By Whitmire S.B. No. 1224
74R5878 NSC-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to claims against a decedent's estate.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 146, Texas Probate Code, is amended to
1-5 read as follows:
1-6 Sec. 146. Payment of Claims and Delivery of Exemptions and
1-7 Allowances. (a) Duty of the Independent Executor. An independent
1-8 executor, in the <his> administration of an estate, <although free
1-9 from the control of the court, shall nevertheless,> independently
1-10 of and without application to, or any action in or by the court:
1-11 (1) shall give the notices required under Sections 294
1-12 and 295;
1-13 (2) may give the notice permitted under Section 294(d)
1-14 and bar a claim under that subsection;
1-15 (3) shall approve, <receive presentation of and>
1-16 classify, <allow,> and pay, or reject, claims against the estate in
1-17 the same order of priority, classification, and proration
1-18 prescribed in this Code;<,> and
1-19 (4) shall set aside and deliver to those entitled
1-20 thereto exempt property and allowances for support, and allowances
1-21 in lieu of exempt property <homestead>, as prescribed in this Code,
1-22 to the same extent and result as if the independent executor's
1-23 <his> actions had been accomplished in, and under orders of, the
1-24 court.
2-1 (b) Secured Claims for Money. Within six months after the
2-2 date letters are granted or within four months after the date
2-3 notice is received under Section 295, whichever is later, a
2-4 creditor with a claim for money secured by real or personal
2-5 property of the estate must notify the independent executor by
2-6 certified or registered mail of the creditor's election to have the
2-7 creditor's claim approved as a matured secured claim to be paid in
2-8 due course of administration. If the election is not made, the
2-9 claim is a preferred debt and lien against the specific property
2-10 securing the indebtedness and shall be paid according to the terms
2-11 of the contract that secured the lien, and the claim may not be
2-12 asserted against other assets of the estate. The independent
2-13 executor may pay the claim before the claim matures if paying the
2-14 claim before maturity is in the best interest of the estate.
2-15 (c) Liability of Independent Executor. An independent
2-16 executor, in the administration of an estate, may pay at any time
2-17 and without personal liability a claim for money against the estate
2-18 to the extent approved and classified by the personal
2-19 representative if:
2-20 (1) the claim is not barred by limitations; and
2-21 (2) at the time of payment, the independent executor
2-22 reasonably believes the estate will have sufficient assets to pay
2-23 all claims against the estate.
2-24 SECTION 2. Section 294, Texas Probate Code, is amended by
2-25 amending Subsection (a) and adding Subsection (d) to read as
2-26 follows:
2-27 (a) Giving of Notice Required. Within one month after
3-1 receiving letters, personal representatives of estates shall send
3-2 to the comptroller of public accounts by certified or registered
3-3 mail if the decedent remitted or should have remitted taxes
3-4 administered by the comptroller of public accounts and publish in
3-5 some newspaper, printed in the county where the letters were
3-6 issued, if there be one, a notice requiring all persons having
3-7 claims against the estate being administered to present the same
3-8 within the time prescribed by law. The notice shall include the
3-9 date <time> of issuance of letters held by the representative, the
3-10 address to which claims may be presented, and an instruction of the
3-11 representative's choice that claims be addressed in care of the
3-12 representative, in care of the representative's attorney, or in
3-13 care of "Representative, Estate of __________" (naming the estate).
3-14 (d) Permissive Notice to Unsecured Creditors. At any time
3-15 before an estate administration is closed, the personal
3-16 representative may give notice by certified or registered mail,
3-17 with return receipt requested, to an unsecured creditor having a
3-18 claim for money against the estate expressly stating that the
3-19 creditor must present a claim within four months after the date of
3-20 the receipt of the notice or the claim is barred, if the claim is
3-21 not barred by the general statutes of limitation. The notice must
3-22 include:
3-23 (1) the dates of issuance of letters held by the
3-24 representative;
3-25 (2) the address to which claims may be presented; and
3-26 (3) an instruction of the representative's choice that
3-27 the claim be addressed in care of:
4-1 (A) the representative;
4-2 (B) the representative's attorney; or
4-3 (C) "Representative, Estate of " (naming
4-4 the estate).
