1-1 By: Hilbert (Senate Sponsor - Whitmire) H.B. No. 2866
1-2 (In the Senate - Received from the House May 1, 1995;
1-3 May 2, 1995, read first time and referred to Committee on
1-4 Jurisprudence; May 16, 1995, reported favorably by the following
1-5 vote: Yeas 6, Nays 0; May 16, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to claims against a decedent's estate.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section 146, Texas Probate Code, is amended to
1-11 read as follows:
1-12 Sec. 146. Payment of Claims and Delivery of Exemptions and
1-13 Allowances. (a) Duty of the Independent Executor. An independent
1-14 executor, in the <his> administration of an estate, <although free
1-15 from the control of the court, shall nevertheless,> independently
1-16 of and without application to, or any action in or by the court:
1-17 (1) shall give the notices required under Sections 294
1-18 and 295;
1-19 (2) may give the notice permitted under Section 294(d)
1-20 and bar a claim under that subsection;
1-21 (3) shall approve, <receive presentation of and>
1-22 classify, <allow,> and pay, or reject, claims against the estate in
1-23 the same order of priority, classification, and proration
1-24 prescribed in this Code;<,> and
1-25 (4) shall set aside and deliver to those entitled
1-26 thereto exempt property and allowances for support, and allowances
1-27 in lieu of exempt property <homestead>, as prescribed in this Code,
1-28 to the same extent and result as if the independent executor's
1-29 <his> actions had been accomplished in, and under orders of, the
1-30 court.
1-31 (b) Secured Claims for Money. Within six months after the
1-32 date letters are granted or within four months after the date
1-33 notice is received under Section 295, whichever is later, a
1-34 creditor with a claim for money secured by real or personal
1-35 property of the estate must notify the independent executor by
1-36 certified or registered mail of the creditor's election to have the
1-37 creditor's claim approved as a matured secured claim to be paid in
1-38 due course of administration. If the election is not made, the
1-39 claim is a preferred debt and lien against the specific property
1-40 securing the indebtedness and shall be paid according to the terms
1-41 of the contract that secured the lien, and the claim may not be
1-42 asserted against other assets of the estate. The independent
1-43 executor may pay the claim before the claim matures if paying the
1-44 claim before maturity is in the best interest of the estate.
1-45 (c) Liability of Independent Executor. An independent
1-46 executor, in the administration of an estate, may pay at any time
1-47 and without personal liability a claim for money against the estate
1-48 to the extent approved and classified by the personal
1-49 representative if:
1-50 (1) the claim is not barred by limitations; and
1-51 (2) at the time of payment, the independent executor
1-52 reasonably believes the estate will have sufficient assets to pay
1-53 all claims against the estate.
1-54 SECTION 2. Section 294, Texas Probate Code, is amended by
1-55 amending Subsection (a) and adding Subsection (d) to read as
1-56 follows:
1-57 (a) Giving of Notice Required. Within one month after
1-58 receiving letters, personal representatives of estates shall send
1-59 to the comptroller of public accounts by certified or registered
1-60 mail if the decedent remitted or should have remitted taxes
1-61 administered by the comptroller of public accounts and publish in
1-62 some newspaper, printed in the county where the letters were
1-63 issued, if there be one, a notice requiring all persons having
1-64 claims against the estate being administered to present the same
1-65 within the time prescribed by law. The notice shall include the
1-66 date <time> of issuance of letters held by the representative, the
1-67 address to which claims may be presented, and an instruction of the
1-68 representative's choice that claims be addressed in care of the
2-1 representative, in care of the representative's attorney, or in
2-2 care of "Representative, Estate of __________" (naming the estate).
2-3 (d) Permissive Notice to Unsecured Creditors. At any time
2-4 before an estate administration is closed, the personal
2-5 representative may give notice by certified or registered mail,
2-6 with return receipt requested, to an unsecured creditor having a
2-7 claim for money against the estate expressly stating that the
2-8 creditor must present a claim within four months after the date of
2-9 the receipt of the notice or the claim is barred, if the claim is
2-10 not barred by the general statutes of limitation. The notice must
2-11 include:
2-12 (1) the dates of issuance of letters held by the
2-13 representative;
2-14 (2) the address to which claims may be presented; and
2-15 (3) an instruction of the representative's choice that
2-16 the claim be addressed in care of:
2-17 (A) the representative;
2-18 (B) the representative's attorney; or
2-19 (C) "Representative, Estate of " (naming
2-20 the estate).
2-21 SECTION 3. Section 295, Texas Probate Code, is amended to
2-22 read as follows:
2-23 Sec. 295. Notice to Holders of Secured <Recorded> Claims.
