the account own the account in proportion to the parties' net contributions to the account. A trustee may withdraw funds from the account. A beneficiary may not withdraw funds from the account before all trustees are deceased. On the death of the last surviving trustee, the ownership of the account passes to the beneficiary. The trust account is not a part of a trustee's estate and does not pass under the trustee's will or by intestacy, unless the trustee survives all of the beneficiaries and all other trustees.

Enter the name or names of the trustees:

______________________________

______________________________

Enter the name or names of the beneficiaries:

______________________________

______________________________ [HB 2238]

(c) A financial institution shall be deemed to have adequately disclosed the information provided in this section if the financial institution uses the form set forth in Subsection (b) of this section. If a financial institution varies the format of the form set forth in Subsection (b) of this section, then such financial institution may make disclosures in the account agreement or in any other form which adequately discloses the information provided in this section. [unchanged in 2003]

(d) A financial institution may combine any of the provisions and vary the format of the selections form and notices described in Subsection (b) of this section provided that the customer receives adequate disclosure of the ownership rights and there is appropriate indication of the names of the parties. This may be accomplished in a universal account form with options listed for selection and additional disclosures provided in the account agreement, or in any other manner which adequately discloses the information provided in this section. [unchanged in 2003]

Sec. 442. RIGHTS OF CREDITORS; PLEDGE OF ACCOUNT. No multiple-party account will be effective against an estate of a deceased party to transfer to a survivor sums needed to pay debts, taxes, and expenses of administration, including statutory allowances to the surviving spouse and minor children, if other assets of the estate are insufficient. No multiple-party account will be effective against the claim of a secured creditor who has a lien on the account. A party to a multiple-party account may pledge the account or otherwise create a security interest in the account without the joinder of, as appropriate, a P.O.D. payee, a beneficiary, a convenience signer, or any other party to a joint account, regardless of whether there is a right of survivorship. A convenience signer may not pledge or otherwise create a security interest in an account. Not later than the 30th day after the date on which a security interest on a multiple-party account is perfected, a secured creditor that is a financial institution the accounts of which are insured by the Federal Deposit Insurance Corporation shall provide written notice of the pledge of the account to any other party to the account who did not create the security interest. The notice must be sent by certified mail to any other party at the last address the party provided to the depository bank and is not required to be provided to a P.O.D. payee, a beneficiary, or a convenience signer. A party, P.O.D. payee, or beneficiary who receives payment from a multiple-party account after the death of a deceased party shall be liable to account to the deceased party's personal representative for amounts the decedent owned beneficially immediately before his death to the extent necessary to discharge the claims and charges mentioned above remaining unpaid after application of the decedent's estate, but is not liable in an amount greater than the amount that the party, P.O.D. payee, or beneficiary received from the multiple-party account. No proceeding to assert this liability shall be commenced unless the personal representative has received a written demand by a surviving spouse, a creditor, or one acting for a minor child of the decedent, and no proceeding shall be commenced later than two years following the death of the decedent. Sums recovered by the personal representative shall be administered as part of the decedent's estate. This section shall not affect the right of a financial institution to make payment on multiple-party accounts according to the terms thereof, or make it liable to the estate of a deceased party unless before payment the institution received written notice from the personal representative stating the sums needed to pay debts, taxes, claims, and expenses of administration. [HB 1590]

Sec. 606. [DISTRICT COURT AND OTHER COURT OF RECORD] JURISDICTION WITH RESPECT TO GUARDIANSHIP PROCEEDINGS. [HB 1470]

(a) [repealed] [HB 1470]

(b) In those counties in which there is no statutory probate court, county court at law, or other statutory court exercising the jurisdiction of a probate court, all applications, petitions, and motions regarding guardianships, mental health matters, and other matters covered by this chapter shall be filed and heard in the county court. In [, except that in] contested guardianship matters, the judge of the county court may on the judge's own motion, or shall on the motion of any party to the proceeding, according to the motion:

(1) [,] request [as provided by Section 25.0022, Government Code,] the assignment of a statutory probate court judge to hear the contested portion of the proceeding, as provided by Section 25.0022, Government Code; or

(2) transfer the contested portion of the proceeding to the district court, which may hear the transferred contested matter [matters] as if originally filed in the district court. [HB 1470]

(b-1) If the judge of the county court has not transferred a contested guardianship matter to the district court at the time a party files a motion for assignment of a statutory probate court judge, the county judge shall grant the motion and may not transfer the matter to the district court unless the party withdraws the motion. [HB 1470]

(b-2) A statutory probate court judge assigned to a contested guardianship [probate] matter as provided by Subsection (b) of this section [subsection] has [for that matter] the jurisdiction and authority granted to a statutory probate court by Sections 607 and 608 of this code. On resolution of a contested matter, including an appeal of a matter, to which a statutory probate court judge has been assigned, the statutory probate court judge shall transfer the resolved portion of the case to the county court for further proceedings not inconsistent with the orders of the statutory probate court judge [The county court continues to exercise jurisdiction over the management of the guardianship with the exception of the contested matter until final disposition of the contested matter is made by the assigned judge or the district court]. [HB 1470]

(b-3) In contested matters transferred to the district court [as provided by this subsection], the district court[, concurrently with the county court,] has the general jurisdiction of a probate court. On resolution of a [all pending] contested matter, including an appeal of a matter [matters], the district court shall transfer the resolved [contested] portion of the case [guardianship proceeding] to the county court for further proceedings not inconsistent with the orders of the district court. [HB 1470]

(b-4) The county court shall continue to exercise jurisdiction over the management of the guardianship with the exception of the contested matter until final disposition of the contested matter is made by the assigned judge or the district court. [HB 1470]

(b-5) If a contested portion of the proceeding is transferred to a district court under Subsection (b-3) of this section [subsection], the clerk of the district court may perform in relation to the transferred portion of the proceeding any function a county clerk may perform in that type of contested proceeding. [HB 1470]

(c) In those counties in which there is no statutory probate court, but in which there is a county court at law or other statutory court exercising the jurisdiction of a probate court, all applications, petitions, and motions regarding guardianships, mental health matters, or other matters addressed by this chapter shall be filed and heard in those courts and the constitutional county court, [rather than in the district courts,] unless otherwise provided by law. The judge of a county court may hear any of those matters sitting for the judge of any other county court. Except as provided by Section 608 of this code, in contested guardianship matters, the judge of the constitutional county court may on the judge's own motion, and shall on the motion of a party to the proceeding, transfer the proceeding to the county court at law or a statutory court exercising the jurisdiction of a probate court other than a statutory probate court. The court to which the proceeding is transferred may hear the proceeding as if originally filed in the court. [HB 1470]

(d) In those counties in which there is a statutory probate court, all applications, petitions, and motions regarding guardianships, mental health [illness] matters, or other matters addressed by this chapter shall be filed and heard in the statutory probate court[, unless otherwise provided by law]. [HB 1470]

(e) [A statutory probate court has concurrent jurisdiction with the district court in all actions by or against a person in the person's capacity as guardian.] A court that exercises original probate jurisdiction has the power to hear all matters incident to an estate. After a guardianship of the estate of a ward is required to be settled as provided by Section 745 of this chapter, the court exercising original probate jurisdiction over the settling of the former ward's estate has the jurisdiction to hear: (1) an action brought by or on behalf of the former ward against a former guardian of the ward for alleged misconduct arising from the performance of the person's duties as guardian; (2) an action against a former guardian of the former ward that is brought by a surety that is called on to perform in place of the former guardian; (3) a claim for the payment of compensation, expenses, and court costs and any other matter authorized under Subpart H, Part 2, of this chapter; (4) a matter related to an authorization made or duty performed by a guardian under Subpart C, Part 4, of this chapter; and (5) any other matter related or appertaining to a guardianship estate that a court exercising original probate jurisdiction is specifically authorized to hear under this chapter. [HB 1470]

(f) [A court that exercises original probate jurisdiction has the power to hear all matters incident to an estate.] When a surety is called on to perform in place of a guardian or former guardian, a court exercising original probate jurisdiction, including jurisdiction exercised under Subsection (e)(2) of this section, may award judgment against the guardian or former guardian in favor of the surety of the guardian or former guardian in the same suit[, even if the ward has died, regained capacity, or the ward's disabilities of minority have been removed]. [HB 1470]

(g) A final order of a court that exercises original probate jurisdiction is appealable to a court of appeals. [unchanged in 2003]

(h) A statutory probate court has concurrent jurisdiction with the district court in all personal injury, survival, or wrongful death actions by or against a person in the person's capacity as a guardian and in all actions involving a guardian in which each other party aligned with the guardian is not an interested person in the guardianship. [HB 1470]

(i) A statutory probate court has jurisdiction over any matter appertaining to an estate or incident to an estate and has jurisdiction over any cause of action in which a guardian in a guardianship proceeding pending in the statutory probate court is a party. [HB 1470]

(j) A statutory probate court may exercise the pendent and ancillary jurisdiction necessary to promote judicial efficiency and economy. [HB 1470]