4-5 SECTION 3. Section 295, Texas Probate Code, is amended to
4-6 read as follows:
4-7 Sec. 295. Notice to Holders of Secured <Recorded> Claims.
4-8 (a) When notice required for secured <lien> claimants. Within two
4-9 <four> months after receiving letters, the personal representative
4-10 of an estate shall give notice of the issuance of such letters to
4-11 each and every person known to the personal representative to have
4-12 <having> a claim for money against the estate of a decedent that is
4-13 secured by real or personal property of the estate. Within a
4-14 reasonable time after the personal representative obtains actual
4-15 knowledge of the existence of a person having a secured claim for
4-16 money and to whom notice was not previously given, the personal
4-17 representative shall give notice to the person of the issuance of
4-18 letters <, provided:>
4-19 <(1) That such claim is secured by a deed of trust,
4-20 mortgage, vendor's, mechanic's or other contractor's lien upon real
4-21 estate belonging to such estate; and>
4-22 <(2) That the instrument creating, extending, or
4-23 transferring such lien was duly recorded prior to the death of a
4-24 testator or intestate in the county in which the real estate
4-25 covered by such lien is situated, or prior to the time at which
4-26 title vested in an heir or devisee>.
4-27 (b) <When notice required for general claimants. Within
5-1 four months after receiving letters, the representative of an
5-2 estate shall give notice of the issuance of the letters to each
5-3 person having an outstanding claim for money against the estate of
5-4 a decedent if the representative has actual knowledge of the claim.>
5-5 <(c)> How notice shall be given. The notice stating the
5-6 original grant of letters <letter> shall be given by mailing same
5-7 by certified <mail> or registered mail <letter>, with return
5-8 receipt requested, addressed to the record holder of such
5-9 indebtedness or claim at the record holder's <his> last known post
5-10 office address.
5-11 (c) <(d)> Proof of service of notice. A copy of each notice
5-12 required by Subsection (a) of this section and a copy of<, together
5-13 with> the return receipt and an affidavit of the representative,
5-14 stating that said notice was mailed as required by law, giving the
5-15 name of the person to whom the notice was mailed, if not shown on
5-16 the notice or receipt, shall be filed with the clerk of <in> the
5-17 court from which letters were issued.
5-18 SECTION 4. Section 297, Texas Probate Code, is amended to
5-19 read as follows:
5-20 Sec. 297. Penalty for Failure to Give Notice. If the
5-21 representative fails to give the notices required in preceding
5-22 Sections, or to cause such notices to be given, the representative
5-23 <he> and the sureties on the representative's <his> bond shall be
5-24 liable for any damage which any person suffers by reason of such
5-25 neglect, unless it appears that such person had notice otherwise.
5-26 SECTION 5. Section 298, Texas Probate Code, is amended to
5-27 read as follows:
6-1 Sec. 298. Claims Against Estates of Decedents. (a) Time
6-2 for Presentation of Claims <Against Decedent's Estate Postponed if
6-3 not Presented in Six Months>. A claim may be presented to the
6-4 personal representative at any time before the estate is closed if
6-5 suit on the claim has not been barred by the general statutes of
6-6 limitation. If a claim of an unsecured creditor for money is not
6-7 presented within four months after the date of receipt of the
6-8 notice permitted by Section 294(d), the claim is barred <All claims
6-9 for money against a testator or intestate shall be presented to the
6-10 executor or administrator within six months after the original
6-11 grant of letters testamentary or of administration; otherwise the
6-12 payment thereof shall be postponed until the claims which have been
6-13 presented within six months and allowed by the executor or
6-14 administrator and approved by the court have been first entirely
6-15 paid; provided, however, that the failure of the holder of a
6-16 secured claim to present his claim within said six month period
6-17 shall not cause his claim to be postponed, but it shall be treated
6-18 as a claim to be paid in accordance with subsequent provisions of
6-19 this Code>.
6-20 (b) Claims Barred by Limitation Not to Be Allowed or
6-21 Approved. No claims for money against a decedent, or against the
6-22 estate of the decedent, on which a suit is barred under Subsection
6-23 (a) of this section, Section 313, or Section 317(a) or by a general
6-24 statute of limitation applicable thereto shall be allowed by a
6-25 personal representative. If allowed by the representative and the
6-26 court is satisfied that the claim is barred or that limitation has
6-27 run, the claim shall be disapproved.