2-24 (a) When notice required for secured <lien> claimants. Within two
2-25 <four> months after receiving letters, the personal representative
2-26 of an estate shall give notice of the issuance of such letters to
2-27 each and every person known to the personal representative to have
2-28 <having> a claim for money against the estate of a decedent that is
2-29 secured by real or personal property of the estate. Within a
2-30 reasonable time after the personal representative obtains actual
2-31 knowledge of the existence of a person having a secured claim for
2-32 money and to whom notice was not previously given, the personal
2-33 representative shall give notice to the person of the issuance of
2-34 letters <, provided:>
2-35 <(1) That such claim is secured by a deed of trust,
2-36 mortgage, vendor's, mechanic's or other contractor's lien upon real
2-37 estate belonging to such estate; and>
2-38 <(2) That the instrument creating, extending, or
2-39 transferring such lien was duly recorded prior to the death of a
2-40 testator or intestate in the county in which the real estate
2-41 covered by such lien is situated, or prior to the time at which
2-42 title vested in an heir or devisee>.
2-43 (b) <When notice required for general claimants. Within
2-44 four months after receiving letters, the representative of an
2-45 estate shall give notice of the issuance of the letters to each
2-46 person having an outstanding claim for money against the estate of
2-47 a decedent if the representative has actual knowledge of the claim.>
2-48 <(c)> How notice shall be given. The notice stating the
2-49 original grant of letters <letter> shall be given by mailing same
2-50 by certified <mail> or registered mail <letter>, with return
2-51 receipt requested, addressed to the record holder of such
2-52 indebtedness or claim at the record holder's <his> last known post
2-53 office address.
2-54 (c) <(d)> Proof of service of notice. A copy of each notice
2-55 required by Subsection (a) of this section and a copy of<, together
2-56 with> the return receipt and an affidavit of the representative,
2-57 stating that said notice was mailed as required by law, giving the
2-58 name of the person to whom the notice was mailed, if not shown on
2-59 the notice or receipt, shall be filed with the clerk of <in> the
2-60 court from which letters were issued.
2-61 SECTION 4. Section 297, Texas Probate Code, is amended to
2-62 read as follows:
2-63 Sec. 297. Penalty for Failure to Give Notice. If the
2-64 representative fails to give the notices required in preceding
2-65 Sections, or to cause such notices to be given, the representative
2-66 <he> and the sureties on the representative's <his> bond shall be
2-67 liable for any damage which any person suffers by reason of such
2-68 neglect, unless it appears that such person had notice otherwise.
2-69 SECTION 5. Section 298, Texas Probate Code, is amended to
2-70 read as follows:
3-1 Sec. 298. Claims Against Estates of Decedents. (a) Time
3-2 for Presentation of Claims <Against Decedent's Estate Postponed if
3-3 not Presented in Six Months>. A claim may be presented to the
3-4 personal representative at any time before the estate is closed if
3-5 suit on the claim has not been barred by the general statutes of
3-6 limitation. If a claim of an unsecured creditor for money is not
3-7 presented within four months after the date of receipt of the
3-8 notice permitted by Section 294(d), the claim is barred <All claims
3-9 for money against a testator or intestate shall be presented to the
3-10 executor or administrator within six months after the original
3-11 grant of letters testamentary or of administration; otherwise the
3-12 payment thereof shall be postponed until the claims which have been
3-13 presented within six months and allowed by the executor or
3-14 administrator and approved by the court have been first entirely
3-15 paid; provided, however, that the failure of the holder of a
3-16 secured claim to present his claim within said six month period
3-17 shall not cause his claim to be postponed, but it shall be treated
3-18 as a claim to be paid in accordance with subsequent provisions of
3-19 this Code>.
3-20 (b) Claims Barred by Limitation Not to Be Allowed or
3-21 Approved. No claims for money against a decedent, or against the
3-22 estate of the decedent, on which a suit is barred under Subsection
3-23 (a) of this section, Section 313, or Section 317(a) or by a general
3-24 statute of limitation applicable thereto shall be allowed by a
3-25 personal representative. If allowed by the representative and the
3-26 court is satisfied that the claim is barred or that limitation has
3-27 run, the claim shall be disapproved.
3-28 SECTION 6. Section 301, Texas Probate Code, is amended to
3-29 read as follows:
3-30 Sec. 301. Claims for Money Must Be Authenticated. No
3-31 personal representative of a decedent's estate shall allow, and the
3-32 court shall not approve, a claim for money against such estate,
3-33 unless such claim be supported by an affidavit that the claim is
3-34 just and that all legal offsets, payments, and credits known to the
3-35 affiant have been allowed. If the claim is not founded on a
3-36 written instrument or account, the affidavit shall also state the
3-37 facts upon which the claim is founded. A photostatic copy of any
3-38 exhibit or voucher necessary to prove a claim may be offered with
3-39 and attached to the claim in lieu of the original.
