Administration
Guardianship proceedings are the subject of intense court supervision and control. Almost every action first requires the guardian’s attorney to seek the court’s permission. This includes expenditures, sales, purchases, and engaging counsel. Properly maintaining the court’s supervision over the guardianship requires the guardian to prepare and submit a large number of applications to keep the court informed about the guardianship and seek court approval of all actions. This chapter contains guidelines and practice comments for various administrative procedures that might arise during the guardianship’s existence. These guidelines are based on the authors’ experience practicing in the probate courts. Not all areas are covered directly by the Texas Estates Code, and many judges have their own local rules and procedures for guardianship cases in their courts. The guardian should consult other resources if this chapter does not address a specific need. Guardians should also always check with a court for its local rules and procedures in guardianship cases.
The guardian of the person must provide food, clothing, medical care, and shelter for the ward. Tex. Est. Code § 1151.051(c)(3). The guardian of the estate must take care of and manage the estate of the ward. Tex. Est. Code § 1151.151. A guardian will necessarily incur expenses in carrying out his duties. A guardian is not required to spend personal funds to provide for the ward, but he may not expend funds of the ward’s estate unless specifically authorized to do so by the Texas Estates Code or by prior court approval. See Tex. Est. Code §§ 1155.101–.103. With proper court approval the guardian of the estate may acquire goods or services and pay for these expenditures with estate funds. See Tex. Est. Code §§ 1101.151(b)(3), 1101.152(b)(3), 1156.001, 1156.051. If the guardian of the estate must expend estate funds without prior court approval, the Code provides procedures for the subsequent approval of these expenditures. See Tex. Est. Code § 1156.004.
Guardians incur routine expenses throughout the guardianship. A court can order a monthly allowance in the order appointing guardian, but courts more often consider a separate application filed after the guardian qualifies. The guardian of the estate should file an application showing projected monthly expenditures to be paid by the estate’s income and corpus for the education and maintenance of the ward and the ward’s property. The application must be filed within thirty days of qualification, if the court did not order a monthly allowance in the order appointing guardian, or by the date specified by the court, whichever is later. Tex. Est. Code § 1156.001. See forms 8-1 and 8-2 in this chapter for an application and order that can be adapted to meet most situations.
The application must list separately the amounts requested for education and maintenance of the ward and the amount requested for maintenance of the property. Tex. Est. Code § 1156.001(c). The application may provide that a certain amount of money be paid to the guardian of the person for the ward’s education and maintenance. Tex. Est. Code § 1156.003(b)(2).
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. Tex. Est. Code § 1156.002. An accounting for those expenditures is still required annually even if the court authorized the budget. Tex. Est. Code § 1156.003(d).
§ 8.3:1Expenditures for Ward’s Dependents
The guardian of the estate for a ward may also seek court authority for expenditure of funds for maintenance or education of the ward’s spouse and dependents. Tex. Est. Code § 1156.052. See forms 8-3 and 8-4 in this chapter for an application and order to expend funds. The applicant must mail notice of the application to all interested persons. See Tex. Est. Code § 1156.052(c); see also Tex. Est. Code § 1002.018 (defining interested persons). The application should include information regarding—
1.the circumstances of the ward, the ward’s spouse, and the ward’s dependents and their need for support;
2.the ability and duty of the ward’s spouse, as applicable, to support himself or herself and the ward’s dependents;
3.the size of the ward’s estate;
4.the beneficial interest the ward or the ward’s spouse or dependents, as applicable, has in any trusts; and
5.an existing estate plan, if the ward has one, including a trust or will, that provides a benefit to the ward’s spouse or dependents, as applicable.
See Tex. Est. Code § 1156.052.
See form 8-2 for an order establishing expenditures.
§ 8.3:2Expenditures for Minors
Parents have an obligation to support their minor children. Tex. Fam. Code § 151.001(a)(3); see Tex. Est. Code § 1156.051(a). If the parent cannot provide for the minor’s support, the guardian of the person is permitted to obtain court approval, based on clear and convincing evidence, to pay from the ward’s estate expenses related to the ward’s support only. See Tex. Est. Code § 1156.051.
Application for Expenditures on Behalf of Minor: A written application should include—
1.detailed information on both the annual income of the ward and the principal assets available to provide for his future support; and
2.detailed information about the financial condition of the ward’s parents, family income and expenses, and other children supported by the parents and any other information that will allow the court to understand the hardship on the family or the family’s inability to provide adequately for the ward.
See Tex. Est. Code § 1156.051(b).
Though not required by the Texas Estates Code, the guardian’s verification of the application or the inclusion of an affidavit of the parent stating the specifics of the ward’s need and the hardship that will exist may avoid a hearing and expedite approval of the application. See Tex. Est. Code § 1156.051(b). See form 8-5 in this chapter for an application.
Note that the guardian of the estate for the minor can make no expenditure for the ward’s parents or other siblings because the minor has no duty to support his parents or siblings.
Order: The court may enter an order authorizing the expense if it finds the expenditure is in the ward’s best interests. See Tex. Est. Code § 1156.004. The court may also appoint a guardian ad litem. See Tex. Est. Code § 1054.051. See form 8-6 for an order.
§ 8.4Payment of Additional Expenses
If someone has provided goods or services to the ward without prior court approval, the guardian of the estate should submit these expenses to the probate court for approval before making payment from the ward’s estate. Tex. Est. Code §§ 1155.101, 1155.103.
§ 8.4:1Application for Payment of Expenses
A written application for payment of expenses should be verified and include—
1.details of all expenses sought to be paid;
2.copies of any invoices, statements, or other documents containing information about and amounts of expenses; and
3.details concerning the ward’s needs or other justification for the specific expense item.
See Tex. Est. Code § 1155.103. See form 8-7 in this chapter for an application for authority to expend funds.
There is no requirement for a hearing on an application for payment of additional expenses. Once filed with the clerk, it can be presented to and acted on by the court. The court will enter an order authorizing the expense if it finds it is in the ward’s best interests. See form 8-8 in this chapter for an order.
§ 8.5Reimbursement of Expenditures Provided by Guardian of Estate
The Texas Estates Code permits reimbursement for necessary and reasonable expenses that the guardian of the estate has paid out of personal funds. See Tex. Est. Code § 1155.101.
§ 8.5:1Application for Reimbursement of Expenses Paid
A written application for reimbursement of expenditures should be verified and include—
1.details of all expenses for which reimbursement is sought;
2.copies of any invoices, statements, or other documents containing information about and amounts of expenses; and
3.details concerning the ward’s needs or justification for the specific expense item.
Practice Pointer: Because most expenses should be paid only by court order, if the guardian is seeking reimbursement, it may be helpful to explain why the guardian could not wait for court authorization before making the payment. See form 8-9 in this chapter for an application for reimbursement.
Unless the requested reimbursement is unusual or excessive, most courts do not require hearings on applications for reimbursement and will consider the applications as they are filed. And while a request for reimbursement of minor expenses may be incorporated into the annual account that the guardian of the estate has filed, it is better practice to file a separate application.
Section 1155.101 of the Texas Estates Code indicates to some extent what the guardian must include in a court’s order for reimbursement. The court will enter an order authorizing the expense if it finds the expenditure was reasonable and necessary. Tex. Est. Code § 1155.101. See form 8-10 in this chapter for an order.