7-1 SECTION 6. Section 301, Texas Probate Code, is amended to
7-2 read as follows:
7-3 Sec. 301. Claims for Money Must Be Authenticated. No
7-4 personal representative of a decedent's estate shall allow, and the
7-5 court shall not approve, a claim for money against such estate,
7-6 unless such claim be supported by an affidavit that the claim is
7-7 just and that all legal offsets, payments, and credits known to the
7-8 affiant have been allowed. If the claim is not founded on a
7-9 written instrument or account, the affidavit shall also state the
7-10 facts upon which the claim is founded. A photostatic copy of any
7-11 exhibit or voucher necessary to prove a claim may be offered with
7-12 and attached to the claim in lieu of the original.
7-13 SECTION 7. Section 303, Texas Probate Code, is amended to
7-14 read as follows:
7-15 Sec. 303. Evidence Concerning Lost or Destroyed Claims. If
7-16 evidence of a claim is lost or destroyed, the claimant<,> or an
7-17 authorized representative or agent of the claimant <someone for
7-18 him>, may make affidavit to the fact of such loss or destruction,
7-19 stating the amount, date, and nature of the claim and when due, and
7-20 that the same is just, and that all legal offsets, payments and
7-21 credits known to the affiant have been allowed, and that the
7-22 claimant is still the owner of the claim; and the claim must be
7-23 proved by disinterested testimony taken in open court, or by oral
7-24 or written deposition, before the claim is approved. If such claim
7-25 is allowed or approved without such affidavit, or if it is approved
7-26 without satisfactory proof, such allowance or approval shall be
7-27 void.
8-1 SECTION 8. Section 304, Texas Probate Code, is amended to
8-2 read as follows:
8-3 Sec. 304. Authentication of Claim by Others Than Individual
8-4 Owners. An authorized officer or representative <The cashier,
8-5 treasurer, or managing official> of a corporation or other entity
8-6 shall make the affidavit required to authenticate a claim of such
8-7 corporation or entity. When an affidavit is made by an officer of
8-8 a corporation, or by an executor, administrator, trustee, assignee,
8-9 agent, representative, or attorney, it shall be sufficient to state
8-10 in such affidavit that the person making it has made diligent
8-11 inquiry and examination, and that he believes that the claim is
8-12 just and that all legal offsets, payments, and credits made known
8-13 to the affiant have been allowed.
8-14 SECTION 9. Section 306, Texas Probate Code, is amended to
8-15 read as follows:
8-16 Sec. 306. Method of Handling Secured Claims For Money.
8-17 (a) Specifications of Claim. When a secured claim for money
8-18 against an estate is presented, the claimant shall specify therein,
8-19 in addition to all other matters required to be specified in
8-20 claims:
8-21 (1) Whether it is desired to have the claim allowed
8-22 and approved as a matured secured claim to be paid in due course of
8-23 administration, in which event it shall be so paid if allowed and
8-24 approved; or
8-25 (2) Whether it is desired to have the claim allowed,
8-26 approved, and fixed as a preferred debt and lien against the
8-27 specific property securing the indebtedness and paid according to
9-1 the terms of the contract which secured the lien, in which event it
9-2 shall be so allowed and approved if it is a valid lien; provided,
9-3 however, that the personal representative may pay said claim prior
9-4 to maturity if it is for the best interest of the estate to do so.
9-5 (b) <Handling of Secured Claims Not Presented in> Time for
9-6 Specification of Secured Claim. Within six months after the date
9-7 letters are granted, or within four months after the date notice is
9-8 received under Section 295 of this code, whichever is later, the
9-9 secured creditor may present the creditor's claim and shall specify
9-10 whether the claim is to be allowed and approved under Paragraph (1)
9-11 or (2) of Subsection (a) of this section. If a secured claim is
9-12 not presented within the time prescribed by this subsection or if
9-13 the claim is presented without specifying how the claim is to be
9-14 paid <provided by law>, it shall be treated as a claim to be paid
9-15 in accordance with Paragraph (2) of Subsection (a) hereof.