Sec. 607. MATTERS APPERTAINING AND INCIDENT TO AN ESTATE. (a) In a proceeding in a constitutional county court or a statutory county court at law, the phrases "appertaining to estates" and "incident to an estate" in this chapter include the appointment of guardians, the issuance of letters of guardianship, a claim by or against a guardianship estate, all actions for trial of title to land incident to a guardianship estate and for the enforcement of liens incident to a guardianship estate, all actions for trial of the right of property incident to a guardianship estate, and generally all matters relating to the settlement, partition, and distribution of a guardianship estate. [unchanged in 2003]

(b) In a proceeding in a statutory probate court [or district court], the phrases "appertaining to estates" and "incident to an estate" in this chapter include the appointment of guardians, the issuance of letters of guardianship, all claims by or against a guardianship estate, all actions for trial of title to land and for the enforcement of liens on the land, all actions for trial of the right of property, and generally all matters relating to the collection, settlement, partition, and distribution of a guardianship estate. A statutory probate court, in the exercise of its jurisdiction and notwithstanding any other provision of this chapter, may hear all suits, actions, and applications filed against or on behalf of any guardianship; all such suits, actions, and applications are appertaining to and incident to an estate. Except for situations [In a situation] in which the jurisdiction of a statutory probate court is concurrent with that of a district court or any other court, any[, a] cause of action appertaining to or incident to a guardianship estate shall be brought in a statutory probate court [rather than in the district court]. [HB 1470]

(c) [repealed] [HB 1470]

(d) [repealed] [HB 1470]

[Note the possible conflict in Section 607(e) between HB 1470 and HB 4]


(e) [repealed] [HB 1470]

(e) Notwithstanding any other provision of this chapter, the proper venue for an action by or against a personal representative for personal injury, death, or property damages is determined under Section 15.007, Civil Practice and Remedies Code. [HB 4]

Sec. 608. TRANSFER OF GUARDIANSHIP PROCEEDING. A judge of a statutory probate court, on the motion of a party to the action or of a person interested in a guardianship, may transfer to the judge's court from a district, county, or statutory court a cause of action appertaining to or incident to a guardianship estate that is pending in the statutory probate court or a cause of action relating to a guardianship in which a guardian, ward, or proposed ward in a guardianship [personal representative of an estate] pending in the statutory probate court is a party and may consolidate the transferred cause of action with the other proceedings in the statutory probate court relating to the guardianship estate. [HB 1470]

Sec. 633. NOTICE AND CITATION. (a) On the filing of an application for guardianship, notice shall be issued and served as provided by this section. [unchanged in 2003]

(b) The court clerk shall issue a citation stating that the application for guardianship was filed, the name of the proposed ward, the name of the applicant, and the name of the person to be appointed guardian as provided in the application, if that person is not the applicant. The citation must cite all persons interested in the welfare of the proposed ward to appear at the time and place stated in the notice if they wish to contest the application. The citation shall be posted. [unchanged in 2003]

(c) The sheriff or other officer shall personally serve citation to appear and answer the application for guardianship on:

(1) a proposed ward who is 12 years of age or older;

(2) the parents of a proposed ward if the whereabouts of the parents are known or can be reasonably ascertained;

(3) any court-appointed conservator or person having control of the care and welfare of the proposed ward;

(4) a proposed ward's spouse if the whereabouts of the spouse are known or can be reasonably ascertained; and

(5) the person named in the application to be appointed guardian, if that person is not the applicant. [unchanged in 2003]

(d) The [court clerk, at the applicant's request, or the] applicant shall mail a copy of the application for guardianship and a notice containing the information required in the citation issued under Subsection (b) of this section by registered or certified mail, return receipt requested, or by any other form of mail that provides proof of delivery, to the following persons, if their whereabouts are known or can be reasonably ascertained:

(1) all adult children of a proposed ward;

(2) all adult siblings of a proposed ward;

(3) the administrator of a nursing home facility or similar facility in which the proposed ward resides;

(4) the operator of a residential facility in which the proposed ward resides;

(5) a person whom the applicant knows to hold a power of attorney signed by the proposed ward;

(6) a person designated to serve as guardian of the proposed ward by a written declaration under Section 679 of this code, if the applicant knows of the existence of the declaration;

(7) a person designated to serve as guardian of the proposed ward in the probated will of the last surviving parent of the ward; [and]

(8) a person designated to serve as guardian of the proposed ward by a written declaration of the proposed ward's last surviving parent, if the declarant is deceased and the applicant knows of the existence of the declaration; and

(9) each person named as next of kin in the application for guardianship as required by Section 682(10) or (12) of this code. [HB 1470]

(d-1) The applicant shall file with the court:

(1) a copy of any notice required by Subsection (d) of this section and the proofs of delivery of the notice; and

(2) an affidavit sworn to by the applicant or the applicant's attorney stating:

(A) that the notice was mailed as required by Subsection (d) of this section; and

(B) the name of each person to whom the notice was mailed, if the person's name is not shown on the proof of delivery. [HB 1470]

(e) A person other than the proposed ward who is entitled to receive notice or personal service of citation under Subsections (c) and (d) of this section may choose, in person or by attorney ad litem, by writing filed with the clerk, to waive the receipt of notice or the issuance and personal service of citation. [unchanged in 2003]

(f) The court may not act on an application for the creation of a guardianship until the Monday following the expiration of the 10-day period beginning the date service of notice and citation has been made as provided by Subsections (b), (c), and (d)(1) of this section and the applicant has complied with Subsection (d-1) of this section. The validity of a guardianship created under this chapter is not affected by the failure of the [clerk or] applicant to comply with the requirements of Subsections (d)(2)-(9) [(d)(2)-(8)] of this section. [HB 1470]

(g) It is not necessary for a person who files an application for the creation of a guardianship under this chapter to be served with citation or waive the issuance and personal service of citation under this section. [unchanged in 2003]

Sec. 634. SERVICE ON ATTORNEY. (a) If an attorney has entered an appearance on record for a party in a guardianship proceeding, a citation or notice required to be served on the party shall be served on the attorney. Service on the attorney of record is in lieu of service on the party for whom the attorney appears. Except as provided by Section 633(e) [633(f)] of this code, an attorney ad litem may not waive personal service of citation. (b) A notice served on an attorney under this section may be served by registered or certified mail, return receipt requested, by any other form of mail requiring proof of delivery, or by delivery to the attorney in person. A party to the proceeding or the party's attorney of record, an appropriate sheriff or constable, or another person who is competent to testify may serve notice or citation to an attorney under this section. (c) A written statement by an attorney of record, the return of the officer, or the affidavit of a person that shows service is prima facie evidence of the fact of service. [HB 1470]

Sec. 645A. IMMUNITY. (a) A guardian ad litem appointed under Section 645, 683, or 694A of this code to represent the interests of an incapacitated person in a guardianship proceeding involving the creation, modification, or termination of a guardianship is not liable for civil damages arising from a recommendation made or an opinion given in the capacity of guardian ad litem.

(b) Subsection (a) of this section does not apply to a recommendation or opinion that is:

(1) wilfully wrongful;

(2) given with conscious indifference or reckless disregard to the safety of another;

(3) given in bad faith or with malice; or

(4) grossly negligent. [HB 1985]

Sec. 665B. COMPENSATION OF CERTAIN ATTORNEYS. (a) A court that creates a guardianship for a ward under this chapter, on request of a person who filed an application to be appointed guardian of the proposed ward or for the appointment of another suitable person as guardian of the proposed ward, may authorize compensation of an attorney who represents the person who filed the application at the application hearing, regardless of whether the person is appointed the ward's guardian, from:

(1) available funds of the ward's estate; or

(2) the county treasury if:

(A) the ward's estate is insufficient to pay for the services provided by the attorney; and

(B) funds in the county treasury are budgeted for that purpose. [HB 1470]

(b) The court may not authorize compensation under this section unless the court finds that the applicant acted in good faith and for just cause in the filing and prosecution of the application. [unchanged in 2003]

Sec. 682. APPLICATION; CONTENTS. Any person may commence a proceeding for the appointment of a guardian by filing a written application in a court having jurisdiction and venue. The application must be sworn to by the applicant and state:

(1) the name, sex, date of birth, and address of the proposed ward;

(2) the name, relationship, and address of the person the applicant desires to have appointed as guardian;

(3) whether guardianship of the person or estate, or both, is sought;

(4) the nature and degree of the alleged incapacity, the specific areas of protection and assistance requested, and the limitation of rights requested to be included in the court's order of appointment;

(5) the facts requiring that a guardian be appointed and the interest of the applicant in the appointment;

(6) the nature and description of any guardianship of any kind existing for the proposed ward in any other state;

(7) the name and address of any person or institution having the care and custody of the proposed ward;

(8) the approximate value and description of the proposed ward's property, including any compensation, pension, insurance, or allowance to which the proposed ward may be entitled;

(9) the name and address of any person whom the applicant knows to hold a power of attorney signed by the proposed ward and a description of the type of power of attorney;