§ 8.6Recovery of Attorney’s Fees
The fees of the attorney hired to represent the guardian of the estate are considered part of the costs of administration and thus are expenses for the operation of the guardianship. Tex. Est. Code §§ 1155.053, 1155.054, 1155.101, 1155.102, 1155.151. A guardian is entitled to be reimbursed from the ward’s estate for all necessary and reasonable expenses incurred in performing any duty as guardian, including payment of reasonable attorney’s fees. Tex. Est. Code § 1155.101. Thus, attorney’s fees incurred by the guardian in the day-to-day operations of the estate may be recovered.
The guardian must make a request to the court to pay or, if the guardian has paid personally, for any reimbursement of fees and expenses. The process most often used is to submit an application directly to the court for approval before the guardian makes payment. Some courts require the application to be supported by an affidavit of one or more attorneys; check local practice. For example, the Harris County courts post attorney’s fee guidelines on the county’s website. As with any expenditure that the court must approve, the application should contain specific, detailed information about the nature of the request. See forms 8-11 and 8-12 in this chapter for an application and attorney’s fee order.
For a discussion of fees paid by the guardian to a court appointee under Texas Estates Code sections 1054.001, 1155.151, and 1102.001, see section 6.8 in this manual.
§ 8.7Ratification of Expenditures for Maintenance and Education
The court may ratify expenditures made by the guardian of the estate from the corpus and income of the ward’s estate under certain circumstances without prior approval. The application should be filed as promptly as possible but no later than the filing of the annual account. If the expenditure is large, the guardian should apply as soon as possible without waiting until the end of the annual accounting period.
A written application for these expenditures should indicate that—
1.the expenditures were made when it was not convenient or possible to first secure court approval;
2.the proof is clear and convincing that the expenditures were reasonable and proper;
3.the court would have granted authority in advance to make the expenditure; and
4.the ward received the benefit of the expenditures.
If the expenditure is small or consists of many small expenditures, the guardian of the estate can submit the application as a part of the annual account rather than submit a separate application. See form 8-13 in this chapter for an application to ratify expenses and form 8-14 for a corresponding order; these should be used only if funds of the guardianship estate have been spent without prior court approval.
§ 8.8Investment Management Plans
The guardian of the estate, within 180 days of qualification or on a date specified by the court, has the duty to invest estate assets according to Texas Estates Code section 1161.003 or file a written application for an order that authorizes the guardian to develop and implement an investment management plan for estate assets and to invest in or sell securities under that plan. Tex. Est. Code § 1161.051(a). The plan should be very detailed and will allow the court to declare that one or more estate assets must be retained despite being underproductive with respect to income or overall return. Additionally, the court will determine if estate funds may be loaned or invested in real estate. The court may allow investments or the purchase of insurance or annuity contracts. The duty to invest the estate may also be modified or eliminated by application pursuant to this section. Tex. Est. Code § 1161.051(a)(2)(B). Although the Texas Estates Code requires the application to be made within 180 days of qualification, courts routinely consider such requests at any time during the guardianship. See Tex. Est. Code § 1161.051(a).
The court may approve the investment management plan without a hearing. Tex. Est. Code § 1161.051(b). However, because investment management plans will be specifically tailored to the particular estate, the court will usually benefit from a hearing to better understand the basis for the request.
A court may order the relief requested in the investment plan if the actions requested by the guardian of the estate are in the best interests of the ward. 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, including (if applicable) the authority to invest in or sell securities in accordance with the plan; (2) when an investment must be reviewed and reconsidered by a guardian; and (3) whether the guardian must report the guardian’s review and recommendations to the court. Tex. Est. Code § 1161.052(a), (b). Citation or notice is not necessary to invest in or sell securities under such a court-authorized investment plan. Tex. Est. Code § 1161.052(c).
If an account or other asset is the subject of a specific or general gift under a ward’s will or if a ward has funds, securities, or other property held with a right of survivorship, the guardian is not prevented from administering or changing the asset in any manner. Tex. Est. Code § 1161.053.
A proposed application for a management plan and the corresponding order are included as forms 8-43 and 8-44 in this chapter. As an investment plan is tailored to a specific estate, the forms should be revised as necessary to provide the information that will allow the court to properly consider the requested management plan. The forms are provided for illustrative purposes only and contain information that may not need to be included in every application.
[Sections 8.9 and 8.10 are reserved for expansion.]
The Texas Estates Code permits certain guardians of the person and all guardians of the estate to be compensated for acting as a guardian. See Tex. Est. Code ch. 1155.
§ 8.11:2Calculating Compensation for Guardian of Person
The court may authorize to the permanent or temporary guardian of a person compensation of no more than 5 percent of the gross income of the ward’s estate. Tex. Est. Code § 1155.002(a). When determining gross income, the court must consider the monthly income from all sources and whether the ward received assistance under the state Medicaid program. Tex. Est. Code § 1155.004. However, Social Security or veterans benefits may not be considered. Tex. Est. Code § 1155.001(1). Note that the court may deny compensation if it finds that the guardian has not adequately performed his duties or has been removed for cause. Tex. Est. Code § 1155.008.
§ 8.11:3Calculating Compensation for Guardian of Estate
Guardians and temporary guardians of a ward’s estate are entitled to reasonable compensation, and a fee of 5 percent of the gross income and 5 percent of all money paid out of the estate is considered reasonable. Tex. Est. Code § 1155.003. The court must find that the guardian of an estate has taken care of and managed the estate according to Texas Estates Code provisions. Tex. Est. Code § 1155.003. The guardian must give consideration to the method of characterizing income. Money loaned, invested, or paid over on settlement of the estate; Social Security and veterans benefits; and money paid for tax-motivated gifts do not constitute “gross income” or “money paid out” for purposes of calculating the guardian’s compensation. Tex. Est. Code §§ 1155.001, 1155.003(b). In addition, while the Estates Code permits the guardian to operate a farm, ranch, factory, or other business of the ward, no specific provision permits the guardian to receive compensation for providing these services. See Tex. Est. Code § 1151.155. Any interested person may petition the court to modify the guardian’s compensation if the amount calculated under section 1155.003 is unreasonably low. The court may also modify the compensation on its own motion. Tex. Est. Code § 1155.006(a). However, most courts are reluctant to grant a request for compensation above the statutory amount without notice, a hearing, and significant testimony. A court on its own motion or on that of an interested person can deny a guardian compensation in whole or in part. Tex. Est. Code § 1155.008. A denial of compensation should contain a finding that the guardian did not adequately perform the duties required or was removed for cause. Tex. Est. Code § 1155.008.
§ 8.11:4Calculating Compensation for Guardian of Person and Estate
Unless a guardian of an estate is permitted to receive additional compensation as described at section 8.11:3 above, the guardians of the person and estate may not jointly receive a fee that exceeds 5 percent of the gross income plus 5 percent of all money paid out of the estate. Tex. Est. Code § 1155.005. The method of characterizing income remains the same.
§ 8.11:5Application for Compensation
The court will consider an application for compensation for the guardian of the estate at the time the court approves an annual or final account. Tex. Est. Code § 1155.003(a). The Texas Estates Code makes no specific provision about when an application for compensation of the guardian of the person should be filed. See Tex. Est. Code § 1155.002(a). Some courts allow the application to be included with the annual account, and others require it to be a separate pleading. Either way, the court will consider a compensation application for the guardian of the estate after approval of the annual account or with a final account. Tex. Est. Code § 1155.003(a).