9-16 (c) Matured Secured Claims. If a claim has been allowed and
9-17 approved as a matured secured claim under Paragraph (1) of
9-18 Subsection (a) of this section, the claim shall be paid in due
9-19 course of administration and the secured creditor is not entitled
9-20 to exercise any other remedies in a manner that prevents the
9-21 preferential payment of claims and allowances described by
9-22 Paragraphs (1) through (3) of Section 320(a) of this code.
9-23 (d) <(c)> Approved Claim as Preferred Lien Against
9-24 Property. When an indebtedness has been allowed and approved under
9-25 Paragraph (2) of Subsection (a) hereof, no further claim shall be
9-26 made against other assets of the estate by reason thereof, but the
9-27 same thereafter shall remain a preferred lien against the property
10-1 securing same, and the property shall remain security for the debt
10-2 in any distribution or sale thereof prior to final maturity and
10-3 payment of the debt.
10-4 (e) <(d)> Payment of Maturities on Preferred Debt and Lien
10-5 <Secured> Claims. If property securing a claim allowed, approved,
10-6 and fixed under Paragraph (2) of Subsection (a) hereof is not sold
10-7 or distributed within six <twelve> months from the date letters
10-8 <testamentary or of administration> are granted, the representative
10-9 of the estate shall promptly pay all maturities which have accrued
10-10 on the debt according to the terms thereof, and shall perform all
10-11 the terms of any contract securing same. If the representative
10-12 defaults in such payment or performance, on application <motion> of
10-13 the claimholder, the court shall:
10-14 (1) require the sale of said property subject to the
10-15 unmatured part of such debt and apply the proceeds of the sale to
10-16 the liquidation of the maturities;
10-17 (2) require the sale of the property free of the lien
10-18 and apply the proceeds to the payment of the whole debt; or
10-19 (3) authorize foreclosure by the claimholder under
10-20 Subsection (f) of this section.
10-21 (f) Foreclosure of Preferred Liens. If the court authorizes
10-22 a claimholder to foreclose the claimholder's lien or security
10-23 interest on property securing a claim that has been allowed,
10-24 approved, and fixed under Paragraph (2) of Subsection (a) of this
10-25 section, the claimholder shall file with the court an application
10-26 supported by affidavit that:
10-27 (1) describes the property or part of the property to
11-1 be sold by foreclosure;
11-2 (2) describes the amounts of the claimholder's
11-3 outstanding debt;
11-4 (3) describes the maturities that have accrued on the
11-5 debt according to the terms of the debt;
11-6 (4) describes any other debts secured by a mortgage,
11-7 lien, or security interest against the property that are known by
11-8 the claimholder;
11-9 (5) contains a statement that the claimholder has no
11-10 knowledge of the existence of any debts secured by the property
11-11 other than those described by the application; and
11-12 (6) requests permission for the claimholder to
11-13 foreclose the claimholder's mortgage, lien, or security interest.
11-14 (g) Citation. On the filing of an application, the clerk
11-15 shall issue citation by personal service to the personal
11-16 representative and to any person described by the application as
11-17 having other debts secured by a mortgage, lien, or security
11-18 interest against the property and by posting to any other person
11-19 interested in the estate. The citation must require the person to
11-20 appear and show cause why foreclosure should or should not be
11-21 permitted.
11-22 (h) Setting of Hearing on Application. When an application
11-23 is filed, the clerk shall immediately notify the judge. The judge
11-24 shall schedule in writing a date for a hearing on the application.
11-25 The judge may, by entry on the docket or otherwise, continue the
11-26 hearing for a reasonable time to allow an interested person to
11-27 obtain an appraisal or other evidence concerning the fair market
12-1 value of the property that is the subject of the application. If
12-2 the interested person requests an unreasonable time for a
12-3 continuance, the person must show good cause for the continuance.
12-4 (i) Hearing. At the hearing, if the court finds that there
12-5 is a default in payment or performance under the contract that
12-6 secures the payment of the claim, the court shall enter an order
12-7 granting the claimholder permission to foreclose the claimholder's
12-8 mortgage, lien, or security interest in accordance with the
12-9 provisions of the document creating the mortgage, lien, or security
12-10 interest or in any other manner allowed by law. In the discretion
12-11 of the court and based on the evidence presented at the hearing,
12-12 the court may fix a minimum price for the property to be sold by
12-13 foreclosure that does not exceed the fair market value of the
12-14 property. If the court fixes a minimum price, the property may not
12-15 be sold at the foreclosure sale for a lower price.