(10) if the proposed ward is a minor and if known by the applicant:

(A) the name of each parent of the proposed ward and state the parent's address or that the parent is [, the names of the parents and next of kin of the proposed ward and whether either or both of the parents are] deceased;

(B) the name and age of each sibling, if any, of the proposed ward and state the sibling's address or that the sibling is deceased; and

(C) if each of the proposed ward's parents and siblings are deceased, the names and addresses of the proposed ward's next of kin who are adults;

(11) if the proposed ward is a minor, whether the minor was the subject of a legal or conservatorship proceeding within the preceding two-year period and, if so, the court involved, the nature of the proceeding, and the final disposition, if any, of the proceeding;

(12) if the proposed ward is an adult and if known by the applicant:

(A) the name [60 years of age or older, the names and addresses, to the best of the applicant's knowledge,] of the proposed ward's spouse, if any, and state the spouse's address or that the spouse is deceased;

(B) the name of each of the proposed ward's parents and state the parent's address or that the parent is deceased;

(C) the name and age of each of the proposed ward's siblings, if any, and state the sibling's address or that the sibling is deceased;

(D) the name and age of each of the proposed ward's children, if any, and state the child's address or that the child is deceased; and

(E) if the proposed ward's spouse and each of the proposed ward's parents, siblings, and children are deceased, or, if there is no spouse, parent, adult sibling, or adult child, the names and addresses of the proposed ward's next of kin who are adults;

(13) facts showing that the court has venue over the proceeding; and

(14) if applicable, that the person whom the applicant desires to have appointed as a guardian is a private professional guardian who has complied with the requirements of Section 697 of this code. [HB 1470]

Sec. 687. EXAMINATIONS AND REPORTS. (a) The court may not grant an application to create a guardianship for an incapacitated person, other than a minor, person whose alleged incapacity is mental retardation, or person for whom it is necessary to have a guardian appointed only to receive funds from a governmental source, unless the applicant presents to the court a written letter or certificate from a physician licensed in this state that is dated not earlier than the 120th day before the date of the filing of the application and based on an examination the physician performed not earlier than the 120th day before the date of the filing of the application. The letter or certificate must:

(1) describe the nature and degree of incapacity, including the medical history if reasonably available;

(2) provide a medical prognosis specifying the estimated severity of the incapacity;

(3) state how or in what manner the proposed ward's ability to make or communicate responsible decisions concerning himself or herself is affected by the person's physical or mental health;

(4) state whether any current medication affects the demeanor of the proposed ward or the proposed ward's ability to participate fully in a court proceeding;

(5) describe the precise physical and mental conditions underlying a diagnosis of senility, if applicable; and

(6) include any other information required by the court. [unchanged in 2003]

(b) Except as provided by Subsection (c) of this section, if the court determines it is necessary, the court may appoint the necessary physicians to examine the proposed ward. The court must make its determination with respect to the necessity for a physician's examination of the proposed ward at a hearing held for that purpose. Not later than the fourth day before the date of the hearing, the applicant shall give to the proposed ward and the proposed ward's attorney ad litem written notice specifying the purpose and the date and time of the hearing. A physician who examines the proposed ward, other than a physician or psychologist who examines the proposed ward under Subsection (c) of this section, shall make available to an attorney ad litem appointed to represent the proposed ward, for inspection, a written letter or certificate from the physician that complies with the requirements of Subsection (a) of this section. [unchanged in 2003]

(c) If the basis of the proposed ward's alleged incapacity is mental retardation, the proposed ward shall be examined by a physician or psychologist licensed in this state or certified by the Texas Department of Mental Health and Mental Retardation to perform the examination, unless there is written documentation filed with the court that shows that the proposed ward has been examined according to the rules adopted by the Texas Department of Mental Health and Mental Retardation not earlier than 24 [six] months before the date of a hearing to appoint a guardian for the proposed ward. The physician or psychologist shall conduct the examination according to the rules adopted by the Texas Department of Mental Health and Mental Retardation and shall submit written findings and recommendations to the court. [HB 1470]

Sec. 729. INVENTORY AND APPRAISEMENT. (a) Not later than the 30th [90th] day after the date the guardian of the estate qualifies as guardian, unless a longer time is granted by the court, the guardian of the estate shall file with the clerk of the court a verified, full, and detailed inventory, in one written instrument, of all the property of the ward that has come into the guardian's possession or knowledge. The inventory filed by the guardian under this section must include:

(1) all real property of the ward that is located in this state; and

(2) all personal property of the ward wherever located. [HB 1470]

(b) The guardian shall set out in the inventory the guardian's appraisement of the fair market value of each item of the property on the date of the grant of letters of guardianship. If the court appoints an appraiser of the estate, the guardian shall determine the fair market value of each item of the inventory with the assistance of the appraiser and shall set out in the inventory the appraisement made by the appraiser. [unchanged in 2003]

(c) An inventory made under this section must specify what portion of the property is separate property and what portion is community property. If any property is owned in common with other persons, the interest owned by the ward shall be shown in the inventory, together with the names and relationship, if known, of co-owners. [unchanged in 2003]

(d) The inventory, when approved by the court and duly filed with the clerk of court, is for purposes of this chapter the inventory and appraisement of the estate referred to in this chapter. [unchanged in 2003]

(e) The court for good cause shown may require the filing of the inventory and appraisement at a time not later than the 30th [90th] day after the date of qualification of the guardian. [HB 1470]

Sec. 743. REPORTS OF GUARDIANS OF THE PERSON. (a) The guardian of the person of a ward shall return to the court a sworn, written report showing each item of receipts and disbursements for the support and maintenance of the ward, the education of the ward when necessary, and support and maintenance of the ward's dependents, when authorized by order of court. [unchanged in 2003]

(b) The guardian of the person, whether or not there is a separate guardian of the estate, shall submit to the court an annual report by sworn affidavit that contains the following information:

(1) the guardian's current name, address, and phone number;

(2) the ward's current:

(A) name, address, and phone number; and

(B) age and date of birth;

(3) the type of home in which the ward resides, described as the ward's own; a nursing, guardian's, foster, or boarding home; a relative's home, and the ward's relationship to the relative; a hospital or medical facility; or other type of residence;

(4) the length of time the ward has resided in the present home and, if there has been a change in the ward's residence in the past year, the reason for the change;

(5) the date the guardian most recently saw the ward, and how frequently the guardian has seen the ward in the past year;

(6) a statement indicating whether or not the guardian has possession or control of the ward's estate;

(7) the following statements concerning the ward's health during the past year:

(A) whether the ward's mental health has improved, deteriorated, or remained unchanged, and a description if there has been a change; and

(B) whether the ward's physical health has improved, deteriorated, or remained unchanged, and a description if there has been a change;

(8) a statement concerning whether or not the ward has regular medical care, and the ward's treatment or evaluation by any of the following persons during the last year, including the name of that person, and the treatment involved:

(A) a physician;

(B) a psychiatrist, psychologist, or other mental health care provider;

(C) a dentist;

(D) a social or other caseworker; or

(E) another individual who provided treatment;

(9) a description of the ward's activities during the past year, including recreational, educational, social, and occupational activities, or if no activities are available or if the ward is unable or has refused to participate in them, a statement to that effect;

(10) the guardian's evaluation of the ward's living arrangements as excellent, average, or below average, including an explanation if the conditions are below average;

(11) the guardian's evaluation of whether the ward is content or unhappy with the ward's living arrangements;

(12) the guardian's evaluation of unmet needs of the ward;

(13) a statement of whether or not the guardian's power should be increased, decreased, or unaltered, including an explanation if a change is recommended;

(14) a statement that the guardian has paid the bond premium for the next reporting period; and

(15) any additional information the guardian desires to share with the court regarding the ward, including whether the guardian has filed for emergency detention of the ward under Subchapter A, Chapter 573, Health and Safety Code, and if applicable, the number of times the guardian has filed and the dates of the applications. [HB 2679]

(c) If the ward is deceased, the guardian shall provide the court with the date and place of death, if known, in lieu of the information about the ward otherwise required to be provided in the annual report. [unchanged in 2003]

(d) Unless the judge is satisfied that the facts stated are true, he shall issue orders as are necessary for the best interests of the ward. [unchanged in 2003]

(e) If the judge is satisfied that the facts stated in the report are true, the court shall approve the report. [unchanged in 2003]

(f) The court on the court's own motion may waive the costs and fees related to the filing of a report approved under Subsection (e) of this section. [unchanged in 2003]

(g) Once each year for the duration of the guardianship, a guardian of the person shall file the report that contains the information required by Subsections (a) and (b) of this section. Except as provided by Subsection (h) of this section, the report must cover a 12-month reporting period that begins on the date the guardian qualifies to serve. [unchanged in 2003]

(h) The court may change a reporting period for purposes of this section but may not extend a reporting period so that it covers more than 12 months. [unchanged in 2003]

(i) Each report is due not later than the 60th day after the date on which the reporting period ends. [unchanged in 2003]

(j) A guardian of the person may complete and file the report required under this section without the assistance of an attorney. [unchanged in 2003]

