Compliance, Show-Cause Order, Removal, and Reinstatement
When a guardian or the guardian’s attorney fails to comply with guardianship procedures outlined in the Texas Estates Code, the court must take steps to bring the guardian into compliance. Usually, a deadline will have been inadvertently overlooked, which can be easily remedied. However, in some cases a guardian’s noncompliance is more serious, and the court has a duty to require the guardian to correct the error, or the court must remove the guardian and appoint a new guardian to do so. Examples of serious misconduct requiring court intervention include misapplication or mismanagement of the ward’s funds, an insufficient or defective bond, removing the ward from the state without court permission, and theft of the ward’s assets. This chapter discusses compliance requirements for guardians and the methods the court may apply to ensure a guardian’s compliance.
Every guardian must meet a number of statutory requirements in order to qualify and continue to serve as a guardian. The requirements vary depending on whether the guardian is serving as guardian of the person, estate, or both. At each stage of the guardianship process, the failure to comply with the statutory requirements can result in being cited to attend show-cause hearings, removal, and various penalties and fines. Texas Estates Code chapter 1105 sets out the requirements that must be met to qualify as a guardian. See Tex. Est. Code §§ 1105.002–.257. The most common types of guardians’ failures to comply with the law are discussed below.
§ 15.2:1Requirement to Qualify
Texas Estates Code section 1105.051 addresses the required oath, and section 1105.101 requires, with limited exceptions, that all noncorporate guardians of the person or estate post a bond in order to qualify. See Tex. Est. Code §§ 1105.051, 1105.101. It is a guardian’s responsibility to care for and manage the ward’s estate as a prudent person would manage that person’s property. The guardian’s bond is to ensure the guardian’s careful performance of this duty and to protect the ward from loss because of any waste or mismanagement caused by the guardian. Rodriguez v. Gonzales, 830 S.W.2d 799, 801 (Tex. App.—Corpus Christi–Edinburg 1992, no writ). The guardian must take an oath and give bond within twenty-one days of being appointed; otherwise the court may remove the guardian without notice. See Tex. Est. Code §§ 1105.003, 1203.051(a)(1). See also Thedford v. White, 37 S.W.3d 494, 497 (Tex. App.—Tyler 2000, no pet.) (trial court’s removal of guardian without hearing, where guardian failed to file oath and bond, did not violate removed guardian’s due-process rights).
§ 15.2:2Requirement to File Inventory and Appraisement
Texas Estates Code Section 1154.051 requires that a guardian of the estate file an inventory and appraisement not later than the thirtieth day after qualification as guardian. The inventory and appraisement is critical to confirm the initial assets to be accounted for during administration and that the bond is adequate. The guardian must file the inventory and appraisement within thirty days of appointment as guardian or is subject to removal without notice. See Tex. Est. Code §§ 1154.051, 1203.051(a)(2). A guardian’s failure to timely file the inventory may cause the following additional penalties to be imposed: (1) liability for costs and fees incurred due to the removal process and (2) a $1,000 fine. See Tex. Est. Code §§ 1155.152, 1163.151.
§ 15.2:3Requirement to Notify Creditors
The guardian must provide various notices to creditors by certain deadlines.
Within four months after receiving letters, the guardian must give notice—
1.to secured creditors, and
2.to persons having an outstanding claim for money against the ward if the guardian has actual knowledge of the claim.
If a guardian fails to give the required notice, the guardian and the surety on the guardian’s bond are liable for any damages any person suffers because of the guardian’s neglect, unless it appears that such person had notice otherwise. Tex. Est. Code § 1153.005(b).
§ 15.2:4Requirement to Apply for Monthly Allowance
If a monthly allowance was not decreed in the court’s order appointing the guardian, the guardian of the estate must file an application requesting a monthly allowance within thirty days of the date the guardian qualified or by the date specified by the court. Tex. Est. Code § 1156.001(a), (b). The application must request a monthly allowance to be spent from the income and corpus of the ward’s estate for the ward’s education and maintenance and for the maintenance of the ward’s property. Tex. Est. Code § 1156.001(a). Typically, the expenses in a monthly allowance are those that recur on a monthly or quarterly basis.