12-16 (j) Appeal. Any person interested in the estate may appeal
12-17 an order issued under Subsection (i) of this section.
12-18 (k) Unsuccessful Foreclosure. If a foreclosure sale
12-19 authorized under this section is conducted and the property is not
12-20 sold because no bid at the sale met the minimum price set by the
12-21 court, the claimholder may file another application under
12-22 Subsection (f) of this section. The court may, in the court's
12-23 discretion, eliminate or modify the minimum price requirement and
12-24 grant permission for another foreclosure sale<, or, at the option
12-25 of the claimholder, a motion may be made in a like manner to
12-26 require the sale of said property free of such lien and to apply
12-27 the proceeds to the payment of the whole debt>.
13-1 SECTION 10. Section 308, Texas Probate Code, is amended to
13-2 read as follows:
13-3 Sec. 308. Depositing Claims With Clerk. Claims may also be
13-4 presented by depositing same, with vouchers and necessary exhibits
13-5 and affidavit attached, with the clerk, who, upon receiving same,
13-6 shall advise the representative of the estate, or the
13-7 representative's <his> attorney, by letter mailed to the
13-8 representative's <his> last known address, of the deposit of same.
13-9 Should the representative fail to act on said claim within thirty
13-10 days after it is deposited <filed>, then it shall be presumed to be
13-11 rejected. Failure of the clerk to give notice as required herein
13-12 shall not affect the validity of the presentment or the presumption
13-13 of rejection because not acted upon within said thirty day period.
13-14 The clerk shall enter a deposited claim on the claim docket.
13-15 SECTION 11. Section 309, Texas Probate Code, is amended to
13-16 read as follows:
13-17 Sec. 309. Memorandum of Allowance or Rejection of Claim.
13-18 When a duly authenticated claim against an estate is presented to
13-19 the representative, or deposited <filed> with the clerk as
13-20 heretofore provided, the representative <he> shall, within thirty
13-21 days after the claim is presented or deposited <filed>, endorse
13-22 thereon, <or> annex thereto, or file with the clerk a memorandum
13-23 signed by the representative <him>, stating the date <time> of
13-24 presentation or depositing <filing> of the claim, and that the
13-25 representative <he> allows or rejects it, or what portion thereof
13-26 the representative <he> allows or rejects.
13-27 SECTION 12. Section 310, Texas Probate Code, is amended to
14-1 read as follows:
14-2 Sec. 310. Failure to Endorse or Annex Memorandum. The
14-3 failure of a representative of an estate to timely allow or reject
14-4 a claim under Section 309 of this code <endorse on, or annex to, a
14-5 claim presented to him, his allowance or rejection thereof within
14-6 thirty days after the claim was presented,> shall constitute a
14-7 rejection of the claim. If the claim is thereafter established by
14-8 suit, the costs shall be taxed against the representative,
14-9 individually, or the representative <he> may be removed on the
14-10 written complaint of any person interested in the claim, after
14-11 personal service of citation, hearing, and proof, as in other cases
14-12 of removal.
14-13 SECTION 13. Section 311, Texas Probate Code, is amended to
14-14 read as follows:
14-15 Sec. 311. When Claims Entered in Docket. After a claim
14-16 against an estate has been presented to and allowed or rejected by
14-17 the personal representative, in whole or in part, the claim must be
14-18 filed with the county clerk of the proper county. The clerk shall
14-19 enter the claim on the claim docket <If a claim against the estate
14-20 of a decedent has been presented within six months after the
14-21 issuance of original testamentary letters or of administration, and
14-22 all or part of such claim is allowed by the executor or
14-23 administrator, the claim shall forthwith be filed with the county
14-24 clerk of the proper county, who shall enter the same in its proper
14-25 place upon the claim docket. If such claim is not so presented
14-26 within such time, the payment thereof, should it be approved in
14-27 whole or in part, shall be postponed until all other claims which
15-1 have been presented, allowed, and approved within the time
15-2 prescribed have been first entirely paid>.