Contents of Application for Compensation: Because the accounting figures that the court approves will form the basis for the final calculation of compensation, the guardian must support the application with adequate details about both income and expenses and should always sign the application. The application need not be supported by an affidavit unless the guardian is requesting additional compensation exceeding the statutorily calculated amount. See Tex. Est. Code § 1155.006. See form 8-15 in this chapter for an application for compensation.
Compensation Hearing: The general calculation for the compensation is set as a matter of law. Therefore, there should be no reason for a hearing on the application. Most courts will require a hearing on applications if the guardian requests additional compensation.
Quarterly Payments: The court may also authorize compensation for the guardian in an estimated amount the court finds reasonable to be paid on a quarterly basis before the filing of the annual account. Tex. Est. Code § 1155.006(a)(2). Requests for interim fees are not generally granted except in rare circumstances.
If quarterly compensation is authorized, the court may later reduce or eliminate the guardian’s compensation if, after review of the annual or final accounting, the court finds the guardian (1) received compensation in excess of the amount permitted, (2) has not adequately performed the duties required of a guardian, or (3) has been removed for cause. Tex. Est. Code § 1155.007(a). If the court reduces or eliminates a guardian’s compensation, the guardian and the surety on the guardian’s bond are liable to the guardianship estate for any excess compensation received. Tex. Est. Code § 1155.007(b).
Compensation Order: The Code makes no provision about the contents of the order approving the guardian’s compensation payment. Note that a guardian is a court appointee, and the order must comply with the supreme court’s reporting requirements for appointees’ fees. The county clerk must report to the supreme court the court-ordered guardian’s compensation. This order also allows the court to keep track of estate expenditures for review in the next annual account. See form 8-16 for an order.
§ 8.12Payment of Attorney’s Fees to Attorney Serving as Guardian
If an attorney is serving as a guardian and is also providing legal services in connection with the guardianship, the attorney is not entitled to compensation for the guardianship services or payment of the attorney’s fees for the legal services unless the attorney files with the court a detailed description of the services performed that identifies which of the services provided were guardianship services and which were legal services. Tex. Est. Code § 1155.052(a). An attorney serving as guardian is not entitled to payment of attorney’s fees for guardianship services that are not legal services. Tex. Est. Code § 1155.052(b). Each court shall set the compensation to be paid to attorneys for guardian services. Tex. Est. Code § 1155.052(c). Many courts set a much lower hourly rate for attorneys serving as guardian than the hourly rate for legal services performed by that attorney in the same guardianship. The guardian’s time serving as an attorney should be segregated from his fiduciary time. Attorneys should check with the court for its local procedures in paying attorneys who are also serving as guardians.
[Sections 8.13 through 8.20 are reserved for expansion.]
§ 8.21Contract for Goods or Services
It is advisable to obtain prior court approval before entering into any contracts relating to goods or services furnished to the ward or his estate. Prior court approval is required when managing the ward’s property. See Tex. Est. Code §§ 1151.102, 1151.103.
A written application for approval to contract for goods and services should contain—
1.details about the nature of the services;
2.an indication of what funds will need to be used during the accounting year;
3.an explanation of the necessity for the expenditure; and
4.a copy of the proposed contract or details about the terms of any proposed contract.
The guardian should submit the application to the court for approval as soon as possible. Note that some courts prefer the application to be verified, but it is not required by statute. See form8-17 in this chapter for an application.
Unless the proposed contract covers something of an unusual nature or provides for a significant expense, the court does not usually require a hearing on the application.
The court order should approve the contract and the amount of funds to be spent during the accounting period. This order also allows the court to keep track of the estate’s expenditures for review in the next annual account. The contract usually should cover only a one-year period. See form 8-18 in this chapter for an order.
§ 8.22Contract to Employ Attorney
It is the obligation of the guardian of an estate to collect and recover property for the ward’s estate. Tex. Est. Code § 1151.105. The guardian is permitted to sue to recover personal property, debts, or damages. Tex. Est. Code § 1151.104. If it is necessary to employ an attorney to represent the guardian in such an action, the guardian must seek court approval of a contingency fee contract or arrangement in accordance with Tex. Est. Code § 1155.053. The court may authorize a contingency fee in excess of one-third of the recovery, but most will do so only under exceptional circumstances. Tex. Est. Code § 1155.053(b). The Texas Estates Code governs this process and the method of payment. See Tex. Est. Code § 1155.053(b).
§ 8.22:1Application to Employ Attorney
A written application for approval to employ an attorney should contain—
1.information about the need to hire counsel and the expertise of the proposed counsel, including—
a.the time and labor that will be required, the novelty and difficulty of the questions to be involved, and the skill that will be required to perform the legal services properly;
b.the fee customarily charged in the locality for similar legal services;
c.the value of property recovered or sought to be recovered by the guardian under this section;
d.the benefits to the estate that the attorney will be responsible for securing; and
e.the experience and ability of the attorney who will be performing the services;
2.a copy of the contingent fee contract; and
3.a statement about whether a lawsuit is anticipated and, if necessary, a request for court authorization to commence a suit.
Tex. Est. Code § 1155.053(c). If a contract is entered into or a conveyance made pursuant to a contract before the court approves the contract or conveyance, that contract or conveyance is void unless the court ratifies or reforms the contract or documents to the extent necessary to cause the contract or conveyance to meet the requirements of Texas Estates Code section 1155.053. Tex. Est. Code § 1155.053.
See form 8-19 in this chapter for an application to employ an attorney.
Attached to the application should be an order authorizing the guardian to execute the fee agreement, institute suit, and recover his fees. See form 8-20 in this chapter for an order.
[Sections 8.23 through 8.30 are reserved for expansion.]
§ 8.31Sale of Guardianship Real Property
All sales of guardianship property must be authorized by the court before title will pass out of the guardianship estate. The court may order the property sold for cash, for credit, at public auction, or by private sale, as it considers most advantageous to the estate, except when otherwise directed by the Texas Estates Code. Tex. Est. Code § 1158.001.
An application to sell real property may be made only—
1.if funds are needed to pay expenses of administration, allowances, and claims against the ward or the estate;
2.to pay the funeral and last illness expenses of a deceased ward;
3.to make up a deficiency if the estate’s income, sales of personal property, and the proceeds of previous sales are insufficient to pay for the education and maintenance of the ward or the debts of the estate;
4.to dispose of undivided interests in property owned by the estate if it is in the best interests of the estate to sell the interest;
5.to dispose of property that is nonproductive or underproductive; or
6.to conserve the estate by selling mineral interests or royalties on minerals in place.
The court may approve a sale of real property on terms that will be most beneficial to the estate. Tex. Est. Code § 1158.001. The concern of the court is to preserve and protect the ward and his estate. The guardian of the estate may reconvey a property acquired by the estate through foreclosure of a preexisting lien without compliance with the otherwise applicable credit-sales provisions. See Tex. Est. Code § 1158.352.
A public auction of real property must be conducted in the same basic manner as any public auction ordered by statute. The auction must be advertised by published notice in the county in which the estate is pending, made to the highest bidder, held at the courthouse door or other place authorized, and held on the first Tuesday of the month between 10:00 a.m. and 4:00 p.m. Tex. Est. Code §§ 1158.401–.403.
The court may permit an auction in a county in which the land is located if notice is provided in both the county in which the land is located and the county in which the estate is pending. Tex. Est. Code § 1158.403(c). Auctions not completed on the auction day advertised may be continued. Tex. Est. Code § 1158.404. If the highest bidder defaults, the property may be readvertised and auctioned again without a further court order; a defaulting bidder is liable for 10 percent of the amount of the bid and the amount of any deficiency in the price on the second auction. Tex. Est. Code § 1158.405.