Sec. 745. SETTLING GUARDIANSHIPS OF THE ESTATE. (a) A guardianship of the estate of a ward shall be settled when:

(1) a minor ward dies or becomes an adult by becoming 18 years of age, or by removal of disabilities of minority according to the law of this state, or by marriage;

(2) an incapacitated ward dies, or is decreed as provided by law to have been restored to full legal capacity;

(3) the spouse of a married ward has qualified as survivor in community and the ward owns no separate property;

(4) the estate of a ward becomes exhausted;

(5) the foreseeable income accruing to a ward or to his estate is so negligible that maintaining the guardianship in force would be burdensome;

(6) all of the assets of the estate have been placed in a management trust under Subpart N, Part 4, of this code and the court determines that a guardianship for the ward is no longer necessary; or

(7) the court determines for any other reason that a guardianship for the ward is no longer necessary. [unchanged in 2003]

(b) In a case arising under Subsection (a)(5) of this section, the court may authorize the income to be paid to a parent, or other person who has acted as guardian of the ward, to assist in the maintenance of the ward and without liability to account to the court for the income. [unchanged in 2003]

(c) When the estate of a minor ward consists only of cash or cash equivalents in an amount of $100,000 or less, the guardianship of the estate may be terminated and the assets paid to the county clerk of the county in which the guardianship proceeding is pending, and the clerk shall manage the funds as provided by Section 887 of this code. [HB 1470]

(d) In the settlement of a guardianship, the court may appoint an attorney ad litem to represent the interests of the ward, and may allow the attorney reasonable compensation for services provided by the attorney out of the ward's estate. [unchanged in 2003]

Sec. 747. TERMINATION OF GUARDIANSHIP OF THE PERSON. (a) When the guardianship of an incapacitated person is required to be settled as provided by Section 745 of this code, the guardian of the person shall deliver all property of the ward in the possession or control of the guardian to the emancipated ward or other person entitled to the property. If the ward is deceased, the guardian shall deliver the property to the personal representative of the deceased ward's estate or other person entitled to the property. [unchanged in 2003]

(b) If there is no property of the ward in the possession or control of the guardian of the person, the guardian shall, not later than the 60th day after the date on which the guardianship is required to be settled, file with the court a sworn affidavit that states the reason the guardianship was terminated and to whom the property of the ward in the guardian's possession was delivered. The judge may issue orders as necessary for the best interests of the ward or of the estate of a deceased ward. This section does not discharge a guardian of the person from liability for breach of the guardian's fiduciary duties. [HB 1709]

Sec. 762. REINSTATEMENT AFTER REMOVAL. (a) Not later than the 10th day after the date the court signs the order of removal, a personal representative who is removed under Subsection (a)(6) or (7), Section 761, of this code may file an application with the court for a hearing to determine whether the personal representative should be reinstated. [unchanged in 2003]

(b) On the filing of an application for a hearing under this section, the court clerk shall issue a notice stating that the application for reinstatement was filed, the name of the ward [or decedent], and the name of the applicant. The clerk shall issue the notice to the applicant, the ward, a person interested in the welfare of the ward[, the decedent's estate,] or the ward's estate, and, if applicable, [to] a person who has control of the care and custody of the ward. The notice must cite all persons interested in the estate or welfare of the ward to appear at the time and place stated in the notice if they wish to contest the application. [HB 1470]

(c) If, at the conclusion of a hearing under this section, the court is satisfied by a preponderance of the evidence that the applicant did not engage in the conduct that directly led to the applicant's removal, the court shall set aside an order appointing a successor representative, if any, and shall enter an order reinstating the applicant as personal representative of the ward or estate. [unchanged in 2003]

(d) If the court sets aside the appointment of a successor representative under this section, the court may require the successor representative to prepare and file, under oath, an accounting of the estate and to detail the disposition the successor has made of the property of the estate. [unchanged in 2003]

Sec. 765. SUCCESSORS' RETURN OF INVENTORY, APPRAISEMENT, AND LIST OF CLAIMS. A successor guardian who has qualified to succeed a prior guardian shall make and return to the court an inventory, appraisement, and list of claims of the estate, not later than the 30th day [90 days] after the date the successor guardian qualifies as guardian [of qualification], in the same manner as is required of an original appointee. The successor guardian shall in like manner as is required of an original appointee return additional inventories, appraisements, and lists of claims. In all orders appointing a successor guardian, the court shall appoint an appraiser as in original appointments on the application of any person interested in the estate. [HB 1470]

[Note the possible conflict in Section 767 between HB 1470 and HB 2679]

Sec. 767. POWERS AND DUTIES OF GUARDIANS OF THE PERSON. The guardian of the person is entitled to the charge and control of the person of the ward, and the duties of the guardian correspond with the rights of the guardian. A guardian of the person has:

(1) the right to have physical possession of the ward and to establish the ward's legal domicile;

(2) the duty of care, control, and protection of the ward;

(3) the duty to provide the ward with clothing, food, medical care, and shelter; [and]

(4) the power to consent to medical, psychiatric, and surgical treatment other than the in-patient psychiatric commitment of the ward; and

(5) on application to and order of the court, the power to establish a trust in accordance with 42 U.S.C. Section 1396p(d)(4)(B), as amended, and direct that the income of the ward as defined by that section be paid directly to the trust, solely for the purpose of the ward's eligibility for medical assistance under Chapter 32, Human Resources Code. [HB 1470]

Sec. 767. POWERS AND DUTIES OF GUARDIANS OF THE PERSON. (a) The guardian of the person is entitled to the charge and control of the person of the ward, and the duties of the guardian correspond with the rights of the guardian. A guardian of the person has:

(1) the right to have physical possession of the ward and to establish the ward's legal domicile;

(2) the duty of care, control, and protection of the ward;

(3) the duty to provide the ward with clothing, food, medical care, and shelter; and

(4) the power to consent to medical, psychiatric, and surgical treatment other than the in-patient psychiatric commitment of the ward.

(b) Notwithstanding Subsection (a)(4) of this section, a guardian of the person of a ward has the power to transport the ward to an inpatient mental health facility for a preliminary examination in accordance with Subchapters A and C, Chapter 573, Health and Safety Code. [HB 2679]

Sec. 768. GENERAL POWERS AND DUTIES OF GUARDIAN OF THE ESTATE. The guardian of the estate of a ward is entitled to the possession and management of all property belonging to the ward, to collect all debts, rentals, or claims that are due to the ward, to enforce all obligations in favor of the ward, and to bring and defend suits by or against the ward; but, in the management of the estate, the guardian is governed by the provisions of this chapter. It is the duty of the guardian of the estate to take care of and manage the estate as a prudent person would manage the person's own property, except as otherwise provided by this chapter. The guardian of the estate shall account for all rents, profits, and revenues that the estate would have produced by such prudent management. [HB 1470]

Sec. 770. CARE OF WARD; COMMITMENT. (a) The guardian of an adult may expend funds of the guardianship as provided by court order to care for and maintain the incapacitated person. The guardian may apply for residential care and services provided by a public or private facility on behalf of an incapacitated person who has decision-making ability if the person agrees to be placed in the facility. The guardian shall report the condition of the person to the court at regular intervals at least annually, unless the court orders more frequent reports. If the person is receiving residential care in a public or private residential care facility, the guardian shall include in any report to the court a statement as to the necessity for continued care in the facility. [unchanged in 2003]

(b) Except as provided by Subsection (c) or (d) of this section, a guardian may not voluntarily admit an incapacitated person to a public or private in-patient psychiatric facility or to a residential facility operated by the Texas Department of Mental Health and Mental Retardation for care and treatment. If care and treatment in a psychiatric or a residential facility are necessary, the person or the person's guardian may:

(1) apply for services under Section 593.027 or 593.028, Health and Safety Code;

(2)[, or] apply to a court to commit the person under Subtitle D, Title 7, Health and Safety Code (Persons with Mental Retardation Act), Subtitle C, Title 7, Health and Safety Code (Texas Mental Health Code), or Chapter 462, Health and Safety Code; or

(3) transport the ward to an inpatient mental health facility for a preliminary examination in accordance with Subchapters A and C, Chapter 573, Health and Safety Code. [HB 2679]

(c) A guardian of a person younger than 16 years of age may voluntarily admit an incapacitated person to a public or private inpatient psychiatric facility for care and treatment. [unchanged in 2003]

(d) A guardian of a person may voluntarily admit an incapacitated person to a residential care facility for emergency care or respite care under Section 593.027 or 593.028, Health and Safety Code. [unchanged in 2003]

Sec. 770A. ADMINISTRATION OF MEDICATION. (a) In this section, "psychoactive medication" has the meaning assigned by Section 574.101, Health and Safety Code.