3-40 SECTION 7. Section 303, Texas Probate Code, is amended to
3-41 read as follows:
3-42 Sec. 303. Evidence Concerning Lost or Destroyed Claims. If
3-43 evidence of a claim is lost or destroyed, the claimant<,> or an
3-44 authorized representative or agent of the claimant <someone for
3-45 him>, may make affidavit to the fact of such loss or destruction,
3-46 stating the amount, date, and nature of the claim and when due, and
3-47 that the same is just, and that all legal offsets, payments and
3-48 credits known to the affiant have been allowed, and that the
3-49 claimant is still the owner of the claim; and the claim must be
3-50 proved by disinterested testimony taken in open court, or by oral
3-51 or written deposition, before the claim is approved. If such claim
3-52 is allowed or approved without such affidavit, or if it is approved
3-53 without satisfactory proof, such allowance or approval shall be
3-54 void.
3-55 SECTION 8. Section 304, Texas Probate Code, is amended to
3-56 read as follows:
3-57 Sec. 304. Authentication of Claim by Others Than Individual
3-58 Owners. An authorized officer or representative <The cashier,
3-59 treasurer, or managing official> of a corporation or other entity
3-60 shall make the affidavit required to authenticate a claim of such
3-61 corporation or entity. When an affidavit is made by an officer of
3-62 a corporation, or by an executor, administrator, trustee, assignee,
3-63 agent, representative, or attorney, it shall be sufficient to state
3-64 in such affidavit that the person making it has made diligent
3-65 inquiry and examination, and that he believes that the claim is
3-66 just and that all legal offsets, payments, and credits made known
3-67 to the affiant have been allowed.
3-68 SECTION 9. Section 306, Texas Probate Code, is amended to
3-69 read as follows:
3-70 Sec. 306. Method of Handling Secured Claims For Money.
4-1 (a) Specifications of Claim. When a secured claim for money
4-2 against an estate is presented, the claimant shall specify therein,
4-3 in addition to all other matters required to be specified in
4-4 claims:
4-5 (1) Whether it is desired to have the claim allowed
4-6 and approved as a matured secured claim to be paid in due course of
4-7 administration, in which event it shall be so paid if allowed and
4-8 approved; or
4-9 (2) Whether it is desired to have the claim allowed,
4-10 approved, and fixed as a preferred debt and lien against the
4-11 specific property securing the indebtedness and paid according to
4-12 the terms of the contract which secured the lien, in which event it
4-13 shall be so allowed and approved if it is a valid lien; provided,
4-14 however, that the personal representative may pay said claim prior
4-15 to maturity if it is for the best interest of the estate to do so.
4-16 (b) <Handling of Secured Claims Not Presented in> Time for
4-17 Specification of Secured Claim. Within six months after the date
4-18 letters are granted, or within four months after the date notice is
4-19 received under Section 295 of this code, whichever is later, the
4-20 secured creditor may present the creditor's claim and shall specify
4-21 whether the claim is to be allowed and approved under Paragraph (1)
4-22 or (2) of Subsection (a) of this section. If a secured claim is
4-23 not presented within the time prescribed by this subsection or if
4-24 the claim is presented without specifying how the claim is to be
4-25 paid <provided by law>, it shall be treated as a claim to be paid
4-26 in accordance with Paragraph (2) of Subsection (a) hereof.
4-27 (c) Matured Secured Claims. If a claim has been allowed and
4-28 approved as a matured secured claim under Paragraph (1) of
4-29 Subsection (a) of this section, the claim shall be paid in due
4-30 course of administration and the secured creditor is not entitled
4-31 to exercise any other remedies in a manner that prevents the
4-32 preferential payment of claims and allowances described by
4-33 Paragraphs (1) through (3) of Section 320(a) of this code.
4-34 (d) <(c)> Approved Claim as Preferred Lien Against
4-35 Property. When an indebtedness has been allowed and approved under
4-36 Paragraph (2) of Subsection (a) hereof, no further claim shall be
4-37 made against other assets of the estate by reason thereof, but the
4-38 same thereafter shall remain a preferred lien against the property
4-39 securing same, and the property shall remain security for the debt
4-40 in any distribution or sale thereof prior to final maturity and
4-41 payment of the debt.
4-42 (e) <(d)> Payment of Maturities on Preferred Debt and Lien
4-43 <Secured> Claims. If property securing a claim allowed, approved,
4-44 and fixed under Paragraph (2) of Subsection (a) hereof is not sold
4-45 or distributed within six <twelve> months from the date letters
4-46 <testamentary or of administration> are granted, the representative
4-47 of the estate shall promptly pay all maturities which have accrued
4-48 on the debt according to the terms thereof, and shall perform all
4-49 the terms of any contract securing same. If the representative
4-50 defaults in such payment or performance, on application <motion> of
4-51 the claimholder, the court shall:
4-52 (1) require the sale of said property subject to the
4-53 unmatured part of such debt and apply the proceeds of the sale to
4-54 the liquidation of the maturities;
4-55 (2) require the sale of the property free of the lien
4-56 and apply the proceeds to the payment of the whole debt; or
4-57 (3) authorize foreclosure by the claimholder under
4-58 Subsection (f) of this section.