§ 15.2:5Requirement to Collect Claims and Recover Property; Duty of Care
A guardian is to use ordinary diligence to collect all claims and debts of the estate or ward, if there is a reasonable prospect of collecting the claims or recovering the property. Tex. Est. Code § 1151.105(a). A guardian who willfully neglects to use ordinary diligence is liable, along with the guardian’s surety, for the loss suffered by the estate because of the guardian’s negligence. Tex. Est. Code § 1151.105(b). The guardian is to manage the estate as a prudent person would manage the person’s own property, except as otherwise provided in the Texas Estates Code. Tex. Est. Code § 1151.151(a).
§ 15.2:6Requirement to File Annual Report of Person
The guardian of the person is required to file a sworn annual report with the court detailing the ward’s current condition and in what way the ward’s condition has changed, if at all, in the previous year. Tex. Est. Code § 1163.101. If the guardian of the person fails to file the required report, on the court’s own motion the guardian will be cited to appear and show why the report should not be filed. Tex. Est. Code § 1203.052(a)(2). Unless good cause is shown, the court may revoke the letters of guardianship, fine the guardian an amount not to exceed $1,000, or both. Tex. Est. Code § 1163.151.
§ 15.2:7Requirement to File Annual Accounting
The guardian of the estate, who is often the same person as the guardian of the person, is required to file an annual account each year not later than the sixtieth day after the anniversary of the guardian’s qualification date. Tex. Est. Code §§ 1163.001, 1163.002. The account should enumerate the claims made against the estate and how they have been treated, describe the property that has come into the guardian’s knowledge or possession, list the changes in the ward’s property that have not been previously reported, and include a complete list of receipts, disbursements, and property that is still being administered by the guardian. Tex. Est. Code § 1163.001. The guardian of the estate is required to file this accounting each year until the estate is closed. Tex. Est. Code § 1163.002. If the guardian of the person fails to file the required report, on the court’s own motion the guardian will be cited to appear and show why the report should not be filed. Tex. Est. Code § 1203.052(a)(2). The penalty for failure to file the annual accounting is the same as that for failure to file the annual report, which is discussed at section 15.2:6 above. See Tex. Est. Code § 1163.151.
§ 15.2:8Requirement to Post New Bond
The court may require the guardian to post a new bond if, among other things, the bond amount is insufficient. See Tex. Est. Code § 1105.251(a). This often occurs after review of an annual accounting and sale of certain assets. A person interested in the guardianship may file a motion to increase the guardian’s bond if the bond is insufficient or defective. Tex. Est. Code § 1105.251(b). If the court becomes aware that the bond is insufficient or has other problems, the court must either enter an order without notice, requiring the guardian to give a new bond, or without delay cite the guardian to show cause why the guardian should not be required to give a new bond. Tex. Est. Code § 1105.252(1). If required to give a new bond, the guardian must do so within the time specified by the court, or the guardian will be subject to removal without notice. See Tex. Est. Code § 1203.051(a)(3). It is the court’s duty to annually examine the condition of the ward’s estate and to determine the sufficiency of the guardian’s bond, and to require the guardian to increase the bond if the current bond is not ample security to protect the ward’s estate. See Heyn v. Massachussetts Bonding & Insurance Co., 110 S.W.2d 261, 265 (Tex. App.—Dallas 1937, writ dism’d). The court is to impose fines for contempt of court, assess damages on a guardian and the guardian’s surety for nonperformance of the guardian’s duties, and remove a guardian who fails to give a bond as required by law. Heyn, 110 S.W.2d at 265.
§ 15.2:9Requirement to File Final Account
When a guardianship ends, whether because the ward is restored, a minor ward reaches the age of majority, the ward dies, or because of another event prescribed by law, an account for final settlement must be filed by the guardian of the estate. Tex. Est. Code § 1204.001. The guardian of the estate must account for all financial transactions that have occurred since the most recent annual account, pay whatever debts or taxes are due, and distribute any remaining assets. Tex. Est. Code § 1204.102. Failure to file the final accounting will likely result in the guardian’s being cited to appear and explain the reason for the guardian’s failure to do so. See discussion at section 15.3 below. If the guardian fails to file the final accounting, the court may remove the guardian and appoint a successor guardian to finalize the estate, and the guardian will not be discharged from his bond. Tex. Est. Code § 1204.201.
§ 15.2:10Requirement to Close Guardianship of Person
Within sixty days of a ward’s death, the guardian must file an affidavit notifying the court of the termination of the guardianship of the person. See Tex. Est. Code § 1204.108.