(b) If a person under a protective custody order as provided by Subchapter B, Chapter 574, Health and Safety Code, is a ward who is not a minor, the guardian of the person of the ward may consent to the administration of psychoactive medication as prescribed by the ward's treating physician regardless of the ward's expressed preferences regarding treatment with psychoactive medication. [HB 2679]

Sec. 774. EXERCISE OF POWER WITH OR WITHOUT COURT ORDER. (a) On application, and if authorized by an order, the guardian of the estate may renew or extend any obligation owed by or to the ward. On written application to the court and when a guardian of the estate deems it is in the best interest of the estate, the guardian may, if authorized by an order of the court:

(1) purchase or exchange property;

(2) take a claim or property for the use and benefit of the estate in payment of a debt due or owing to the estate;

(3) compound a bad or doubtful debt due or owing to the estate;

(4) make a compromise or a settlement in relation to property or a claim in dispute or litigation;

(5) compromise or pay in full any secured claim that has been allowed and approved as required by law against the estate by conveying to the holder of the secured claim the real estate or personalty securing the claim, in full payment, liquidation, and satisfaction of the claim, and in consideration of cancellation of a note, deed of trust, mortgage, chattel mortgage, or other evidence of a lien that secures the payment of the claim;

(6) abandon worthless or burdensome property and the administration of that property. Abandoned real or personal property may be foreclosed on by a secured party, trustee, or mortgagee without further order of the court; [and]

(7) purchase a prepaid funeral benefits contract; and

(8) establish a trust in accordance with 42 U.S.C. Section 1396p(d)(4)(B), as amended, and direct that the income of the ward as defined by that section be paid directly to the trust, solely for the purpose of the ward's eligibility for medical assistance under Chapter 32, Human Resources Code. [HB 1470]

(b) The guardian of the estate of a person, without application to or order of the court, may exercise the following powers provided, however, that a guardian may apply and obtain an order if doubtful of the propriety of the exercise of any such power:

(1) release a lien on payment at maturity of the debt secured by the lien;

(2) vote stocks by limited or general proxy;

(3) pay calls and assessments;

(4) insure the estate against liability in appropriate cases;

(5) insure property of the estate against fire, theft, and other hazards; and

(6) pay taxes, court costs, and bond premiums. [unchanged in 2003]

Sec. 776. AMOUNTS [SUMS] ALLOWABLE FOR EDUCATION AND MAINTENANCE OF WARD. (a) Subject to Section 777 of this code, if a monthly allowance for the ward was not ordered in the court's order appointing a guardian, the guardian of the estate shall file an application with the court requesting a monthly allowance to be expended from the income and corpus of the ward's estate [the court may direct the guardian of the person to expend,] for the education and maintenance of the [guardian's] ward and the maintenance of the ward's property. [HB 1470]

(a-1) The guardian must file the application requesting the monthly allowance not later than the 30th day after the date on which the guardian qualifies as guardian or the date specified by the court, whichever is later. The application must clearly separate amounts requested for education and maintenance of the ward from amounts requested for maintenance of the ward's property. [HB 1470]

(a-2) In determining the amount of the monthly allowance for the ward and the ward's property, the court shall consider the condition of the estate and the income and corpus of the estate necessary to pay the reasonably anticipated regular education and maintenance expenses of the ward and maintenance expenses of the ward's property. The court's order setting a monthly allowance must specify the types of expenditures the guardian may make on a monthly basis for the ward or the ward's property. An order setting a monthly allowance does not affect the guardian's duty to account for expenditures of the allowance in the annual account required by Section 741 of this code[, a sum in excess of the income of the ward's estate. Otherwise, the guardian may not be allowed, for the education and maintenance of the ward, more than the net income of the estate]. [HB 1470]

(a-3) When different persons have the guardianship of the person and estate of a ward, the guardian of the estate shall pay to the guardian of the person the monthly allowance [a sum that is] set by the court, at a time specified by the court, for the education and maintenance of the ward. If the guardian of the estate fails to pay to the guardian of the person the monthly allowance [sum] set by the court, the guardian of the estate shall be compelled to make the payment by court order after the guardian is duly cited to appear. [HB 1470]

(b) When a guardian has in good faith expended funds from the income and corpus of the estate of the ward [of the guardian] for support and maintenance of [for] the ward [under this section or Section 777 of this code,] and the expenditures exceed the monthly allowance authorized by the court, the guardian shall file a motion with the court requesting approval of the expenditures. The court may approve the excess expenditures if:

(1) the expenditures were made when it was [is] not convenient or possible for the guardian to first secure court approval;

(2) [, if] the proof is clear and convincing that the expenditures were reasonable and proper;

(3) [, and are expenditures that] the court would have granted authority in advance to make the expenditures; and

(4) [out of the corpus, and] the ward received the benefits of the expenditures[, the court may approve the expenditures in the same manner as if the expenditures were made by the guardian out of the income from the ward's estate. An expenditure under this subsection may not exceed $5,000 per ward during an annual accounting period, unless the expenditure is made to a nursing home in which case the court may ratify any amount]. [HB 1470]

Sec. 812. CERTAIN PERSONAL PROPERTY TO BE SOLD. (a) The guardian of an estate, after approval of inventory and appraisement, shall promptly apply for an order of the court to sell at public auction or privately, for cash or on credit not exceeding six months, all of the estate that is liable to perish, waste, or deteriorate in value or that will be an expense or disadvantage to the estate if kept. Property exempt from forced sale, a specific legacy, or personal property necessary to carry on a farm, ranch, factory, or any other business that it is thought best to operate, may not be included in a sale under this section. [unchanged in 2003]

(b) In determining whether to order the sale of an asset under Subsection (a) of this section, the court shall consider:

(1) the guardian's duty to take care of and manage the estate as a person of ordinary prudence, discretion, and intelligence would exercise in the management of the person's own affairs; and

(2) whether the asset constitutes an asset that a trustee is authorized to invest under Chapter 117 [Section 113.056] or Subchapter F, Chapter 113, Property Code. [HB 2240]

Sec. 814. SPECIAL PROVISIONS PERTAINING TO LIVESTOCK. (a) When the guardian of an estate has in the guardian's possession any livestock that the guardian deems necessary or to the advantage of the estate to sell, the guardian may, in addition to any other method provided by law for the sale of personal property, obtain authority from the court in which the estate is pending to sell the livestock through a bonded livestock commission merchant or a bonded livestock auction commission merchant.

(b) On written and sworn application by the guardian or by any person interested in the estate that describes the livestock sought to be sold and that sets out the reasons why it is deemed necessary or to the advantage of the estate that the application be granted, the court may authorize the sale. The court shall consider the application and may hear evidence for or against the application, with or without notice, as the facts warrant.

(c) If the application is granted, the court shall enter its order to that effect and shall authorize delivery of the livestock to any bonded livestock commission merchant or bonded livestock auction commission merchant for sale in the regular course of business. The commission merchant shall be paid the merchant's [his] usual and customary charges, not to exceed five [three] percent of the sale price, for the sale of the livestock. A report of the sale, supported by a verified copy of the merchant's account of sale, shall be made promptly by the guardian to the court, but no order of confirmation by the court is required to pass title to the purchaser of the livestock. [HB 1470]

Sec. 854. GUARDIAN REQUIRED TO KEEP ESTATE INVESTED UNDER CERTAIN CIRCUMSTANCES. (a) The guardian of the estate is not required to invest funds that are immediately necessary for the education, support, and maintenance of the ward or others the ward supports, if any, as provided by this chapter. The guardian of the estate shall invest any other funds and assets available for investment unless the court orders otherwise under this subpart.

(b) The court may, on its own motion or on written request of a person interested in the guardianship, cite the guardian to appear and show cause why the estate is not invested or not properly invested. At any time after giving notice to all parties, the court may conduct a hearing to protect the estate, except that the court may not hold a final hearing on whether the estate is properly invested until the 31st day after the date the guardian was originally cited to appear under this subsection. On the hearing of the court's motion or a request made under this section, the court shall render an order the court considers to be in the best interests of the ward.