4-59 (f) Foreclosure of Preferred Liens. If the court authorizes
4-60 a claimholder to foreclose the claimholder's lien or security
4-61 interest on property securing a claim that has been allowed,
4-62 approved, and fixed under Paragraph (2) of Subsection (a) of this
4-63 section, the claimholder shall file with the court an application
4-64 supported by affidavit that:
4-65 (1) describes the property or part of the property to
4-66 be sold by foreclosure;
4-67 (2) describes the amounts of the claimholder's
4-68 outstanding debt;
4-69 (3) describes the maturities that have accrued on the
4-70 debt according to the terms of the debt;
5-1 (4) describes any other debts secured by a mortgage,
5-2 lien, or security interest against the property that are known by
5-3 the claimholder;
5-4 (5) contains a statement that the claimholder has no
5-5 knowledge of the existence of any debts secured by the property
5-6 other than those described by the application; and
5-7 (6) requests permission for the claimholder to
5-8 foreclose the claimholder's mortgage, lien, or security interest.
5-9 (g) Citation. On the filing of an application, the clerk
5-10 shall issue citation by personal service to the personal
5-11 representative and to any person described by the application as
5-12 having other debts secured by a mortgage, lien, or security
5-13 interest against the property and by posting to any other person
5-14 interested in the estate. The citation must require the person to
5-15 appear and show cause why foreclosure should or should not be
5-16 permitted.
5-17 (h) Setting of Hearing on Application. When an application
5-18 is filed, the clerk shall immediately notify the judge. The judge
5-19 shall schedule in writing a date for a hearing on the application.
5-20 The judge may, by entry on the docket or otherwise, continue the
5-21 hearing for a reasonable time to allow an interested person to
5-22 obtain an appraisal or other evidence concerning the fair market
5-23 value of the property that is the subject of the application. If
5-24 the interested person requests an unreasonable time for a
5-25 continuance, the person must show good cause for the continuance.
5-26 (i) Hearing. At the hearing, if the court finds that there
5-27 is a default in payment or performance under the contract that
5-28 secures the payment of the claim, the court shall enter an order
5-29 granting the claimholder permission to foreclose the claimholder's
5-30 mortgage, lien, or security interest in accordance with the
5-31 provisions of the document creating the mortgage, lien, or security
5-32 interest or in any other manner allowed by law. In the discretion
5-33 of the court and based on the evidence presented at the hearing,
5-34 the court may fix a minimum price for the property to be sold by
5-35 foreclosure that does not exceed the fair market value of the
5-36 property. If the court fixes a minimum price, the property may not
5-37 be sold at the foreclosure sale for a lower price.
5-38 (j) Appeal. Any person interested in the estate may appeal
5-39 an order issued under Subsection (i) of this section.
5-40 (k) Unsuccessful Foreclosure. If a foreclosure sale
5-41 authorized under this section is conducted and the property is not
5-42 sold because no bid at the sale met the minimum price set by the
5-43 court, the claimholder may file another application under
5-44 Subsection (f) of this section. The court may, in the court's
5-45 discretion, eliminate or modify the minimum price requirement and
5-46 grant permission for another foreclosure sale<, or, at the option
5-47 of the claimholder, a motion may be made in a like manner to
5-48 require the sale of said property free of such lien and to apply
5-49 the proceeds to the payment of the whole debt>.
5-50 SECTION 10. Section 308, Texas Probate Code, is amended to
5-51 read as follows:
5-52 Sec. 308. Depositing Claims With Clerk. Claims may also be
5-53 presented by depositing same, with vouchers and necessary exhibits
5-54 and affidavit attached, with the clerk, who, upon receiving same,
5-55 shall advise the representative of the estate, or the
5-56 representative's <his> attorney, by letter mailed to the
5-57 representative's <his> last known address, of the deposit of same.
5-58 Should the representative fail to act on said claim within thirty
5-59 days after it is deposited <filed>, then it shall be presumed to be
5-60 rejected. Failure of the clerk to give notice as required herein
5-61 shall not affect the validity of the presentment or the presumption
5-62 of rejection because not acted upon within said thirty day period.
5-63 The clerk shall enter a deposited claim on the claim docket.
5-64 SECTION 11. Section 309, Texas Probate Code, is amended to
5-65 read as follows:
5-66 Sec. 309. Memorandum of Allowance or Rejection of Claim.