§ 15.2:11Requirement to Close Guardianship of Estate
Once the court approves the final accounting, the guardian must deliver any remaining estate property to the rightful owners as ordered by the court. Tex. Est. Code § 1204.202. Failure to timely deliver the property as ordered subjects the guardian to liability for damages at a rate of 10 percent of the amount of the appraised value of the money or estate withheld, per month, for each month the property is withheld. Tex. Est. Code § 1204.202.
“Show cause” is not defined in the Texas Estates Code. However, Black’s Law Dictionary defines a show-cause order as “[a]n order directing a party to appear in court and explain why the party took (or failed to take) some action or why the court should or should not impose some sanction or grant some relief.” See Black’s Law Dictionary 1272 (10th ed. 2014). When a show-cause order is issued, the guardian has the burden of proof to explain his action or inaction. The Estates Code provides a number of instances in which a guardian of either the person or estate might be cited and required to appear to explain his actions. This process can be initiated by the court or by an interested party seeking an explanation of the actions taken by the guardian. Because of the potential consequences of a show-cause order, including removal of the guardian, money damages, and in extreme cases imprisonment, when the order is issued the guardian is required to be personally served to provide due process.
§ 15.3:1Common Instances Where Show-Cause Orders Issued
In order to protect the ward’s health, safety, and finances, a guardian must take certain actions in order to ensure that the court is made aware of the guardian’s activities and the status of the ward’s person and estate. The guardian must file an oath and post bond, timely file an inventory, submit the proper annual reports and accountings, post a new bond if necessary, and, when the guardianship has ended or the service of the guardian has concluded, file a final accounting and deliver the guardianship assets to the proper person. A guardian who fails to take these actions may be subject to a show-cause order. See discussion above.
§ 15.3:2Other Instances Where Show-Cause Orders Issued
There are other, less common instances in which a court may issue a show-cause order against a guardian.
Transfer of Guardianship: When a guardian or any other person files an application to transfer a guardianship to a different county, citation will issue and the sureties on the bond and the guardian will be cited to appear and show cause why the application should not be granted. Tex. Est. Code §§ 1023.003–.004.
Additional Inventory and Appraisement or List of Claims: Any interested party may file a written complaint that property or claims were omitted from the filed inventory, appraisement, and list of claims. In that case, the guardian will be cited by personal service to appear and show cause why the omissions were made and why the guardian should not be required to amend the inventory. Tex. Est. Code § 1154.102.
Bond Required from Guardian Otherwise Exempt: If the guardian of the estate was not initially required to post a bond, and if a claimant files a proper complaint, the court must issue citation and require the guardian to show cause why the guardian should not be required to post a bond. Tex. Est. Code § 1105.103. If required, the bond must be—
(1)in an amount sufficient to protect the guardianship and guardianship’s creditors;
(2)approved by and payable to the judge; and
(3)conditioned that the guardian:
(A)will well and truly administer the guardianship; and
(B)will not waste, mismanage, or misapply the guardianship estate.
Tex. Est. Code § 1105.103(e)(1–3). Failure to give the bond as required will result in the court’s removing the guardian without notice. Tex. Est. Code § 1105.103(f).
Authority of Guardian to Engage in Certain Borrowing: A guardian may file a proper application for authority to mortgage or pledge guardianship property by deed of trust or as security for an indebtedness under section 1151.202 of the Texas Estates Code. The clerk will issue and post citation, and interested persons will be required to appear and show cause why the application should not be granted. Authorized purposes for the creation of such indebtedness include the payment of taxes (either ad valorem or income taxes), payment of expenses of administration, payment of an allowed and approved claim, the renewal or extension of an existing lien, an improvement or repair to the ward’s real estate under certain conditions, the purchase of a residence for the ward or the ward’s dependents, or funeral expenses or expenses of last illness for the ward. Tex. Est. Code § 1151.201.
Liability for Nonpayment of Claims: If a guardian fails to pay on demand a claim that the court orders to be paid and the estate has sufficient assets to pay the claim, the court may cite the guardian and the sureties on the guardian’s bond to show cause why the guardian or sureties should not be held liable for payment of the debt, interest, costs, or damages resulting from the failure to timely pay the debt. Tex. Est. Code § 1157.108.
Failure to Apply for Sale: If a guardian fails to apply to sell guardianship property to pay charges and claims against the estate that have been allowed and approved or established by suit, an interested party may file an application and have the guardian cited to appear and show cause why the sale of certain property should not be ordered. Tex. Est. Code § 1158.601.