(c) The court may appoint a guardian ad litem for the limited purpose of representing the ward's best interests with respect to the investment of the ward's property at a hearing under this section. [HB 1470]

Sec. 855. STANDARD FOR MANAGEMENT AND INVESTMENTS [WITHOUT COURT ORDER]. (a) In acquiring, investing, reinvesting, exchanging, retaining, selling, supervising, and managing a ward's estate, a guardian of the estate shall exercise the judgment and care under the circumstances then prevailing that persons of ordinary prudence, discretion, and intelligence exercise in the management of their own affairs, considering the probable income from as well as the probable increase in value and the safety of their capital. The guardian shall also consider all other relevant factors, including:

(1) the anticipated costs of supporting the ward;

(2) the ward's age, education, current income, ability to earn additional income, net worth, and liabilities;

(3) the nature of the ward's estate; and

(4) any other resources reasonably available to the ward [The guardian of the estate may retain, without regard to diversification of investments and without liability for any depreciation or loss resulting from the retention, any property received into a guardianship estate at its inception or added to the estate by gift, devise, or inheritance or by mutation or increase. A guardian of the estate is not relieved from the duty to take care of and manage the estate as a person of ordinary prudence, discretion, and intelligence would exercise in the management of the person's own affairs]. [HB 1470]

(a-1) In determining whether a guardian has exercised the standard of investment required by this section with respect to an investment decision, the court shall, absent fraud or gross negligence, take into consideration the investment of all the assets of the estate over which the guardian has management or control, rather than taking into consideration the prudence of only a single investment made by the guardian. [HB 1470]

(b) A guardian of the estate is considered to have exercised the standard required by this section with respect to investing the ward's estate if the guardian invests in the following [If the guardian of the estate has on hand money that belongs to the ward that exceeds that amount of money that may be necessary for the education and maintenance of the ward, the guardian shall invest the money as follows]:

(1) [in] bonds or other obligations of the United States;

(2) [in] tax-supported bonds of this state;

(3) except as limited by Subsections (c) and (d) of this section, [in] tax-supported bonds of a county, district, political subdivision, or incorporated city or town in this state;

(4) [in] shares or share accounts of a state savings and loan association or savings bank with its main office or a branch office in this state if the payment of the shares or share accounts is insured by the Federal Deposit Insurance Corporation;

(5) [in] the shares or share accounts of a federal savings and loan association or savings bank with its main office or a branch office in this state if the payment of the shares or share accounts is insured by the Federal Deposit Insurance Corporation;

(6) [in] collateral bonds of companies incorporated under the laws of this state, having a paid-in capital of $1,000,000 or more, when the bonds are a direct obligation of the company that issues the bonds and are specifically secured by first mortgage real estate notes or other securities pledged with a trustee; or

(7) [in] interest-bearing time deposits that may be withdrawn on or before one year after demand in a bank that does business in this state where the payment of the time deposits is insured by the Federal Deposit Insurance Corporation. [HB 1470]

(c) The bonds of a county, district, or subdivision may be purchased only if the net funded debt of the county, district, or subdivision that issues the bonds does not exceed 10 percent of the assessed value of taxable property in the county, district, or subdivision. [unchanged in 2003]

(d) The bonds of a city or town may be purchased only if the net funded debt of the city or town does not exceed 10 percent of the assessed value of taxable property in the city or town less that part of the debt incurred for acquisition or improvement of revenue-producing utilities, the revenues of which are not pledged to support other obligations of the city or town. [unchanged in 2003]

(e) The limitations in Subsections (c) and (d) of this section do not apply to bonds issued for road purposes in this state under Section 52, Article III, of the Texas Constitution that are supported by a tax unlimited as to rate or amount. [unchanged in 2003]

(f) In this section, "net funded debt" means the total funded debt less sinking funds on hand. [unchanged in 2003]

(g) The court may modify or eliminate the guardian's duty to keep the estate invested or the standard required by this section with regard to investments of estate assets on a showing by clear and convincing evidence that the modification or elimination is in the best interests of the ward and the ward's estate. [HB 1470]

Sec. 855A. RETENTION OF ASSETS. (a) A guardian of the estate may retain without court approval until the first anniversary of the date of receipt any property received into the guardianship estate at its inception or added to the estate by gift, devise, inheritance, mutation, or increase, without regard to diversification of investments and without liability for any depreciation or loss resulting from the retention. The guardian shall care for and manage the retained assets as a person of ordinary prudence, discretion, and intelligence would in caring for and managing the person's own affairs.

(b) On application and a hearing, the court may render an order authorizing the guardian to continue retaining the property after the period prescribed by Subsection (a) of this section if the retention is an element of the guardian's investment plan as provided by this subpart. [HB 1470]

Sec. 855B. PROCEDURE FOR MAKING INVESTMENTS OR RETAINING ESTATE ASSETS. (a) Not later than the 180th day after the date on which the guardian of the estate qualified as guardian or another date specified by the court, the guardian shall file a written application with the court for an order:

(1) authorizing the guardian to:

(A) develop and implement an investment plan for estate assets;

(B) declare that one or more estate assets must be retained, despite being underproductive with respect to income or overall return; or

(C) loan estate funds, invest in real estate or make other investments, or purchase a life, term, or endowment insurance policy or an annuity contract; or

(2) modifying or eliminating the guardian's duty to invest the estate.

(b) On hearing the application under this section and on a finding by the preponderance of the evidence that the action requested in the application is in the best interests of the ward and the ward's estate, the court shall render an order granting the authority requested in the application or an order modifying or eliminating the guardian's duty to keep the estate invested. The order must state in reasonably specific terms:

(1) the nature of the investment, investment plan, or other action requested in the application and authorized by the court;

(2) when an investment must be reviewed and reconsidered by the guardian; and

(3) whether the guardian must report the guardian's review and recommendations to the court.

(c) The fact that an account or other asset is the subject of a specific or general gift under a ward's will, if any, or that a ward has funds, securities, or other property held with a right of survivorship does not prevent:

(1) a guardian of the estate from taking possession and control of the asset or closing the account; or

(2) the court from authorizing an action or modifying or eliminating a duty with respect to the possession, control, or investment of the account or other asset.

(d) The procedure prescribed by this section does not apply if a different procedure is prescribed for an investment or sale by a guardian. A guardian is not required to follow the procedure prescribed by this section with respect to an investment or sale that is specifically authorized by other law. [HB 1470]

[Note the possible conflict in Section 856 between HB 1470 and HB 2240]

Sec. 856. [repealed] [HB 1470]

Sec. 856. OTHER INVESTMENTS. (a) If a guardian of an estate deems it is in the best interests of the ward the guardian is appointed to represent to invest on behalf of the ward in the Texas tomorrow constitutional trust fund [Tomorrow Fund] established by Subchapter F, Chapter 54, Education Code, or to invest in or sell any property or security in which a trustee is authorized to invest by either Chapter 117 [Section 113.056] or Subchapter F, Chapter 113, of the Texas Trust Code (Subtitle B, Title 9, Property Code), and the investment or sale is not expressly permitted by other sections of this chapter, the guardian may file a written application in the court in which the guardianship is pending that asks for an order authorizing the guardian to make the desired investment or sale and states the reason why the guardian is of the opinion that the investment or sale would be beneficial to the ward. A citation or notice is not necessary under this subsection unless ordered by the court. [HB 2240]

Sec. 857. INVESTMENT IN, OR CONTINUED INVESTMENT IN, LIFE INSURANCE OR ANNUITIES. (a) In this section, "life insurance company" means a stock or mutual legal reserve life insurance company that maintains the full legal reserves required under the laws of this state and that is licensed by the State Board of Insurance to transact the business of life insurance in this state. [HB 1470]

(b) The guardian of the estate may invest in life, term, or endowment insurance policies, or in annuity contracts, or both, issued by a life insurance company or administered by the Veterans Administration, subject to conditions and limitations in this section. [unchanged in 2003]

(c) The guardian shall first apply to the court for an order that authorizes the guardian to make the investment. The application filed under this subsection must include a report that shows:

(1) in detail the financial condition of the estate at the time the application is made;

(2) the name and address of the life insurance company from which the policy or annuity contract is to be purchased and that the company is licensed by the State Board of Insurance to transact that business in this state on the date the application is filed, or that the policy or contract is administered by the Veterans Administration;

(3) a statement of the face amount and plan of the policy of insurance sought to be purchased and of the amount, frequency, and duration of the annuity payments to be provided by the annuity contract sought to be purchased;

(4) a statement of the amount, frequency, and duration of the premiums required by the policy or annuity contract; and

(5) a statement of the cash value of the policy or annuity contract at its anniversary nearest the 21st birthday of the ward, assuming that all premiums to the anniversary are paid and that there is no indebtedness against the policy or contract incurred in accordance with its terms. [unchanged in 2003]

(d) An insurance policy must be issued on the life of the ward, or the father, mother, spouse, child, brother, sister, grandfather, or grandmother of the ward or a person in whose life the ward may have an insurable interest. [unchanged in 2003]

(e) Only the ward, the ward's estate, or the father, mother, spouse, child, brother, sister, grandfather, or grandmother of the ward may be a beneficiary of the insurance policy and of the death benefit of the annuity contract, and the ward must be the annuitant in the annuity contract. [unchanged in 2003]

(f) The control of the policy or the annuity contract and of the incidents of ownership in the policy or annuity contract is vested in the guardian during the life and disability of the ward. [unchanged in 2003]

(g) The policy or annuity contract may not be amended or changed during the life and disability of the ward except on application to and order of the court. [unchanged in 2003]

(h) If a life, term, or endowment insurance policy or a contract of annuity is owned by the ward when a proceeding for the appointment of a guardian is begun, and it is made to appear that the company issuing the policy or contract of annuity is a life insurance company as defined by this section or the policy or contract is administered by the Veterans Administration, the policy or contract may be continued in full force and effect. All future premiums may be paid out of surplus funds of the ward's estate. The guardian shall apply to the court for an order to continue the policy or contract, or both, according to the existing terms of the policy or contract or to modify the policy or contract to fit any new developments affecting the welfare of the ward. Before any application filed under this subsection is granted, the guardian shall file a report in the court that shows in detail the financial condition of the ward's estate at the time the application is filed. [unchanged in 2003]

(i) The court, if satisfied by the application and the evidence adduced at the hearing that it is in the interests of the ward to grant the application, shall enter an order granting the application. [unchanged in 2003]

(j) A right, benefit, or interest that accrues under an insurance or annuity contract that comes under the provisions of this section shall become the exclusive property of the ward when the ward's disability is terminated. [unchanged in 2003]

Sec. 858. LOANS AND SECURITY FOR LOANS. (a) If, at any time, the guardian of the estate has on hand money belonging to the ward in an amount that provides a return that is more than is [beyond what may be] necessary for the education, support, and maintenance of the ward and others the ward supports, if applicable, the guardian may lend the money for a reasonable [the highest] rate of interest [that can be obtained for the money]. The guardian shall take the note of the borrower for the money that is loaned, secured by a mortgage with a power of sale on unencumbered real estate located in this state worth at least twice the amount of the note, or by collateral notes secured by vendor's lien notes, as collateral, or the guardian may purchase vendor's lien notes if at least one-half has been paid in cash or its equivalent on the land for which the notes were given.