5-67 When a duly authenticated claim against an estate is presented to
5-68 the representative, or deposited <filed> with the clerk as
5-69 heretofore provided, the representative <he> shall, within thirty
5-70 days after the claim is presented or deposited <filed>, endorse
6-1 thereon, <or> annex thereto, or file with the clerk a memorandum
6-2 signed by the representative <him>, stating the date <time> of
6-3 presentation or depositing <filing> of the claim, and that the
6-4 representative <he> allows or rejects it, or what portion thereof
6-5 the representative <he> allows or rejects.
6-6 SECTION 12. Section 310, Texas Probate Code, is amended to
6-7 read as follows:
6-8 Sec. 310. Failure to Endorse or Annex Memorandum. The
6-9 failure of a representative of an estate to timely allow or reject
6-10 a claim under Section 309 of this code <endorse on, or annex to, a
6-11 claim presented to him, his allowance or rejection thereof within
6-12 thirty days after the claim was presented,> shall constitute a
6-13 rejection of the claim. If the claim is thereafter established by
6-14 suit, the costs shall be taxed against the representative,
6-15 individually, or the representative <he> may be removed on the
6-16 written complaint of any person interested in the claim, after
6-17 personal service of citation, hearing, and proof, as in other cases
6-18 of removal.
6-19 SECTION 13. Section 311, Texas Probate Code, is amended to
6-20 read as follows:
6-21 Sec. 311. When Claims Entered in Docket. After a claim
6-22 against an estate has been presented to and allowed or rejected by
6-23 the personal representative, in whole or in part, the claim must be
6-24 filed with the county clerk of the proper county. The clerk shall
6-25 enter the claim on the claim docket <If a claim against the estate
6-26 of a decedent has been presented within six months after the
6-27 issuance of original testamentary letters or of administration, and
6-28 all or part of such claim is allowed by the executor or
6-29 administrator, the claim shall forthwith be filed with the county
6-30 clerk of the proper county, who shall enter the same in its proper
6-31 place upon the claim docket. If such claim is not so presented
6-32 within such time, the payment thereof, should it be approved in
6-33 whole or in part, shall be postponed until all other claims which
6-34 have been presented, allowed, and approved within the time
6-35 prescribed have been first entirely paid>.
6-36 SECTION 14. Sections 312(c), (d), and (e), Texas Probate
6-37 Code, are amended to read as follows:
6-38 (c) Hearing on Claims. Although a claim may be properly
6-39 authenticated and allowed, if the court is not satisfied that it is
6-40 just, the court <he> shall examine the claimant and the personal
6-41 representative under oath, and hear other evidence necessary to
6-42 determine the issue. If not then convinced that the claim is just,
6-43 the court <he> shall disapprove it.
6-44 (d) Order of the Court. When the court has acted upon a
6-45 claim, the court <he> shall also endorse thereon, or annex thereto,
6-46 a written memorandum dated and signed officially, stating the exact
6-47 action taken upon such claim, whether approved or disapproved, or
6-48 approved in part or rejected in part, and stating the
6-49 classification of the claim. Such orders shall have the force and
6-50 effect of final judgments.
6-51 (e) Appeal. When a claimant or any person interested in an
6-52 estate shall be dissatisfied with the action of the court upon a
6-53 claim, the claimant or person <he> may appeal therefrom to the
6-54 courts of appeals, as from other judgments of the county court in
6-55 probate matters.
6-56 SECTION 15. Section 313, Texas Probate Code, is amended to
6-57 read as follows:
6-58 Sec. 313. Suit on Rejected Claim. When a claim or a part
6-59 thereof has been rejected by the representative, the claimant shall
6-60 institute suit thereon in the court of original probate
6-61 jurisdiction in which the estate is pending or in any other court
6-62 of proper jurisdiction within ninety days after such rejection, or
6-63 the claim shall be barred. When a rejected claim is sued on, the
6-64 endorsement made on or annexed thereto, or any memorandum of
6-65 rejection filed with respect to the claim, shall be taken to be
6-66 true without further proof, unless denied under oath. When a
6-67 rejected claim or part thereof has been established by suit, no
6-68 execution shall issue, but the judgment shall be certified within
6-69 thirty days after rendition, if of any court other than the court
6-70 of original probate jurisdiction, and filed in the court in which
7-1 the cause is pending, entered upon the claim docket, classified by
7-2 the court, and handled as if originally allowed and approved in due
7-3 course of administration.
7-4 SECTION 16. Section 314, Texas Probate Code, is amended to
7-5 read as follows:
7-6 Sec. 314. Presentment of Claims a Prerequisite for Judgment.