A private sale must comply with the terms specified in the order authorizing the sale. No additional advertising, notice, or citation is required unless the court directs otherwise. Tex. Est. Code § 1158.451.
A sale of an easement or right-of-way may be made by a guardian of the estate with prior court approval. Tex. Est. Code §§ 1158.501, 1158.502; see also Tex. Est. Code § 1158.001. The procedure is the same as for a private sale of real property under the Texas Estates Code. Tex. Est. Code § 1158.502; see also Tex. Est. Code § 1158.451.
The guardian of the estate need not wait until a specific purchaser for property has been found. Because of the time required to complete the process, the guardian should begin obtaining court approval as soon as a need to sell property has been determined.
The application must include—
1.an adequate description of the real property to be sold (which should conform to the inventory description of the property);
2.an affidavit of the condition of the estate stating the assets of the estate, the claims and their amounts that have been or will be approved, and the property that will remain after the sale to satisfy any claims; and
3.specific facts that show the necessity or advisability of the sale.
See form 8-21 in this chapter for an application for sale of real property.
All applications for the sale of real property are to be heard by the court that receives the application for approval of the sale. Some courts require a formal hearing at which the attorney will present the application. Tex. Est. Code § 1158.255(b), (c). Others will merely review the application and, if it contains sufficient information, approve it by submission after the proper posting time has run. Tex. Est. Code § 1158.255(b). The attorney should check with the staff of the court in which the application has been filed to determine the practice of that court.
Following the filing of the application for sale, citation by posting must be issued and returned before the court may act. Tex. Est. Code § 1158.253. This requirement is mandatory and may not be waived or avoided. Failure to comply will cause any decree of sale that may be issued to be void.
A person interested in the guardianship may, during the period provided in the citation issued under Texas Estates Code section 1158.253, file a written opposition or seek sale of other estate property. Tex. Est. Code § 1158.254. “Interested person” is defined in Tex. Est. Code § 1002.018. If an opposition is filed during the period provided in the citation issued under section 1158.253, the court shall hold a hearing on the application. Tex. Est. Code § 1158.255(a). If the court orders a hearing on the application, the court must designate in writing a date and time for the hearing on the application and the opposition together with evidence pertaining to the application or opposition. Notice must be issued to the applicant and to each person who files an opposition to the sale of the date and time of the hearing. Tex. Est. Code § 1158.255(c).
After citation has been returned and on hearing the application, the court may either approve the sale as submitted, deny it, or order the sale of other property. Tex. Est. Code § 1158.256(a).
The order must specify—
1.the real property to be sold (the description of which should be the same as that contained in the inventory and application);
2.whether the property is to be sold by private sale or at public auction and, if at public auction, the time and place of the auction;
3.the purpose for the sale and its advisability;
4.the court’s finding on the adequacy of the general bond;
5.that the sale be made and the report returned in accordance with law; and
6.the terms of the sale.
The court must also review the adequacy of the bond for the estate and determine whether the bond must remain unchanged or be increased. Tex. Est. Code §§ 1158.256(b)(5), 1158.552(3). In most cases the court will wait until after receiving the report of sale before ordering a bond increase, unless the affidavit on the estate’s condition shows that a present need to increase the bond exists. Tex. Est. Code § 1158.256(b)(4). See form 8-22 in this chapter for an order for sale of real property.
The Texas Estates Code provides that after a successful bid at auction or a private contract for sale is finalized and the sale has been made, the guardian of the estate is required to file a report of sale not later than the thirtieth day after the event. Tex. Est. Code § 1158.551. The report must contain—
1.the date the court approved the order for the sale;
2.a description of the real property sold (which should conform to the inventory description and order of sale);
3.the time and place of the auction or the date the property was placed under contract;
4.the name of the purchaser;
5.the amount of the successful bid or the contracted purchase price of the property;
6.the terms of the sale and whether the sale was at public auction or by contract; and
7.a statement that the purchaser is ready to comply with the terms of the sale.
Tex. Est. Code § 1158.551. See form 8-23 in this chapter.
Once the report of sale is filed, the court must wait five days before the approval of the sale may be signed. See Tex. Est. Code §§ 1158.552–.553. Before signing, the court must review the report and determine that the sale was properly made, that it was for a fair price, and that an increased bond has been filed, if required. The action of the court in approving the sale constitutes a final judgment. Tex. Est. Code § 1158.556. See form 8-24 in this chapter for an approval of sale.
§ 8.32:7Delivery of Deed or Lien Documents
Only after the approval of sale is signed may the guardian of the estate execute a deed to the property that has been sold. Tex. Est. Code § 1158.558(a). The deed that the guardian signs should be a special, not a general, warranty deed. See Tex. Est. Code § 1158.557. If the sale is on credit, the guardian cannot deliver the deed until all proper financing documents such as the note and deed of trust have been delivered. The guardian is responsible for properly recording the deed of trust or mortgage. Tex. Est. Code § 1158.558(c).
A court may not approve a sale of real estate before the court determines if the guardian of the estate must file a new, increased bond to cover the proceeds from the sale. Tex. Est. Code § 1158.554. If a new bond is required, the court may not approve the sale until the increased bond is filed. Tex. Est. Code §§ 1158.552(3), 1158.554. An increase is often necessary because the general bond of the guardian of the estate does not cover the value of the real property held in the estate.
Any guardian of the estate who fails to comply with the delivery requirements of Texas Estates Code section 1158.558 may be subject to removal, and both the guardian and the surety are liable for any loss to the ward’s estate that may be occasioned by the guardian’s negligence. Tex. Est. Code § 1158.559.
§ 8.33Guardian’s Purchase of Property
A guardian ordinarily may not purchase directly or indirectly any of the ward’s property that is to be sold. The only two exceptions that exist are for preexisting executory contracts and court-approved sales. Tex. Est. Code §§ 1158.651–.653. If the guardian seeks court approval to purchase property from the estate, the court will appoint an attorney ad litem, and the court may require notice for the sale. Tex. Est. Code § 1158.653. If a purchase is made in violation of the Texas Estates Code, the court will set aside the sale and order that the property be reconveyed to the estate. Tex. Est. Code § 1158.654.
If the ward’s estate has real or personal property that is worthless or burdensome and it would be more economical to abandon the property than to conduct a sale, the guardian may file an application, and the court may issue an order authorizing abandonment of the property without notice or hearing. Tex. Est. Code § 1151.102(c)(6). If the application clearly shows that the property is worthless or burdensome, most courts will consider the application on submission and issue an order accordingly. See forms 8-29 and 8-30 in this chapter for an application and corresponding order.
[Sections 8.35 through 8.40 are reserved for expansion.]
§ 8.41General Terms for Sale of Guardianship Personal Property
The court must authorize sales of personal property before the guardian of the estate can convey ownership from the estate. The court may order the property sold for cash or on credit at public auction or by private sale. Tex. Est. Code § 1158.001. The Texas Estates Code requires the prompt sale of perishable personal property (see section 8.42 below), allows the expedited sale of nonperishable property (see section 8.43) and livestock (see section 8.44), and also permits abandonment of worthless property (see section 8.45). Application must be made for all sales of personal property, either by the guardian of the estate or by an interested person. Tex. Est. Code § 1158.101. To the extent possible, the application must conform to the requirements for sales of real property. Tex. Est. Code § 1158.102.