(b) A guardian of the estate is considered to have obtained a reasonable rate of interest for a loan for purposes of Subsection (a) of this section if the rate of interest is at least equal to 120 percent of the applicable short-term, midterm, or long-term interest rate under Section 7520, Internal Revenue Code of 1986, as amended, for the month during which the loan was made.

(c) Except as provided by this subsection, a guardian of the estate who loans estate money with the court's approval on security approved by the court is not personally liable if the borrower is unable to repay the money and the security fails. If the guardian committed fraud or was negligent in making or managing the loan, including in collecting on the loan, the guardian and the guardian's surety are liable for the loss sustained by the guardianship estate as a result of the fraud or negligence.

(d) Except as provided by Subsection (e) of this section, a guardian of the estate who lends estate money may not pay or transfer any money to consummate the loan until the guardian:

(1) submits to an attorney for examination all bonds, notes, mortgages, abstracts, and other documents relating to the loan; and

(2) receives a written opinion from the attorney stating that the documents under Subdivision (1) of this subsection are regular and that the title to relevant bonds, notes, or real estate is clear.

(e) A guardian of the estate may obtain a mortgagee's title insurance policy on any real estate loan in lieu of an abstract and attorney's opinion under Subsection (d) of this section.

(f) The borrower shall pay attorney's fees for any legal services required by this section.

(g) Not later than the 30th day after the date the guardian of the estate loans money from the estate, the guardian shall file with the court a written report, accompanied by an affidavit, stating fully the facts related to the loan. This subsection does not apply to a loan made in accordance with a court order.

(h) This section does not apply to an investment in a debenture, bond, or other publicly traded debt security. [HB 1470]

Sec. 859 [repealed] [HB 1470]

Sec. 860. GUARDIAN'S INVESTMENTS IN REAL ESTATE. (a) The [When the] guardian of the estate may invest estate assets in real estate if:

(1) the guardian believes that the investment is in the best interests of the ward;

(2) there are on hand sufficient additional assets to provide a return sufficient to provide for:

(A) the education, support, and maintenance of the ward and others the ward supports, if applicable; and

(B) the maintenance, insurance, and taxes on the real estate in which the guardian wishes to invest;

(3) the guardian files [of a ward thinks it is best for the ward who has a surplus of money on hand to invest the money in real estate, the guardian shall file] a written application with [in] the court [in which the guardianship is pending] requesting a court order authorizing the guardian to make the desired investment and stating the reasons why the guardian is of the opinion that the investment would be for the benefit of the ward; and

(4) the court renders an order authorizing the investment as provided by this section [HB 1470]

(b) When an application is filed by the guardian under this section, the judge's attention shall be called to the application, and the judge shall make investigation as necessary to obtain all the facts concerning the investment. The judge may not render an opinion or make an order on the application until 10 days from the date of the filing of the application have expired. On the hearing of the application, if the court is satisfied that the investment benefits the ward, the court shall issue an order that authorizes the guardian to make the investment. The order shall specify the investment to be made and contain other directions the court thinks are advisable. [unchanged in 2003]

(c) When a contract is made for the investment of money in real estate under court order, the guardian shall report the contract in writing to the courts. The court shall inquire fully into the contract. If satisfied that the investment will benefit the estate of the ward and that the title of the real estate is valid and unencumbered, the court may approve the contract and authorize the guardian to pay over the money in performance of the contract. The guardian may not pay any money on the contract until the contract is approved by court order to that effect. [unchanged in 2003]

(d) When the money of the ward has been invested in real estate, the title to the real estate shall be made to the ward. The guardian shall inventory, appraise, manage, and account for the real estate as other real estate of the ward. [unchanged in 2003]

Sec. 863. LIABILITY OF GUARDIAN AND GUARDIAN'S SURETY [FOR FAILURE TO LEND OR INVEST FUNDS]. (a) In addition to any other remedy authorized by law, if [If] the guardian of the estate fails [neglects] to invest or lend estate assets in the manner provided by this subpart, the guardian and the guardian's surety are [surplus money on hand at interest when the guardian can do so by using reasonable diligence, the guardian shall be] liable for the principal and the greater of:

(1) [for] the highest legal rate of interest on the principal during the period the guardian failed to invest or lend the assets; or

(2) the overall return that would have been made on the principal if the principal were invested in the manner provided by this subpart.

(b) In addition to the liability under Subsection (a) of this section, the guardian and the guardian's surety are liable for attorney's fees, litigation expenses, and costs related to a proceeding brought to enforce this section [for the time the guardian neglects to invest or lend the surplus money. The amount of principal and interest on the principal may be recovered in a court of competent jurisdiction]. [HB 1470]

Sec. 864. [repealed] [HB 1470]

Sec. 868. TERMS OF MANAGEMENT TRUST. (a) Except as provided by Subsection (d) of this section, a trust created under Section 867 of this code must provide that:

(1) the ward is the sole beneficiary of the trust;

(2) the trustee may disburse an amount of the trust's principal or income as the trustee determines is necessary to expend for the health, education, support, or maintenance of the ward;

(3) the income of the trust that the trustee does not disburse under Subdivision (2) of this subsection must be added to the principal of the trust;

(4) if the trustee is a corporate fiduciary, the trustee serves without giving a bond; and

(5) the trustee, on annual application to the court and subject to the court's approval, is entitled to receive reasonable compensation for services that the trustee provided to the ward as the ward's trustee that is:

(A) to be paid from the trust's income, principal, or both; and

(B) determined in the same manner as compensation of a guardian of an estate under Section 665 of this code. [unchanged in 2003]

(b) The trust may provide that a trustee make a distribution, payment, use, or application of trust funds for the health, education, support, or maintenance of the ward or of another person whom the ward is legally obligated to support, as necessary and without the intervention of a guardian or other representative of the ward, to:

(1) the ward's guardian;

(2) a person who has physical custody of the ward or another person whom the ward is legally obligated to support; or

(3) a person providing a good or service to the ward or another person whom the ward is legally obligated to support. [unchanged in 2003]

(c) A provision in a trust created under Section 867 that relieves a trustee from a duty, responsibility, or liability imposed by this subpart or Subtitle B, Title 9, Property Code, is enforceable only if:

(1) the provision is limited to specific facts and circumstances unique to the property of that trust and is not applicable generally to the trust; and

(2) the court creating or modifying the trust makes a specific finding that there is clear and convincing evidence that the inclusion of the provision is in the best interests of the beneficiary of the trust. [HB 3503]

(d) When creating or modifying a trust, the court may omit or modify terms required by Subsection (a)(1) or (2) of this section only if the court determines that the omission or modification:

(1) is necessary and appropriate for the ward to be eligible to receive public benefits or assistance under a state or federal program that is not otherwise available to the ward; and

(2) is in the ward's best interests. [unchanged in 2003]

(e) The court may include additional provisions in a trust created or modified under this section if the court determines an addition does not conflict with Subsection (a) and, if appropriate, Subsection (d) of this section. [unchanged in 2003]

(f) If the trustee determines that it is in the best interest of the ward, the trustee may invest funds of the trust in the Texas tomorrow fund established by Subchapter F, Chapter 54, Education Code. [unchanged in 2003]

Sec. 868A. DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION OF TRUST. On or at any time after the creation of a trust under this subpart, the court may discharge the guardian of the ward's estate [only] if [a guardian of the ward's person remains and] the court determines that the discharge is in the ward's best interests. [HB 1470]

Sec. 875. TEMPORARY GUARDIAN----PROCEDURE. (a) If a court is presented with substantial evidence that a person may be a minor or other incapacitated person, and the court has probable cause to believe that the person or person's estate, or both, requires the immediate appointment of a guardian, the court shall appoint a temporary guardian with limited powers as the circumstances of the case require. [unchanged in 2003]

(b) [A person for whom a temporary guardian has been appointed may not be presumed to be incapacitated.] The person retains all rights and powers that are not specifically granted to the person's temporary guardian by court order. [HB 2189]

