Dependent Administration In Texas
When someone dies without a Will in Texas, the default provision in the law requires that the estate be subject to a “Dependent Probate Administration.” In this type of administration, the court-appointed administrator needs the court’s supervision and authority to conduct any action in the probate process. This means that every action the Administrator takes is going to require approval from the court.
In the case that someone has died without a Will, the dependent probate administration is one of two steps in concluding the estate. The second step involves the Court making a formal Determination of Heirship. While the appointment of a dependent administrator for the estate provides for the ability to wind up the affairs of the estate, the determination of heirship involves the Court formally determining the proper heirs of the estate to receive the assets. The concepts involved in a Determination of Heirship are discussed elsewhere in the site.
What Requires Court Approval Under Dependent Administration?
The dependent administrator is required to seek the court’s approval for all of the transactions that the administrator may need to enter as part of the probate process. For instance, each of the following require the court’s special approval:
- Sale of real estate
- Sale of cars
- Sale of personal property
- Payment of debts
- Payment of expenses during the administration
- Payment of professional fees related to the estate (i.e. attorneys, accountants, etc.)
How Does An Administrator Request Court Approval For Transactions?
Generally, the process for obtaining the court’s approval for any of these transactions requires the administrator’s attorney to submit a written application for authority to pay the expenses and attach copies of the outstanding invoices or other information supporting the request.
Dependent Administration Bond Requirement
Every dependent administrator is required to post a bond. The bond is essentially an insurance policy taken out with a bonding company. The administrator is asking the bonding company to ensure his or her proper performance of duties as administrator. If the administrator violates those duties and, for instance, steals part of the assets of the estate, the bond company will reimburse the estate to make it whole for the administrator’s misdeeds.
The amount of the bond will be set by the court, and the estate will be required to pay an annual bond premium. This bond premium is much like a homeowners’ insurance policy premium. For instance, your home may be insured for $100,000.00, but the premium each year might only be $800.00. Likewise, the court might set a bond in the amount of $50,000.00, which would have a much lower premium amount of a few hundred dollars. The administrator will have to qualify for the bond by having a good credit rating.
The Dependent Administration Six-Month Requirement
In general, a dependent administration must remain open for at least six months. Because of timelines related to notice to potential credits, the courts will require that the administration stay open for this length of time to ensure all creditors have proper time to present their claims.
Likewise, the six-month period practically presents the quickest length of time a dependent administration can be concluded due to accounting requirements and length of time involved in court approvals for each transaction.
The six-month requirement does not apply in independent administrations, and it therefore ends up being another reason why the dependent administration is a lengthier process than the independent administration.
Dependent Administrator Accounting Requirements
The Texas Estates Code lays out very specific requirements about how a dependent administrator must account for their actions as the administrator.
Under the Code, the administrator must file a sworn accounting at the end of each year of the probate administration and at the conclusion of the probate administration.
In accounting, the Administrator must provide:
- Details related to the income of the estate received by the administrator during the year
- Expenses paid by the estate during the year
- A listing of assets that remain on hand in the estate at the end of the administration
- A listing of all creditor claims that have been filed against the Estate during the year.
Why is Annual Accounting Required?
The annual accounting serves two functions:
- To inform the court of the activity of the administrator during the probate process.
- To provide the heirs and beneficiaries of the Estate with a full and complete accounting of the transactions that affected the Estate, allowing them the opportunity to monitor what is happening in the Estate.
At the conclusion of the dependent administration, the Administrator must file a Final accounting that details transactions since the last accounting. Likewise, in that final account, the Administrator provides a listing of heirs and beneficiaries and the portion of the Estate each is entitled to receive.
The Final accounting will be provided to each of those beneficiaries and heirs, who can object if they perceive any defects or problems. Once the Final accounting is approved, the dependent administrator distributes the remaining assets according to the court’s instruction, and the administration will thereafter be relieved of any further responsibility as the administrator.
Creditor Claims In Dependent Administration
The dependent administration presents challenges for creditors seeking payment from the estate for debts owed by the Decedent at the time of death. Unlike independent administration, where the creditors have unlimited options for obtaining payment, the Estates Code laid out very specific procedures creditors must follow in a dependent administration.
For instance, they must submit their Claim for payment in a very specific form, including required information. Additionally, they only have a certain timeframe within which they can be paid, and they must take certain steps to ensure they secure their Claim. If a creditor fails to follow the requirements specifically, the estate will no longer be liable to pay the debt.
The strict requirements related to creditors provide assurance to the estate that it only pays those debts properly proved to the court. Conversely, the requirements provide a minefield for creditors attempting to secure their Claims.
Need Legal Guidance?
If you plan to probate an estate but are unsure if dependent administration is the best method, or you have questions about the probate process and want to discuss your case with a Texas probate attorney, we invite you to contact Ford + Bergner LLP now by calling 713-352-0937. With offices in Houston, Dallas and Austin, we serve clients throughout the state.