7-7 No judgment shall be rendered in favor of a claimant upon any claim
7-8 for money which has not been legally presented to the
7-9 representative of an estate, and rejected by the representative
7-10 <him> or by the court, in whole or in part.
7-11 SECTION 17. Section 315, Texas Probate Code, is amended to
7-12 read as follows:
7-13 Sec. 315. Costs of Suit With Respect to Claims. All costs
7-14 incurred in the probate court with respect to claims shall be taxed
7-15 as follows:
7-16 (a) If allowed and approved, the estate shall pay the
7-17 costs.
7-18 (b) If allowed, but disapproved, the claimant shall
7-19 pay the costs.
7-20 (c) If rejected, but established by suit, the estate
7-21 shall pay the costs.
7-22 (d) If rejected, but not established by suit, the
7-23 claimant shall pay the costs, except as provided by Section 310 of
7-24 this code.
7-25 (e) In suits to establish a claim after rejection in
7-26 part, if the claimant fails to recover judgment for a greater
7-27 amount than was allowed or approved, the claimant <he> shall pay
7-28 all costs.
7-29 SECTION 18. Section 316, Texas Probate Code, is amended to
7-30 read as follows:
7-31 Sec. 316. Claims Against Personal Representatives <Executors
7-32 or Administrators>. The naming of an executor in a will shall not
7-33 operate to extinguish any just claim which the deceased had against
7-34 the person named as executor <him>; and, in all cases where a
7-35 personal representative <an executor or administrator> is indebted
7-36 to the <his> testator or intestate, the representative <he> shall
7-37 account for the debt in the same manner as if it were cash in the
7-38 representative's <his> hands; provided, however, that if said debt
7-39 was not due at the time of receiving letters, the representative
7-40 <he> shall be required to account for it only from the date when it
7-41 becomes due.
7-42 SECTION 19. Sections 317(a) and (b), Texas Probate Code, are
7-43 amended to read as follows:
7-44 (a) By Executors or Administrators. The foregoing
7-45 provisions of this Code relative to the presentation of claims
7-46 against an estate shall not be construed to apply to any claim of a
7-47 personal representative <the executor or administrator> against the
7-48 <his> testator or intestate; but a personal representative <an
7-49 executor or administrator> holding such claim shall file the same
7-50 in the court granting the <his> letters, verified by affidavit as
7-51 required in other cases, within six months after the representative
7-52 <he> has qualified, or such claim shall be barred.
7-53 (b) Action on Such Claims. When a claim by a personal
7-54 representative <an executor or administrator> has been filed with
7-55 the court within the required time, such claim shall be entered
7-56 upon the claim docket and acted upon by the court in the same
7-57 manner as in other cases, and, when the claim has been acted upon
7-58 by the court, an appeal from the judgment of the court may be taken
7-59 as in other cases.
7-60 SECTION 20. Section 318, Texas Probate Code, is amended to
7-61 read as follows:
7-62 Sec. 318. Claims Not Allowed After Order for Partition and
7-63 Distribution. No claim for money against the estate of a decedent
7-64 <his testator or intestate> shall be allowed by a personal
7-65 representative <an executor or administrator> and no suit shall be
7-66 instituted against the representative <him> on any such claim,
7-67 after an order for final partition and distribution has been made;
7-68 but, after such an order has been made, the owner of any claim not
7-69 barred by the laws of limitation shall have an <his> action thereon
7-70 against the heirs, devisees, <or> legatees, or creditors of the
8-1 estate, limited to the value of the property received by them in
8-2 distributions from the estate <such partition and distribution>.
8-3 SECTION 21. Section 320, Texas Probate Code, is amended to
8-4 read as follows:
8-5 Sec. 320. Order of Payment of Claims. (a) Priority of
8-6 Payments. Personal representatives <Executors and administrators>,
8-7 when they have funds in their hands belonging to the estate, shall
8-8 pay in the following order:
8-9 (1) Funeral expenses and expenses of last sickness, in
8-10 an amount not to exceed Five Thousand Dollars<, if the claims
8-11 therefor have been presented within sixty days from the original
8-12 grant of letters testamentary or administration, but if not
8-13 presented within such time, their payment shall be postponed until
8-14 the allowances made to the widow and children, or to either, are
8-15 paid>.
8-16 (2) Allowances made to the surviving spouse <widow>
8-17 and children, or to either.
8-18 (3) Expenses of administration and the expenses
8-19 incurred in the preservation, safekeeping, and management of the
8-20 estate.
8-21 (4) Other claims against the estate in the order of
8-22 their classification.