Complaint for Failure to Rent: An interested party may file a sworn complaint and have the guardian cited to appear and show cause why the guardian did not rent property of the guardianship estate. Tex. Est. Code § 1159.005.
Application to Show Cause for Failure to Lease Minerals: Any interested party may require the guardian to be cited and appear to show cause why the guardian did not enter into a lease or other mineral agreement. Tex. Est. Code § 1160.251.
Guardian’s Failure to Invest: If a guardian fails to invest or properly invest the property of the guardianship estate, the court on its own motion or on the motion of an interested party may issue citation and require the guardian to show cause why the property was not invested or was not invested properly. Tex. Est. Code § 1161.007(a). The court may appoint a guardian ad litem to represent the ward at a show-cause hearing for the limited purpose of determining the ward’s best interest with respect to the investment of the ward’s property. Tex. Est. Code § 1161.007(e).
Guardian’s Failure to File Annual Report or Annual Accounting: As stated at sections 15.2:6 and 15.2:7 above, the guardian of the person is required to file an annual report, and the guardian of the estate is required to file an annual accounting. If the guardian of either the person or estate fails to comply, the court may issue citation and require the guardian to show cause why such documents were not filed. Tex. Est. Code § 1163.151.
Texas Estates Code sections 1203.051 and 1203.052 provide for the removal of a guardian by the court or at the request of an interested person, with or without notice, depending on the circumstances requiring the removal of the guardian. See Tex. Est. Code §§ 1203.051, 1203.052. The supreme court shall ensure that courts with jurisdiction over a guardianship immediately notify the Judicial Branch Certification Commission of the removal of a guardian. Tex. Gov’t Code § 155.151.
§ 15.4:1Removal without Notice
Texas Estates Code section 1203.051 provides for the removal of a guardian by the court or at the request of an interested person, with or wihout notice to and service of citation on the guardian, depending on the circumstances requiring the removal. A guardian may be removed without notice if the guardian—
1.fails to qualify;
2.fails to timely file an inventory;
3.fails to timely give a new bond;
4.is absent from the state for three months at one time without court permission or removes from the state;
5.cannot be served, evades service, cannot be found, or is a nonresident of the state without a resident agent to accept service;
6.neglects to educate or maintain the ward as liberally as the ward’s means and the condition of the ward’s estate permit;
7.misapplies, embezzles, or removes from the state estate assets or is about to do any of these acts; or
8.engages in conduct with respect to the ward that would be considered to be abuse, neglect, or exploitation, as those terms are defined by Texas Human Resources Code section 48.002.
Tex. Est. Code § 1203.051(a). Removal without notice for the last two reasons must be found on the basis of clear and convincing evidence given under oath. Tex. Est. Code § 1203.056(a). The burden to prove sufficient grounds is on the party seeking the guardian’s removal. Young v. Choice, 868 S.W.2d 850, 853 (Tex. App.—Houston [14th Dist.] 1993, writ denied).
If a removal action cannot be prosecuted without notice because it does not meet the requirements of section 1203.051 of the Texas Estates Code, a removal action with notice may be instituted by the court on its own motion or by the complaint of an interested person. Tex. Est. Code § 1203.052. The guardian must be given personal citation of the reason, time, and place of the hearing for removal. Tex. Est. Code §§ 1203.052, 1203.053. Service on the attorney of record will not comply with the Code, and, without personal service, the court’s removal order would be void. See Wetsel v. Estate of Perry, 842 S.W.2d 374, 375 (Tex. App.—Waco 1992, no writ). The burden to prove sufficient grounds is on the party seeking the guardian’s removal. Young v. Choice, 868 S.W.2d 850, 852 (Tex. App.—Houston [14th Dist.] 1993, writ denied). A guardian may be removed with notice if—
1.sufficient grounds appear to support the belief that the guardian has misapplied, embezzled, or removed property committed to the guardian’s care from the state or is about to do so;
2.the guardian fails to file any account or report required by law;
3.the guardian fails to obey court orders with respect to the guardian’s duties;
4.the guardian is proved to be guilty of gross misconduct or gross mismanagement in the performance of the guardian’s duties;
5.the guardian becomes incapacitated, is sentenced to the penitentiary, or is otherwise incapable of performing the guardian’s duties;
6.the guardian engages in conduct with respect to the ward that would be considered to be abuse, neglect, or exploitation, as those terms are defined by Texas Human Resources Code section 48.002;
7.the guardian neglects to educate or maintain the ward to the extent that the ward’s estate and the ward’s ability or condition permit;
8.the guardian interferes with the ward’s progress or participation in community programs;
9.the guardian, if a private professional guardian, fails to be certified as required by subchapter G, chapter 1104, of the Estates Code;
10.the court determines that, because of the dissolution of the joint guardians’ marriage, the termination of the guardians’ joint appointment and the continuation of only one of the joint guardians as the sole guardian is in the best interest of the ward; or
11.the guardian would be ineligible for appointment under subchapter H, chapter 1104, of the Estates Code.