§ 8.42Application for Sale of Perishable Personal Property
After the inventory and appraisement have been approved, the guardian must apply to the court to sell property that is liable to perish, waste, or deteriorate in value or will be an expense or disadvantage to the estate to keep. Tex. Est. Code § 1158.051. Personal property that is exempt from forced sale, a specific legacy, or property needed to maintain a farm, ranch, or other business may not be included in a sale under section 1158.051. In determining whether to order a sale under section 1158.051, the court will consider—
1.the guardian’s duty to care for and manage the estate as would a person of ordinary prudence, discretion, and intelligence; and
2.whether the asset is one in which a trustee may be permitted to invest under chapter 117 or subchapter F, chapter 113, of the Texas Property Code.
Tex. Est. Code § 1158.051; see also Tex. Prop. Code ch. 117. See form 8-25 in this chapter for an application.
The court may approve a sale of perishable personal property on terms that will be most beneficial and advantageous to the ward’s estate. Tex. Est. Code §§ 1158.001, 1158.101. See form 8-26 in this chapter for an order approving a sale.
A public auction of perishable personal property is to be conducted after notice is issued by the guardian of the estate and posted in the same manner as in original proceedings in probate. Tex. Est. Code § 1158.103. The Texas Estates Code provides no details of how notice is to be given; at the very least, notice should be published in the county in which the estate is located, giving information about the time, place, and terms of the sale. See Tex. Est. Code § 1158.103. Since no specific Code provision requires a hearing on the sale of personal property, the attorney should check with the court staff to ascertain the practice of a particular court.
Although the Texas Estates Code permits the private sale of perishable personal property, there are no provisions to guide the guardian through the process. See Tex. Est. Code § 1158.001. Thus, when a court approves a private sale of perishable personal property, the sale should comply with the terms specified in the application and the order. No additional advertising, notice, or citation should be required unless the court directs otherwise.
Perishable personal property in the ward’s estate may not be sold until the court has entered an order authorizing the sale. Tex. Est. Code §§ 1158.001, 1158.101. The order of sale should describe the property to be sold or incorporate by reference the description of the property that was in the application. See form 8-26 in this chapter for an order approving the sale.
§ 8.43Other Sale of Personal Property
The guardian of the estate or any interested person may apply to sell personal property of the ward not required to be sold under section 1158.051 of the Texas Estates Code if the sale is in the best interests of the ward—
1.to pay expenses of care, maintenance, and education of the ward or the ward’s dependents;
2.to pay expenses of the guardianship administration, allowances, or claims against the ward or the ward’s estate; or
3.to pay funeral expenses and last illness expenses if the guardianship is kept open after the ward’s death.
Tex. Est. Code § 1158.101. But see In re Estate of Glass, 961 S.W.2d 461, 462 (Tex. App.—Houston [1st Dist.] 1997, writ denied) (when ward dies, only role of guardian is to submit final account and conclude guardianship).
§ 8.43:1Application for Sale of Personal Property
The Texas Estates Code gives little guidance about the contents of the application for the sale of personal property and requires merely that the sale comply with Code provisions for a sale of real property under sections 1158.252 through 1158.256. Tex. Est. Code § 1158.102. It is not necessary to wait until a purchaser for a specific property has been found in order to apply for the sale. Because of the time required to complete the process, the guardian should begin it as soon as a need to sell property has been determined. The application should provide—
1.an adequate description, which conforms to the inventory description, of the personal property to be sold (note that the inventory often does not contain a detailed description of the personal property assets, so an amendment to the inventory may be needed);
2.an affidavit of the condition of the estate stating the assets of the estate, the claims and their amounts that have been or will be approved, and the property that will remain after the sale; and
3.the specific facts that justify the sale.
See Tex. Est. Code §§ 1158.102, 1158.252. See form 8-27 in this chapter for an application.
No specific Texas Estates Code provision requires that an application for the sale of personal property be heard by the court. See Tex. Est. Code § 1158.001; but see Tex. Est. Code § 1158.102 (insofar as possible, sales of personal property must conform to requirements for sales of real estate). Some courts require a formal hearing at which the attorney will present the application. Other courts will merely review the application and, if it contains sufficient information, approve it after the proper posting time has run. The attorney should check with staff of the court in which the guardianship is pending to determine its practice.
Because an application for the sale of personal property must insofar as possible conform to that for a sale of real property, the citation requirements for real property sales should also apply. See Tex. Est. Code § 1158.102. Thus, the application for sale should have citation by posting issued before the court acts on the application. See Tex. Est. Code § 1158.253.
Because sales of personal property should conform with the rules applied to real property, the probate court should not act until after citation has been returned. See Tex. Est. Code § 1158.102. The court should then conduct the hearing or consider the application. If the sale is approved, the court will enter an order authorizing it. Tex. Est. Code § 1158.001. The order should—
1.contain a complete and adequate description of the property to be sold, which is the same as the description in the inventory and sale application;
2.state whether the property is to be sold at public auction (indicating the time and place of sale) or by a private sale;
3.state the purpose for the sale and its advisability; and
4.state the court’s finding on the adequacy of the general bond.
See Tex. Est. Code § 1158.256(b) (requirements for an order of sale of real property). See form 8-28 in this chapter for an order.
Once a sale of the personal property has been completed, the guardian should file a report of the sale with the court. Tex. Est. Code § 1158.105(a). Note that although section 1158.105 does not include a deadline for filing the report of sale, it should be filed within thirty days to conform to the procedure for the sale of real property. See Tex. Est. Code §§ 1158.105, 1158.551. The attorney should check with each court to determine what it requires, but the report should contain at least—
1.the date that the court approved the order for the sale;
2.a description of the personal property that conforms to the inventory and order of sale;
3.the time and place of the sale;
4.the name of the purchaser (but if the value of the property is small or there are multiple purchasers of small items, many courts will allow the report to omit this information); and
5.the amount received for each piece of the personal property sold.
See Tex. Est. Code §§ 1158.105, 1158.551. See form 8-23 in this chapter for a report.
The sections of the Texas Estates Code regulating the confirmation of sales of real property apply to the sale of personal property. Tex. Est. Code § 1158.105(a).
Once the report of sale is filed, the court must wait five days before the approval of sale may be signed. See Tex. Est. Code § 1158.552–.553. Before signing, the court must review the report and determine that the sale was made for a fair price. The court also must determine if an increased bond should be filed. See Tex. Est. Code §§ 1158.552, 1158.556. If a bill of sale is required, the guardian should issue it without warranty. Tex. Est. Code § 1158.105(c). The cost for the bill of sale must be assessed against the purchaser. Tex. Est. Code § 1158.105(c). The action of the court in approving the sale constitutes a final judgment. See Tex. Est. Code § 1158.556. There is usually no need to execute separate documents conveying ownership as in real property sales; it is the approval of sale that vests the title in the purchaser. Tex. Est. Code § 1158.105(b). If the personal property is subject to the certificate-of-title laws, additional documents will need to be completed. See form 8-24 in this chapter for an approval of sale.
§ 8.43:7Review of Guardian’s Bond
A court should not approve any sale of property without a review to determine if an increased bond would be required to cover the proceeds from the sale. See Tex. Est. Code §§ 1158.552(3), 1158.553 (applicable to sale of personal property pursuant to Texas Estates Code sections 1158.101 and 1158.105). Because personal property is bonded at the creation of the guardianship, the attorney should check with the court to see if there is a need to increase the guardian’s bond if the proceeds received are equal to or less than inventory values.