(c) A sworn, written application for the appointment of a temporary guardian shall [may] be filed before the court appoints a temporary guardian. [The application must be filed not later than the end of the next business day of the court after the date of appointment of the temporary guardian.] The application must state:

(1) the name and address of the person who is the subject of the guardianship proceeding;

(2) the danger to the person or property alleged to be imminent;

(3) the type of appointment and the particular protection and assistance being requested;

(4) the facts and reasons supporting the allegations and requests;

(5) the name, address, and qualification of the proposed temporary guardian;

(6) the name, address, and interest of the applicant; and

(7) if applicable, that the proposed temporary guardian is a private professional guardian who has complied with the requirements of Section 697 of this code. [HB 2189]

(d) On [At the earliest of] the filing of an application for temporary guardianship [or the appointment of a temporary guardian], the court shall appoint an attorney to represent the proposed ward in all guardianship proceedings in which independent counsel has not been retained by or on behalf of the proposed ward. [HB 2189]

(e) On the filing of an application for temporary guardianship, the clerk shall issue notice that shall be served on the respondent, the respondent's appointed attorney, and the proposed temporary guardian named in the application, if that person is not the applicant. The notice must describe the rights of the parties and the date, time, place, purpose, and possible consequences of a hearing on the application. A copy of the application [and, if applicable, a copy of the order appointing the temporary guardian] must be attached to the notice. [HB 2189]

(f)

(1) A hearing shall be held not later than the 10th day after the date of the filing of the application for temporary guardianship unless the hearing date is postponed [extended] as provided by Subdivision (2) of this subsection. At a hearing under this section, the respondent has the right to:

(A) receive prior notice;

(B) have representation by counsel;

(C) be present;

(D) present evidence and confront and cross-examine witnesses; and

(E) a closed hearing if requested by the respondent or the respondent's attorney.

(2) The [Every temporary guardianship granted before a hearing on the application required by Subdivision (1) of this subsection expires on its own terms at the conclusion of the hearing unless the] respondent or the respondent's attorney may consent to postpone the hearing on the application for temporary guardianship for a period [consents that the order appointing the temporary guardian may be extended for a longer period] not to exceed 30 [60] days after the date of the filing of the application [for temporary guardianship].

(3) Every application for temporary guardianship [granted before a hearing on the application required by Subdivision (1) of this subsection shall be set for hearing at the earliest possible date and] takes precedence over all matters except older matters of the same character.

(4) Immediately after an application for [Every] temporary guardianship is filed, the court shall issue [granted before a hearing on the application required by Subdivision (1) of this subsection must include] an order that sets a certain date for hearing on the application for temporary guardianship.

(5) On one day's notice to the party who filed the application for [obtained a] temporary guardianship [before a hearing on the application required by Subdivision (1) of this subsection], the respondent or the respondent's attorney may appear and move for the dismissal [dissolution or modification] of the application for temporary guardianship. If a motion is made for dismissal [dissolution or modification] of the application for temporary guardianship, the court shall hear and determine the motion as expeditiously as the ends of justice require.

(6) If the applicant is not the proposed temporary guardian, a temporary guardianship may not be granted before a hearing on the application required by Subdivision (1) of this subsection unless the proposed temporary guardian appears in court. [HB 2189]

(g) If at the conclusion of the hearing required by Subsection (f)(1) of this section the court determines that the applicant has established that there is substantial evidence that the person is a minor or other incapacitated person, that there is imminent danger that the physical health or safety of the respondent will be seriously impaired, or that the respondent's estate will be seriously damaged or dissipated unless immediate action is taken, the court shall appoint a temporary guardian by written order. The court shall assign to the temporary guardian only those powers and duties that are necessary to protect the respondent against the imminent danger shown. The court shall set bond according to Subpart B, Part 3, of this chapter. The reasons for the temporary guardianship and the powers and duties of the temporary guardian must be described in the order of appointment. [HB 2189]

(h) Except as provided by Subsection (k) of this section, a temporary guardianship may not remain in effect for more than 60 days. [unchanged in 2003]

(i) If the court appoints a temporary guardian after the hearing required by Subsection (f)(1) of this section, all court costs, including attorney's fees, may be assessed as provided in Section 665A, 665B, or 669 of this code. [unchanged in 2003]

(j) The court may not customarily or ordinarily appoint the Department of Protective and Regulatory Services as a temporary guardian under this section. The appointment of the department as a temporary guardian under this section should be made only as a last resort. [unchanged in 2003]

(k) If an application for a temporary guardianship, for the conversion of a temporary guardianship to a permanent guardianship, or for a permanent guardianship is challenged or contested, the court, on the court's own motion or on the motion of any interested party, may appoint a new temporary guardian or grant a temporary restraining order under Rule 680, Texas Rules of Civil Procedure, or both, without issuing additional citation if the court finds that the appointment or the issuance of the order is necessary to protect the proposed ward or the proposed ward's estate. [HB 2189]

(l) A temporary guardian appointed under Subsection (k) of this section [this subsection] must qualify in the same form and manner required of a guardian under this code. The term of the temporary guardian expires at the conclusion of the hearing challenging or contesting the application or on the date a permanent guardian the court appoints for the proposed ward qualifies to serve as the ward's guardian. [HB 2189]

Sec 883. INCAPACITATED SPOUSE. (a) Except as provided by Subsection (c) of this section, when a husband or wife is judicially declared to be incapacitated:

(1) the other spouse, in the capacity of surviving partner of the marital partnership, acquires full power to manage, control, and dispose of the entire community estate as community administrator, including the part of the community estate that the incapacitated spouse legally has the power to manage in the absence of the incapacity, without an administration; and

(2) if the incapacitated spouse owns separate property, the court shall appoint the other spouse or another person or entity, in the order of precedence established under Section 677 of this code, as guardian of the estate to administer only the separate property of the incapacitated spouse. [unchanged in 2003]

(b) The spouse who is not incapacitated is presumed to be suitable and qualified to serve as community administrator. The qualification of a guardian of the estate of the separate property of an incapacitated spouse as required under Subsection (a) of this section does not deprive the competent spouse of the right to manage, control, and dispose of the entire community estate as provided in this chapter. [unchanged in 2003]

(c) If a spouse who is not incapacitated is removed as community administrator or if the court finds that the spouse who is not incapacitated would be disqualified to serve as guardian under Section 681 of this code or is not suitable to serve as community administrator for any other reason, the court:

(1) shall appoint a guardian of the estate for the incapacitated spouse if the court:

(A) has not appointed a guardian of the estate under Subsection (a)(2) of this section; or

(B) has appointed the spouse who is not incapacitated as guardian of the estate under Subsection (a)(2) of this section;

(2) after taking into consideration the financial circumstances of the spouses and any other relevant factors, may order the spouse who is not incapacitated to deliver to the guardian of the estate of the incapacitated spouse a portion, not to exceed one-half, of the community property that is subject to the spouses' joint management, control, and disposition under Section 3.102, Family Code; and

(3) shall authorize the guardian of the estate of the incapacitated spouse to administer:

(A) any separate property of the incapacitated spouse;

(B) any community property that is subject to the incapacitated spouse's sole management, control, and disposition under Section 3.102, Family Code;

(C) any community property delivered to the guardian of the estate under Subdivision (2) of this subsection; and

(D) any income earned on property described in this subsection. [unchanged in 2003]

(d) On a person's removal as community administrator or on qualification of a guardian of the estate of the person's incapacitated spouse under Subsection (c) of this section, as appropriate, a spouse who is not incapacitated shall continue to administer:

(1) the person's own separate property;

(2) any community property that is subject to the person's sole management, control, and disposition under Section 3.102, Family Code;

(3) any community property subject to the spouses' joint management, control, and disposition under Section 3.102, Family Code, unless the person is required to deliver a portion of that community property to the guardian of the estate of the person's incapacitated spouse under Subsection (c)(2) of this section, in which event, the person shall continue to administer only the portion of the community property remaining after delivery; and

(4) any income earned on property described in this subsection the person is authorized to administer. [unchanged in 2003]

(e) The duties and obligations between spouses, including the duty to support the other spouse, and the rights of any creditor of either spouse are not affected by the manner in which community property is administered under this section. [unchanged in 2003]

(f) This section does not partition community property between an incapacitated spouse and a spouse who is not incapacitated. [HB 1470]

(g) If the court renders an order directing the guardian of the estate of the incapacitated spouse to administer certain community property as provided by Subsection (c) of this section, the community property administered by the guardian is considered the incapacitated spouse's community property, subject to the incapacitated spouse's sole management, control, and disposition under Section 3.102, Family Code. If the court renders an order directing the spouse who is not incapacitated to administer certain community property as provided by Subsection (d) of this section, the community property administered by the spouse who is not incapacitated is considered that spouse's community property, subject to that spouse's sole management, control, and disposition under Section 3.102, Family Code. [HB 1470]

(h) An order described by Subsection (g) of this section does not affect the enforceability of a creditor's claim existing on the date the court renders the order. [HB 1470]

 

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