Upon complaint of the Judicial Branch Certification Commission, the court may, with notice, remove a guardian who would be ineligible for appointment under subchapter H, chapter 1104, of the Estates Code because of the guardian’s failure to maintain the certification required under subchapter F, chapter 1104. Tex. Est. Code § 1203.052(b).
The court is not prevented from finding grounds other than those provided by the Estates Code to justify the removal of a guardian. See Haynes v. Clanton, 257 S.W.2d 789, 791 (Tex. App.—El Paso 1953, writ dism’d by agr.) (trial court’s removal of personal representative of decedent for unsuitability due to adverse interest was upheld in decedent’s estate). The laws and rules governing estates of decedents apply to guardianships, to the extent applicable and not inconsistent with other provisions of the Estates Code. Tex. Est. Code § 1001.002. Thus, it can be argued that case law governing decedents’ estates can also be applied to guardianship matters.
If costs are incurred because a guardian is removed for cause, the guardian and the surety on the guardian’s bond are liable for any costs of removal and other additional costs incurred that are not authorized expenditures, as well as reasonable attorney’s fees incurred in removing the guardian. Tex. Est. Code § 1155.152. A guardian removed for cause is not entitled to reimbursement of the attorney’s fees incurred by the guardian in defending against the removal. Henderson v. Viesca, 922 S.W.2d 553, 560–62 (Tex. App.—San Antonio 1996, writ denied).
If there is a necessity, the court may immediately appoint a successor guardian without citation or notice and withhold the discharge of the prior guardian and his sureties until the removed guardian’s final account is approved. In addition, the court may order the removed guardian to immediately turn over the ward’s estate to the successor on qualification. Tex. Est. Code §§ 1203.055, 1203.102.
An order removing a guardian is a final appealable order, rather than a matter for mandamus relief. In re Webster, No. 05-15-00945-CV, 2015 WL 4722306 (Tex. App.—Dallas Aug. 10, 2015, no pet.).
The order must state the actual cause of removal. Tex. Est. Code § 1203.053(1). The order must also direct that any letters of guardianship issued to the person who is removed shall be surrendered, if the removed guardian has been personally served with citation, and all the letters be canceled of record. Tex. Est. Code § 1203.053(2). The order must also require the removed guardian to deliver the guardianship assets in the removed guardian’s possession to the person entitled to the property, typically the person who has been appointed and qualified as the successor guardian. Tex. Est. Code § 1203.053(3)(A). The order must also order the removed guardian to relinquish control of the ward’s person. Tex. Est. Code § 1203.053(3)(B).
§ 15.5Limited Rights to Seek Reinstatement
A guardian who is removed under Texas Estates code section 1203.051(a)(6)(A) or (B) may file an application for reinstatement no later than thirty days after the date the court signs the order of removal. Tex. Est. Code § 1203.056(b). On the filing of the application, the clerk must issue notice in compliance with Estates Code section 1203.056(c). The court must hold a hearing on the application as soon as practicable but no later than sixty days from the date of the removal order. Tex. Est. Code § 1203.056(e). If, at the conclusion of the hearing, the court is satisfied by a preponderance of the evidence that the applicant did not engage in the conduct that directly led to the guardian’s removal, the court shall set aside any order appointing a successor representative and shall enter an order reinstating the guardian. Tex. Est. Code § 1203.056(e). In the order, the court may also order the successor to file a final account. Tex. Est. Code § 1203.056(f).
§ 15.6Removal of Joint Guardian
If a joint guardian is removed, the other joint guardian may continue to serve as the sole guardian unless removed for a reason. Tex. Est. Code § 1203.057. Dissolution of the joint guardians’ marriage is not a cause for removal of a joint guardian. Tex. Est. Code § 1203.057.