Ten Things to Change Now
By Glenn M. Karisch
Most changes made by the 80th Texas Legislature affecting probate, guardianship and trust law became effective September 1, 2007. Here are ten things that lawyers who practice in this area should do now to comply with these changes. For a more thorough explanation of the changes, see my 2007 Texas Legislative Update.
- Include identifying numbers in probate and guardianship applications that are not filed in statutory probate court. As crazy as it sounds in this era of hightened privacy concerns, SB 699 requires the first pleading filed by a party to any civil action filed after September 1, 2007, to include the last three digits of the party's social security number and the last three digits of the party's driver's license number. With the support of the Texas Academy of Probate and Trust Lawyers, Rep. Will Hartnett of Dallas was able to amend this bill at the last minute to make actions in statutory probate courts exempt from the requirements of this bill. Are probate actions "civil actions" that are subject to the bill? There's no reason to think otherwise. So, until a court rules otherwise, if you are filing an application to probate a will, application for appointment of a guardian or other initial pleading in a non-statutory probate court after September 1, 2007, your client must include the last three digits of his or her social security number and driver's license number in the pleading. This change was requested by title companies, who want an easy way to distinguish between persons with the same or similar names in searching real property records for abstracts of title. Perhaps local county court judges and local statutory county court judges can adopt local rules that the new requirement does not apply to probate matters. After all, core probate and guardianship proceedings rarely end in an abstract of judgment.
- Independent executors must notify all beneficiaries that the will has been probated and prove that notice was given by filing an affidavit. For every person who dies on or after September 1, 2007, the personal representative appointed after a will is probated must notify all beneficiaries named in the will within 60 days of the date the will is probated. The notice must include a copy of the will and the order admitting it to probate. There are special rules for trusts, minors and incapacitated persons. Waivers are permitted. Personal representatives prove that they complied with the new requirements of Section 128A by filing an affidavit within 90 days of probate. See my 2007 Texas Legislative Update for a detailed explanation of this change. Also, see my forms for the Notice to Beneficiaries, Waiver of Notice, Receipt and Waiver of Notice, and Affidavit of Compliance Under Section 128A.
- Better check the statute before doing the next 142 trust. Substantial changes to Property Code Section 142.005 became effective September 1, 2007. The first page of every 142 Trust must include a statutory warning. Persons who are disabled for purposes of receiving federal benefits but who are not incapacitated for purposes of Property Code Section 142.007 or for purposes of guardianships now may file for creation of a 142 Trust themselves (without the aid of a next friend or guardian ad litem). Several changes enhance the use of 142 Trusts as special needs trusts. Chances are, you need to make several changes to your 142 Trust form.
- Guardianship applications must state that the proposed ward's right to vote and drive may be affected. In order to better protect the civil and constitutional rights of incapacitated persons, the application for a guardianship that may result in the loss of the proposed ward's right to vote or drive a car must disclose this fact. Also, the physician's certificate and order requirements were changed to make the decision of the court regarding the ward's voting rights and driving rights more explicit. Be sure your guardianship application and order comply with these changes, and be sure the physician's certificate includes explicit statements about the proposed ward's ability to vote and drive.
- Don't give the title company the whole trust agreement; give it a certificate of trust. Texas finally has a statute that permits a trustee to provide third parties with a certificate describing the trustee's powers rather than providing the entire trust instrument. Trust Code Section 114.086 states the requirements for a certificate of trust. The certificate permits the third party to ascertain that the trustee has the authority to complete the transaction in question without requiring a disclosure of all of the trust terms. Since a trustee has a duty to keep private matters regarding the trust and its beneficiaries, a cautious trustee always will opt for the certificate if given a choice.
- Your boilerplate provision authorizing a trustee to self-deal now permits corporate trustees to self-deal. Since Texas has had statutes governing trusts, settlors have not been permitted to waive the statutory prohibitions against self-dealing for corporate trustees. Uncle Benny or Aunt Sue could be authorized to self-deal, but not Big State Bank and Trust. Now settlors are permitted to waive self-dealing rules for corporate trustees as well as individual trustees. This will come in handy in some cases (for example, to authorize a corporate trustee to utilize an affiliated hedge fund as a trust investment), but be aware that provisions buried in your trust instruments which were intended to authorize family members serving as trustee to self-deal now may authorize corporate trustees to do so as well, unless the wording limits this effect. And why exactly did you have a self-dealing authorization in your boilerplate provision in the first place?
- Texas statutes now recognize the existence of copiers. In 1955, when the Texas Probate Code was enacted, copy machines were rare. (I remember my dad had a weird kind of machine that made sort of a negative of a document. That was in the early 1960s, though.) That is probably why Section 85 required the testimony of someone who had read a lost will or heard it read to prove up the contents of a lost will. Now, since virtually every lawyer keeps a photographic copy of each signed will in his or her files, maybe looking at the signed copy is a slightly more reliable way to prove the contents of the lost will. Section 85 was amended in 2007 to permit this method of proving up the will. So, in your next lost will case, change your pleadings and consider this new-fangled method of proving what a document says.
- Prospective guardians must provide criminal background checks, unless. . . . Section 698 of the Probate Code was amended to require the clerk to obtain a criminal background check on each person proposed to serve as a guardian or temporary guardian. Before you call the DPS to get your client's record, however, note that the bill was amended late in the session so that it does not apply to family members or attorneys. If it doesn't apply to family members and it doesn't apply to lawyers, to whom does it apply? Non-lawyer employees of private professional guardians and providers of community guardianship services will be subject to the requirement, as well as the fairly rare case in which a non-family member and non-attorney is proposed as a guardian.
- Deja vu, Part 1: "No plan" is the default investment plan in guardianships again. For the longest time, guardians of the estate had to obtain court approval of an investment plan only if they were not going to follow the statutorily-approved guardianship investments. Then, in 2003 Section 855B of the Texas Probate Code was amended to require guardians of the estate to file an investment plan within 180 days of qualifying as guardian. Now, that section is amended to provide that the guardian must file an investment plan only if he or she plans to deviate from the statutorily-approved guardianship investments. Hey, isn't this where I got on?
- Deja vu, Part 2: Back to the common law duty of trustees to keep beneficiaries informed. Prior to 2005, the Texas Trust Code contained no provision imposing an affirmative duty on trustees to keep beneficiaries informed about the trust. There was a requirement to respond to an accounting demand by a beneficiary, and the Supreme Court had found a duty to exist in the common law in some cases, but the Trust Code was missing this requirement. Then, in 2005, Section 113.060 was added to the Trust Code, imposing such a duty. After much hue and cry, and after attempts to reach an agreement on amending its terms, Section 113.060 was repealed effective June 17, 2007. However, the bill repealing Section 113.060 says that the common law duty prior to 2005's enactment of Section 113.060 continues to exist. I believe this is where I get off. . . .