§ 8.44Special Provisions for Livestock
The Texas Estates Code provides special provisions for quick disposition of livestock, allowing the court to dispense with the requirements for citation and notice based on the circumstances. The required application should—
1.be written and sworn;
2.describe the livestock;
3.state the reasons for the sale; and
4.provide that the sale will be conducted through a bonded livestock commission merchant or bonded livestock auction commission merchant.
Tex. Est. Code §§ 1158.151, 1158.152.
The court will issue an order authorizing the sale after the application has been reviewed and found to be acceptable. The order should authorize the guardian to deliver the livestock to the designated livestock commission merchant or bonded livestock auction commission merchant, who will conduct the sale and receive a commission not to exceed 5 percent of the sale price. Tex. Est. Code §§ 1158.153, 1158.155. A report of sale containing a verified copy of the merchant’s account of sale must be made promptly to the court. No confirmation order is required from the court for title to pass. Tex. Est. Code § 1158.154.
If the ward’s estate has real or personal property that is worthless or burdensome and it would be more economical to abandon the property than to conduct a sale, the guardian may file an application under Texas Estates Code section 1151.102(b) to abandon worthless or burdensome property, and the court may issue an order authorizing abandonment of the property without notice or hearing. Tex. Est. Code § 1151.102(c)(6). If the application clearly shows that the property is worthless or burdensome, most courts will consider the application on submission and issue an order accordingly. See forms 8-29 and 8-30 in this chapter for an application and corresponding order.
[Sections 8.46 through 8.50 are reserved for expansion.]
§ 8.51Annual Account Required—Guardian of the Estate
The guardian of the estate must file a sworn account not later than the sixtieth day after the expiration of twelve months from the date the guardian qualified, unless the court extends the time or waives the accounting requirement. Tex. Est. Code § 1163.001(a) (requirements of accountings), § 1163.006 (waiver of accountings). The guardian must also file an annual account each year thereafter until the guardianship is closed. Tex. Est. Code § 1163.002. Unless the annual account has been timely filed and approved or otherwise waived, the guardian’s letters of guardianship cannot be renewed. Tex. Est. Code § 1106.003(a). A waiver of this requirement may be considered only if the estate contains negligible or fixed income. Tex. Est. Code § 1163.006. The court has a duty to review each guardianship at least annually, and if this is not done the judge can be held liable for any damages. Tex. Est. Code §§ 1201.001–.003. If the guardian fails to file any required reports, after a hearing and failure to show good cause, the guardian may be removed and the letters of guardianship revoked. Tex. Est. Code § 1163.151. The court may change the accounting period to coincide with the end of a calendar month or year, but it should not permit an annual account to cover more than twelve months. Tex. Est. Code § 1163.102(b).
An annual account must contain—
1.detailed information covering all claims filed against the ward’s estate during the accounting period;
2.a description of any property that has come to the guardian’s knowledge and that has not been previously inventoried;
3.a description of any changes to the estate’s property that have not been previously reported;
4.an account of all receipts and disbursements during the accounting period, with receipts of principal and income shown separately;
5.a complete, accurate, and detailed description of the property being administered, with the condition of the property, the use being made of the property, and the term and price of any rental property;
6.a list of the estate’s cash balances and their locations; and
7.a detailed list of all personal property, including all bonds, notes, and other securities.
The annual account will usually also contain a request for the guardian’s compensation.
Some courts require a specific form or information not technically required by statute. For example, some courts allow statements to be attached and others require a listing of each receipt in the pleading. It is important to confirm the supervising court’s preference about both form and substance before finalizing the account to avoid a delay in approval. See forms 8-31 and 8-33 in this chapter for forms for complex and simple annual accounts.
§ 8.53Documentation Annexed to Annual Account
The guardian must attach to the annual account—
1.vouchers for all expenses claimed or, if vouchers are not available, other evidence satisfactory to the court;
2.an official letter from the bank for all money deposits showing the amounts in general or special deposits; and
3.proof of the existence and possession of all securities owned by the estate or shown by the account and other assets held by a depository subject to court order.
The practitioner should check with the court to determine the procedure it requires for submission of documents relevant to the annual accounting.
§ 8.54Guardian’s Account Affidavit
The guardian must submit an affidavit with the annual account that states—
1.that the account contains a correct and complete statement of the matters to which the account relates;
2.that the bond premium has been paid;
3.that all tax returns have been filed;
4.that all taxes have been paid, showing the amount, date paid, and to whom they were paid;
5.if the taxes have not been paid or the returns have not been filed, the reasons for any failure to file tax returns or pay taxes; and
6.if the guardian is a private professional guardian, a guardianship program, or the Texas Health and Human Services Commission, whether the guardian or an individual certified under subchapter C, chapter 111, of the Texas Government Code, that is providing guardianship services to the ward and is swearing to the account on the guardian’s behalf is or has been the subject of an investigation conducted by the guardianship certification board during the accounting period.
§ 8.55Court Action on Annual Account
The annual account must be filed with the county clerk and remain on file for ten days before it is presented to the court for review. Tex. Est. Code § 1163.051(a), (b). The court must review the account and may require additional information to be presented until it is satisfied that the account is correct. Tex. Est. Code § 1163.052. The account may not be approved unless the guardian proves possession of all cash and assets of the estate. Tex. Est. Code § 1163.051(c). If the estate is solvent, the court will then order the guardian to pay all outstanding claims. If the estate is insolvent, the court must order any outstanding claims to be paid in the order of their priority. Tex. Est. Code §§ 1163.053, 1163.054; see also Tex. Est. Code § 1157.103.
See forms 8-32 and 8-34 in this chapter for orders.
A guardian can retain without court approval until the first anniversary of the date of receipt any assets received by the estate at its inception or added 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. Tex. Est. Code § 1161.006(a).
On application the court may order the continued retention of the assets after one year if the retention is an element of the estate investment plan. Tex. Est. Code § 1161.006(c). See section 8.8 above.
§ 8.57Annual Report Required—Guardian of the Person
Once each year for the duration of the guardianship, the guardian of the person must file a report advising the court of the physical, medical, and mental status of the ward. Tex. Est. Code § 1163.101. The report is to cover the twelve-month period after the guardian was qualified and each twelve-month period thereafter. Tex. Est. Code § 1163.102(a). The court can change the reporting period if it does not extend the period longer than twelve months. The report is due not later than the sixtieth day following the date the reporting period ends. Tex. Est. Code § 1163.102(b), (c). Many courts have a standard report of the person that they prefer a guardian to submit; the practitioner should determine the court’s preferences before preparing the report.
The annual report must be made under oath or with an unsworn declaration and must contain—
1.the guardian’s current name, address, and phone number;
2.the ward’s current name and date of birth, address, phone number, and age;
3.a complete description of the ward’s residence and its type (for example, nursing, foster);
4.the length of time the ward has resided at the present residence and the reason for any change during the year;
5.the date the guardian last saw the ward and the number of times the guardian saw the ward during the year;
6.a statement of whether the guardian has possession of the ward’s estate;
7.a statement regarding the ward’s mental and physical health;
8.a description of the ward’s medical care during the year, including the identity of the ward’s physician, psychiatrist, psychologist, dentist, social or case worker, or other person providing treatment;
9.a description of any recreational, educational, social, or occupational activities of the ward;
10.the guardian’s evaluations of the ward’s living arrangements, the ward’s feelings about the living arrangements, and the ward’s unmet needs, if any;
11.a statement of whether the court should modify or change the guardian’s powers;
12.a statement that the bond premium has been paid;
13.if the guardian is a private professional guardian, a guardianship program, or the Texas Health and Human Services Commission, whether the guardian or an individual certified under subchapter C, chapter 111, of the Texas Government Code, that is providing guardianship services to the ward and is swearing to the account on the guardian’s behalf is or has been the subject of an investigation conducted by the guardianship certification board during the preceding year; and
14.any additional information the guardian desires to share with the court, including whether the guardian has filed for emergency detention of the ward under subchapter A, chapter 573, of the Texas Health and Safety Code and, if applicable, the number of times the guardian has filed and the date of the application.