15-3 SECTION 14. Sections 312(c), (d), and (e), Texas Probate
15-4 Code, are amended to read as follows:
15-5 (c) Hearing on Claims. Although a claim may be properly
15-6 authenticated and allowed, if the court is not satisfied that it is
15-7 just, the court <he> shall examine the claimant and the personal
15-8 representative under oath, and hear other evidence necessary to
15-9 determine the issue. If not then convinced that the claim is just,
15-10 the court <he> shall disapprove it.
15-11 (d) Order of the Court. When the court has acted upon a
15-12 claim, the court <he> shall also endorse thereon, or annex thereto,
15-13 a written memorandum dated and signed officially, stating the exact
15-14 action taken upon such claim, whether approved or disapproved, or
15-15 approved in part or rejected in part, and stating the
15-16 classification of the claim. Such orders shall have the force and
15-17 effect of final judgments.
15-18 (e) Appeal. When a claimant or any person interested in an
15-19 estate shall be dissatisfied with the action of the court upon a
15-20 claim, the claimant or person <he> may appeal therefrom to the
15-21 courts of appeals, as from other judgments of the county court in
15-22 probate matters.
15-23 SECTION 15. Section 313, Texas Probate Code, is amended to
15-24 read as follows:
15-25 Sec. 313. Suit on Rejected Claim. When a claim or a part
15-26 thereof has been rejected by the representative, the claimant shall
15-27 institute suit thereon in the court of original probate
16-1 jurisdiction in which the estate is pending or in any other court
16-2 of proper jurisdiction within ninety days after such rejection, or
16-3 the claim shall be barred. When a rejected claim is sued on, the
16-4 endorsement made on or annexed thereto, or any memorandum of
16-5 rejection filed with respect to the claim, shall be taken to be
16-6 true without further proof, unless denied under oath. When a
16-7 rejected claim or part thereof has been established by suit, no
16-8 execution shall issue, but the judgment shall be certified within
16-9 thirty days after rendition, if of any court other than the court
16-10 of original probate jurisdiction, and filed in the court in which
16-11 the cause is pending, entered upon the claim docket, classified by
16-12 the court, and handled as if originally allowed and approved in due
16-13 course of administration.
16-14 SECTION 16. Section 314, Texas Probate Code, is amended to
16-15 read as follows:
16-16 Sec. 314. Presentment of Claims a Prerequisite for Judgment.
16-17 No judgment shall be rendered in favor of a claimant upon any claim
16-18 for money which has not been legally presented to the
16-19 representative of an estate, and rejected by the representative
16-20 <him> or by the court, in whole or in part.
16-21 SECTION 17. Section 315, Texas Probate Code, is amended to
16-22 read as follows:
16-23 Sec. 315. Costs of Suit With Respect to Claims. All costs
16-24 incurred in the probate court with respect to claims shall be taxed
16-25 as follows:
16-26 (a) If allowed and approved, the estate shall pay the
16-27 costs.
17-1 (b) If allowed, but disapproved, the claimant shall
17-2 pay the costs.
17-3 (c) If rejected, but established by suit, the estate
17-4 shall pay the costs.
17-5 (d) If rejected, but not established by suit, the
17-6 claimant shall pay the costs, except as provided by Section 310 of
17-7 this code.
17-8 (e) In suits to establish a claim after rejection in
17-9 part, if the claimant fails to recover judgment for a greater
17-10 amount than was allowed or approved, the claimant <he> shall pay
17-11 all costs.
17-12 SECTION 18. Section 316, Texas Probate Code, is amended to
17-13 read as follows:
17-14 Sec. 316. Claims Against Personal Representatives <Executors
17-15 or Administrators>. The naming of an executor in a will shall not
17-16 operate to extinguish any just claim which the deceased had against
17-17 the person named as executor <him>; and, in all cases where a
17-18 personal representative <an executor or administrator> is indebted
17-19 to the <his> testator or intestate, the representative <he> shall
17-20 account for the debt in the same manner as if it were cash in the
17-21 representative's <his> hands; provided, however, that if said debt
17-22 was not due at the time of receiving letters, the representative
17-23 <he> shall be required to account for it only from the date when it
17-24 becomes due.