8-23 (b) Sale of Mortgaged Property. If a personal
8-24 representative has the proceeds of a sale that has been made for
8-25 the satisfaction of a mortgage, lien, or security interest, and the
8-26 proceeds, or any part of the proceeds, are not required for the
8-27 payment of any debts against the estate that have a preference over
8-28 the mortgage, lien, or security interest, the personal
8-29 representative shall pay the proceeds to any holder of a mortgage,
8-30 lien, or security interest. If there is more than one mortgage,
8-31 lien, or security interest against the property, the personal
8-32 representative shall pay the holders in the order of the holders'
8-33 priority. If the personal representative fails to pay proceeds
8-34 under this subsection, a holder, on proof of the failure to pay,
8-35 may obtain an order from the court directing the payment to be
8-36 made.
8-37 (c) Claimant's Petition. A claimant whose claim has not
8-38 been paid may petition the court for determination of his claim at
8-39 any time before it is barred by the applicable statute of
8-40 limitations and upon due proof procure an order for its allowance
8-41 and payment from the estate.
8-42 (d) Permissive Order of Payment. After the sixth month
8-43 after the date letters are granted and on application by the
8-44 personal representative stating that the personal representative
8-45 has no actual knowledge of any outstanding enforceable claims
8-46 against the estate other than the claims already approved and
8-47 classified by the court, the court may order the personal
8-48 representative to pay any claim that is allowed and approved.
8-49 SECTION 22. Section 320A, Texas Probate Code, is amended to
8-50 read as follows:
8-51 Sec. 320A. Funeral Expenses. When personal representatives
8-52 <executors, independent executors, and administrators> pay claims
8-53 for funeral expenses and for items incident thereto, such as
8-54 tombstones, grave markers, crypts or burial plots, they shall
8-55 charge the whole of such claims to the decedent's estate and shall
8-56 charge no part thereof to the community share of a surviving
8-57 spouse.
8-58 SECTION 23. Section 321, Texas Probate Code, is amended to
8-59 read as follows:
8-60 Sec. 321. Deficiency of Assets. When there is a deficiency
8-61 of assets to pay all claims of the same class, other than secured
8-62 claims for money, the claims in such class shall be paid pro rata,
8-63 as directed by the court, and in the order directed. No personal
8-64 representative <executor or administrator> shall be allowed to pay
8-65 the <any> claims, whether the estate is solvent or insolvent,
8-66 except with the pro rata amount of the funds of the estate that
8-67 have come to hand.
8-68 SECTION 24. Section 322, Texas Probate Code, is amended to
8-69 read as follows:
8-70 Sec. 322. Classification of Claims Against Estates of
9-1 Decedent. Claims against an estate of a decedent shall be
9-2 classified <classed> and have priority of payment, as follows:
9-3 Class 1. Funeral expenses and expenses of last
9-4 sickness for a reasonable amount to be approved by the court, not
9-5 to exceed Five Thousand Dollars, with any excess to be classified
9-6 and paid as other unsecured claims.
9-7 Class 2. Expenses of administration and expenses
9-8 incurred in the preservation, safekeeping, and management of the
9-9 estate.
9-10 Class 3. Secured claims for money under Section
9-11 306(a)(1) <Claims secured by mortgage or other liens>, including
9-12 tax liens, so far as the same can be paid out of the proceeds of
9-13 the property subject to such mortgage or other lien, and when more
9-14 than one mortgage, <or> lien, or security interest shall exist upon
9-15 the same property, they shall be paid in order of their priority
9-16 <the oldest shall be first paid; but no preference shall be given
9-17 to such mortgage or lien>.
9-18 Class 4. Claims for taxes, penalties, and interest due
9-19 under Title 2, Tax Code; Chapter 8, Title 132, Revised Statutes;
9-20 Section 81.111, Natural Resources Code; the Municipal Sales and Use
9-21 Tax Act (Chapter 321, Tax Code); Section 11B, Chapter 141, Acts of
9-22 the 63rd Legislature, Regular Session, 1973 (Article 1118x,
9-23 Vernon's Texas Civil Statutes); or Section 16, Chapter 683, Acts of
9-24 the 66th Legislature, Regular Session, 1979 (Article 1118y,
9-25 Vernon's Texas Civil Statutes).
9-26 Class 5. Claims for the cost of confinement
9-27 established by the institutional division of the Texas Department
9-28 of Criminal Justice <Corrections> under Section 501.017, Government
9-29 Code <Article 6184s, Revised Statutes>.
9-30 Class 6. Claims for repayment of medical assistance
9-31 payments made by the state under Chapter 32, Human Resources Code,
9-32 to or for the benefit of the decedent.
9-33 Class 7. All other claims <legally exhibited within
9-34 six months after the original grant of letters testamentary or of
9-35 administration>.