Tex. Est. Code §§ 1163.101(c), 1163.1011.
If the ward has died, the date and place of death should be provided in lieu of the information about the ward otherwise required. Tex. Est. Code § 1163.103.
See form 8-35 in this chapter for an annual report to use if the court does not provide its own preferred form.
§ 8.59Court Action on Annual Report
The court, if satisfied that the facts in the annual report are true, will approve the report after its review. Tex. Est. Code § 1163.104(a). The court may waive the costs and fees associated with the filing of the annual report. Tex. Est. Code § 1163.104(c). See form 8-36 in this chapter for an order to use if the court does not have its own preferred form.
§ 8.60Penalty for Failure to File Account, Exhibit, or Report
If a guardian fails to file any account, exhibit, or report, the court or any person interested in the ward’s estate may cause the guardian to appear and show cause why the account, exhibit, or report should not be filed. Tex. Est. Code § 1163.151(a). At the hearing the court may order the guardian to file the account, exhibit, or report and fine the guardian up to $1,000, revoke the guardian’s letters, or both, unless the guardian can show good cause for the failure to file the account, exhibit, or report. Tex. Est. Code § 1163.151(b).
[Sections 8.61 through 8.70 are reserved for expansion.]
VII. Power to Make Certain Gifts and Charitable Contributions
The guardian may seek the court’s permission to make tax-motivated gifts, charitable contributions, and certain transfers from assets of the ward’s estate to qualify the ward for government benefits. Tex. Est. Code §§ 1162.001, 1162.005, 1162.051–.053.
§ 8.72Tax-Motivated Gifts— Application and Notification
The guardian of the estate or an interested party may apply to the court for authority to make a tax-motivated gift or transfer on behalf of the ward to qualify the ward for government benefits. Tex. Est. Code § 1162.001. Notification of the application must be given by posting and by certified mail. Tex. Est. Code § 1162.003. The persons to receive mailed notice include all devisees under the will, trust, or other beneficial instrument relating to the ward’s estate; the ward’s spouse; the ward’s dependents; and any other person whom the court directs. Tex. Est. Code § 1162.003. See form 8-39 in this chapter for an application.
The applicant must outline a proposed estate or other transfer plan, describe the benefits that will be derived from it, and show that it is consistent with the ward’s intentions. Tex. Est. Code § 1162.002. However, if the ward’s intentions cannot be ascertained, it will be presumed that the ward favors a reduction in tax liability and qualification for government benefits. Tex. Est. Code § 1162.002(b).
The court may order the guardian of the estate to establish an estate plan that minimizes income, estate, inheritance, or other taxes if the guardian shows that the funds to be used are not required during the ward’s lifetime for the support of the ward or the ward’s family and that the ward will probably remain incapacitated throughout his lifetime. Tex. Est. Code § 1162.001. See form 8-40 in this chapter for an order.
The court may also order the guardian of the estate to establish a transfer plan that qualifies the ward for government benefits. Tex. Est. Code § 1162.001.
If the court deems it advisable, it may appoint a guardian ad litem for the ward or any other interested party. Tex. Est. Code § 1162.008.
The court may modify an approved transfer plan if the guardian applies to the court for such modification. Tex. Est. Code § 1162.002(c).
The court may authorize the guardian to make the tax-motivated gifts or transfers to qualify for government benefits on a periodic basis without further application or court order if the court finds it would be in the best interest of the ward and the ward’s estate. Tex. Est. Code §§ 1162.001, 1162.004(a). The court may modify or set aside such an order later because of a change in the ward’s financial condition. Tex. Est. Code § 1162.004(b).
Gifts of principal or income of the ward’s personal or real property may be made outright or in trust for the benefit of—
1.a charitable organization qualifying as such under the Internal Revenue Code in which the ward would reasonably have an interest;
2.the ward’s spouse or descendant or another person related by blood or marriage;
3.a devisee under the ward’s last will, trust, or other beneficial instrument; and
4.a person serving as a guardian of the ward if that person is the ward’s spouse or descendant or another person related by blood or marriage or a devisee under the ward’s last will, trust, or other beneficial instrument.
§ 8.76Charitable Contributions
A guardian who wants to make a charitable contribution must file a sworn application requesting an order from the court in which the guardianship is pending. Tex. Est. Code § 1162.051. An application to make a charitable contribution must be for a specific amount from the income from the ward’s estate. Tex. Est. Code § 1162.051. These contributions may be made only to—
1.corporations, trusts, or community chests, funds, or foundations, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes; or
2.nonprofit federal, state, county, or municipal projects operated exclusively for the public health or welfare.
The application must remain on file for at least ten days before the hearing. Tex. Est. Code § 1162.052(b). After a hearing, the court may authorize a charitable contribution if—
1.the proposed contribution will probably not exceed 20 percent of the ward’s net income for the current calendar year;
2.the net income of the ward’s estate for the current calendar year exceeds or probably will exceed $25,000;
3.the full amount of the contribution will probably be deductible from gross income in determining the net income for the ward under the applicable federal income tax laws;
4.the condition of the ward’s estate justi-fies the contribution; and
5.the charitable contribution is of a reasonable amount and for a worthy cause.
Tex. Est. Code § 1162.053. See forms 8-41 and 8-42 in this chapter for an application and corresponding order.
Tax-motivated gifts, contributions, and transfers to qualify for government benefits must comply with all requirements of the Texas Estates Code. Any gift or transfer that is not authorized by the Code, with or without court approval, is invalid. See In re Guardianship of Estate of Neal, 406 S.W.2d 496, 503 (Tex. App.—Houston), writ ref’d n.r.e., 407 S.W.2d 770 (Tex. 1966) (per curiam) (decided before enactment of Texas Probate Code sections 865–866, now Estates Code chapter 1162). Posting is required on an application to make tax-motivated gifts or transfers for government benefits. Tex. Est. Code § 1162.001.
[Sections 8.78 through 8.80 are reserved for expansion.]
The guardian of the estate is not required to invest funds that are immediately needed for the education, support, and maintenance of the ward or others the ward supports. Tex. Est. Code § 1161.001(b). Excess funds must be invested unless the court orders otherwise. Tex. Est. Code § 1161.001.
The court may, on its own motion or on written request of an interested person, cite the guardian to appear and show cause why the estate’s funds are not invested. Tex. Est. Code § 1161.007(a). After thirty-one days’ notice, the court may conduct a final hearing to protect the estate. The court may appoint a guardian ad litem for the sole purpose of representing the ward’s best interest. Tex. Est. Code § 1161.007(d).
§ 8.82Standard for Management and Investments
The standard applicable to a guardian is that which a person of ordinary prudence, discretion, and intelligence would exercise in his own affairs, considering the probable income from, the probable increase in value of, and the safety of the capital. Tex. Est. Code § 1161.002(a). Other relevant factors include—
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 available to the ward.