9-36 <Class 8. All claims legally exhibited after the lapse
9-37 of six months from the original grant of letters testamentary or of
9-38 administration.>
9-39 SECTION 25. Section 323, Texas Probate Code, is amended to
9-40 read as follows:
9-41 Sec. 323. Joint Obligation. When two or more persons are
9-42 jointly bound for the payment of a debt, or for any other purpose,
9-43 upon the death of any of the persons so bound, the decedent's <his>
9-44 estate shall be charged by virtue of such obligation in the same
9-45 manner as if the obligors had been bound severally as well as
9-46 jointly.
9-47 SECTION 26. Section 324, Texas Probate Code, is amended to
9-48 read as follows:
9-49 Sec. 324. Representatives Not to Purchase Claims. It shall
9-50 be unlawful, and cause for removal, for a personal representative
9-51 <an executor or administrator,> whether acting under appointment by
9-52 will or under orders of the court, to purchase for the personal
9-53 representative's <his> own use or for any purposes whatsoever, any
9-54 claim against the estate the personal representative <he>
9-55 represents. Upon written complaint by any person interested in the
9-56 estate, and satisfactory proof of violation of this provision,
9-57 after citation and hearing, the court shall enter its order
9-58 cancelling the claim, and no part thereof shall be paid out of the
9-59 estate; and the court <judge> may, in the court's <his> discretion,
9-60 remove such representative.
9-61 SECTION 27. Section 328(b), Texas Probate Code, is amended
9-62 to read as follows:
9-63 (b) Penalty Against Representative. Upon return of the
9-64 execution not satisfied, or merely upon the affidavit of demand and
9-65 failure to pay, the court may cite the representative and the
9-66 sureties on the representative's <his> bond to show cause why they
9-67 should not be held liable for such debt, interest, costs, and
9-68 damages. Upon return of citation duly served, if good cause to the
9-69 contrary be not shown, the court shall render judgment against the
9-70 representative and sureties so cited, in favor of the holder of
10-1 such claim, for the amount theretofore ordered to be paid or
10-2 established by suit, and remaining unpaid, together with interest
10-3 and costs, and also for damages upon the amount neglected to be
10-4 paid, at the rate of five per cent per month for each month, or
10-5 fraction thereof, that the payment was neglected to be paid after
10-6 demand made therefor, which damages may be collected in any court
10-7 of competent jurisdiction.
10-8 SECTION 28. Sections 329(a) and (c), Texas Probate Code, are
10-9 amended to read as follows:
10-10 (a) Circumstances Under Which Money May Be Borrowed. Any
10-11 real or personal property of an estate may be mortgaged or pledged
10-12 by deed of trust or otherwise as security for an indebtedness,
10-13 under order of the court, when necessary for any of the following
10-14 purposes:
10-15 (1) For the payment of any ad valorem, income, gift,
10-16 estate, inheritance, or transfer taxes upon the transfer of an
10-17 estate or due from a decedent or the <his> estate, regardless of
10-18 whether such taxes are assessed by a state, or any of its political
10-19 subdivisions, or by the federal government or by a foreign country;
10-20 or
10-21 (2) For payment of expenses of administration,
10-22 including sums necessary for operation of a business, farm, or
10-23 ranch owned by the estate; or
10-24 (3) For payment of claims allowed and approved, or
10-25 established by suit, against the estate; or
10-26 (4) To renew and extend a valid, existing lien.
10-27 (c) Order Authorizing Such Borrowing, or Extension of Lien.
10-28 The court, if satisfied by the evidence adduced at the hearing upon
10-29 said application that it is to the interest of the estate to borrow
10-30 money, or to extend and renew an existing lien, shall issue its
10-31 order to that effect, setting out the terms and conditions of the
10-32 authority granted; provided, however, the loan or renewal shall not
10-33 be for a term longer than three years from the granting of original
10-34 letters to the representative of such estate, but the court may
10-35 authorize an extension of such lien for not more than one
10-36 additional year without further citation or notice. If a new lien
10-37 is created on property of an estate, the court may require that the
10-38 representative's general bond be increased, or an additional bond
10-39 given, for the protection of the estate and the creditors, as for
10-40 the sale of real property belonging to the estate.
10-41 SECTION 29. Sections 300, 325, and 327, Texas Probate Code,
10-42 are repealed.
10-43 SECTION 30. The change in law made by this Act applies only
10-44 to the estates of persons who die on or after the effective date of
10-45 this Act. An estate of a person who dies before the effective date
10-46 of this Act is covered by the law in effect when the person died,
10-47 and the former law continues in effect for that purpose.
10-48 SECTION 31. This Act takes effect January 1, 1996.
10-49 SECTION 32. The importance of this legislation and the
10-50 crowded condition of the calendars in both houses create an
10-51 emergency and an imperative public necessity that the
10-52 constitutional rule requiring bills to be read on three several
10-53 days in each house be suspended, and this rule is hereby suspended.
10-54 * * * * *