In determining whether the guardian has exercised the standard of investment required, the court must, absent fraud or gross negligence, take into consideration the investment of all assets rather than the prudence of only a single investment. Tex. Est. Code § 1161.002(b). Investments that are considered safe are—
1.bonds or other obligations of the United States;
2.tax-supported bonds of Texas;
3.except as limited by section 1161.004(b) and (c), tax-supported bonds of a county, district, political subdivision, or municipality in Texas;
4.shares or share accounts of a state savings and loan association or savings bank with its main office or a branch office in Texas if the payment of the shares or share accounts is insured by the Federal Deposit Insurance Corporation (FDIC);
5.shares or share accounts of a federal savings and loan association or savings bank with its main office or a branch office in Texas if the payment of the shares or share accounts is insured by the FDIC;
6.collateral bonds of companies incorporated under the laws of Texas, having a paid-in capital of $1 million or more, when the bonds are a direct obligation of the company that issues them and are specifically secured by first mortgage real estate notes or other securities pledged with a trustee;
7.interest-bearing time deposits that may be withdrawn on or before one year after demand in a bank that does business in Texas in which the payment of the time deposits is insured by the FDIC; and
8.an ABLE account established in accordance with the Texas Achieving a Better Life Experience (ABLE) Program under subchapter J, chapter 54, of the Texas Education Code.
The court may modify or eliminate the guardian’s investment duties on a showing by clear and convincing evidence that the modification is in the best interest of the ward. Tex. Est. Code § 1161.005.
§ 8.83Investment in Real Estate
The guardian may invest in real estate if the guardian believes it is in the ward’s best interests and if there is sufficient cash on hand to provide for the education, support, and maintenance of the ward and others the ward supports, if applicable, and for the maintenance, insurance, and taxes on the real estate in which the guardian wishes to invest. Tex. Est. Code § 1161.151(a). The court should render an order authorizing the investment. Tex. Est. Code § 1161.152.
§ 8.84Liability of Guardian and Guardian’s Surety for Failure to Invest
In addition to other remedies of law, if the guardian of the estate fails to invest or lend estate assets in the manner provided for by statute, the guardian and the guardian’s surety are liable for the principal and the greater of the highest legal rate of interest on the principal during the period the guardian failed to invest or lend assets or the overall return that would have been made on the principal if invested as provided for by statute. Tex. Est. Code § 1161.008(a).
In addition, the guardian and guardian’s surety are liable for attorney’s fees, litigation expenses, and costs related to a proceeding brought to enforce chapter 1161. Tex. Est. Code § 1161.008(b).
If the guardian has on hand funds belonging to the ward in an amount that provides a return that is more than is necessary for the education, support, and maintenance of the ward and, if applicable, others the ward supports, the guardian may lend funds for a reasonable rate of interest. Tex. Est. Code § 1161.202.
The rate will be considered reasonable if it is equal to at least 120 percent of the applicable short-term, midterm, or long-term interest rate under section 7520 of the Internal Revenue Code for the month during which the loan is made. Tex. Est. Code § 1161.202(b).
A guardian of the estate who complies with this section with court approval will not be personally liable if the borrower is unable to pay and the security fails. If the guardian committed fraud or negligence in making or managing the loan, including 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. Tex. Est. Code § 1161.205(a).
The guardian cannot make a loan until the guardian submits to an attorney all bonds, notes, mortgages, abstracts, and other documents relating to the loan and receives a written opinion that title on the relevant notes, bonds, or real estate is clear. Tex. Est. Code § 1161.203(c).
The guardian of the estate may obtain a mortgagee’s title insurance policy on any real estate loan in lieu of an abstract and an attorney’s opinion. Tex. Est. Code § 1161.203(d).
Within thirty days after a loan is made without a court order, the guardian of the estate must file a report accompanied by an affidavit stating the full facts related to the loan. Tex. Est. Code § 1161.204.
Subchapter E, chapter 1161, of the Texas Estates Code does not apply to investments made in debentures, bonds, or other publicly traded debt security. See Tex. Est. Code ch. 1161, subch. E.
[Sections 8.86 through 8.90 are reserved for expansion.]
§ 8.91Guardian of Person’s Duty to Inform Ward’s Relatives about Ward’s Health and Residence
When filing an application for guardianship, the applicant must mail a copy of the application and notice containing, among other things, a statement to a relative of the ward described in Tex. Est. Code § 1051.104(a)(1)–(2) notifying the relative that, if a guardianship is created for the proposed ward, the relative must elect in writing to receive notice about the ward under section 1151.056. Tex. Est. Code § 1051.104. If the relative of the ward described in section 1051.104(a)(1)–(2) opts in, the guardian of the adult ward shall as soon as practicable inform the relative if (1) the ward dies, (2) the ward is admitted to a medical facility of acute care for a period of three days or more, (3) the ward’s residence has changed, or (4) the ward is staying at a location other than the ward’s residence for longer than one calendar week. Tex. Est. Code § 1151.056(b). If the ward dies, the guardian shall inform the relative of any funeral arrangements and the location of the ward’s final resting place. Tex. Est. Code § 1151.056(c).
“Relatives” include the spouse, parents, siblings, and children against whom a protective order has not been issued to protect the ward; who have not been found by a court or other state agency to have abused, neglected, or exploited the ward; and who have elected in writing to receive notice about the ward. Tex. Est. Code § 1151.056(a); see also Tex. Est. Code § 1101.001(b)(13)(A)–(D). A relative entitled to notice pursuant to this section may choose not to receive the notice by providing to the guardian a written request to that effect. Tex. Est. Code § 1151.056(d). The guardian must file any written request received with the court. Tex. Est. Code § 1151.056(d).
The guardian may file a motion with the court showing good cause to relieve the guardian of the duty to provide notice about a ward to a relative. Tex. Est. Code § 1151.056(e). The relative in question must be provided a copy of the motion, unless the guardian is unable to locate the relative after making reasonable efforts to discover and locate the relative. Tex. Est. Code § 1151.056(f). The relative in question may file evidence in response to the motion. The Texas Estates Code is silent on whether a hearing is required, but the court must consider any evidence filed by the relative before relieving the guardian of the duty to provide notice to that person. The court shall relieve the guardian of the duty to notify the relative in question if the court finds that—
1.the motion includes a written request from a relative electing not to receive the notice;
2.the guardian was unable to locate the relative after making reasonable efforts to discover and locate the relative, or the guardian was able to locate the relative but unable to establish communication with the relative after making reasonable efforts to estalbish communication; or
3.notice is not in the best interest of the ward.
§ 8.92Guardian of Person’s Duty to Inform Court
The guardian of the person must immediately provide written notice to the court that granted the guardianship of the filing of an application for emergency detention of the ward. Tex. Est. Code § 1151.051(d); see also Texas Health and Safety Code chapter 573, subchapters A and C, and chapter 16 in this manual.
The guardian of the person may place the ward in a more restrictive facility only if the guardian provides notice of the proposed placement to the court, the ward, and any other person who has requested notice and after (1) the court orders the placement at a hearing scheduled by the court on its own motion, if the ward or another person objects to the proposed placement before the eighth business day after receipt of notice, or (2) the seventh business day after the court’s receipt of notice if it does not schedule a hearing on the proposed placement. Tex. Est. Code § 1151.051(e).