17-25 SECTION 19. Sections 317(a) and (b), Texas Probate Code, are
17-26 amended to read as follows:
17-27 (a) By Executors or Administrators. The foregoing
18-1 provisions of this Code relative to the presentation of claims
18-2 against an estate shall not be construed to apply to any claim of a
18-3 personal representative <the executor or administrator> against the
18-4 <his> testator or intestate; but a personal representative <an
18-5 executor or administrator> holding such claim shall file the same
18-6 in the court granting the <his> letters, verified by affidavit as
18-7 required in other cases, within six months after the representative
18-8 <he> has qualified, or such claim shall be barred.
18-9 (b) Action on Such Claims. When a claim by a personal
18-10 representative <an executor or administrator> has been filed with
18-11 the court within the required time, such claim shall be entered
18-12 upon the claim docket and acted upon by the court in the same
18-13 manner as in other cases, and, when the claim has been acted upon
18-14 by the court, an appeal from the judgment of the court may be taken
18-15 as in other cases.
18-16 SECTION 20. Section 318, Texas Probate Code, is amended to
18-17 read as follows:
18-18 Sec. 318. Claims Not Allowed After Order for Partition and
18-19 Distribution. No claim for money against the estate of a decedent
18-20 <his testator or intestate> shall be allowed by a personal
18-21 representative <an executor or administrator> and no suit shall be
18-22 instituted against the representative <him> on any such claim,
18-23 after an order for final partition and distribution has been made;
18-24 but, after such an order has been made, the owner of any claim not
18-25 barred by the laws of limitation shall have an <his> action thereon
18-26 against the heirs, devisees, <or> legatees, or creditors of the
18-27 estate, limited to the value of the property received by them in
19-1 distributions from the estate <such partition and distribution>.
19-2 SECTION 21. Section 320, Texas Probate Code, is amended to
19-3 read as follows:
19-4 Sec. 320. Order of Payment of Claims. (a) Priority of
19-5 Payments. Personal representatives <Executors and administrators>,
19-6 when they have funds in their hands belonging to the estate, shall
19-7 pay in the following order:
19-8 (1) Funeral expenses and expenses of last sickness, in
19-9 an amount not to exceed Five Thousand Dollars<, if the claims
19-10 therefor have been presented within sixty days from the original
19-11 grant of letters testamentary or administration, but if not
19-12 presented within such time, their payment shall be postponed until
19-13 the allowances made to the widow and children, or to either, are
19-14 paid>.
19-15 (2) Allowances made to the surviving spouse <widow>
19-16 and children, or to either.
19-17 (3) Expenses of administration and the expenses
19-18 incurred in the preservation, safekeeping, and management of the
19-19 estate.
19-20 (4) Other claims against the estate in the order of
19-21 their classification.
19-22 (b) Sale of Mortgaged Property. If a personal
19-23 representative has the proceeds of a sale that has been made for
19-24 the satisfaction of a mortgage, lien, or security interest, and the
19-25 proceeds, or any part of the proceeds, are not required for the
19-26 payment of any debts against the estate that have a preference over
19-27 the mortgage, lien, or security interest, the personal
20-1 representative shall pay the proceeds to any holder of a mortgage,
20-2 lien, or security interest. If there is more than one mortgage,
20-3 lien, or security interest against the property, the personal
20-4 representative shall pay the holders in the order of the holders'
20-5 priority. If the personal representative fails to pay proceeds
20-6 under this subsection, a holder, on proof of the failure to pay,
20-7 may obtain an order from the court directing the payment to be
20-8 made.
20-9 (c) Claimant's Petition. A claimant whose claim has not
20-10 been paid may petition the court for determination of his claim at
20-11 any time before it is barred by the applicable statute of
20-12 limitations and upon due proof procure an order for its allowance
20-13 and payment from the estate.
20-14 (d) Permissive Order of Payment. After the sixth month
20-15 after the date letters are granted and on application by the
20-16 personal representative stating that the personal representative
20-17 has no actual knowledge of any outstanding enforceable claims
20-18 against the estate other than the claims already approved and
20-19 classified by the court, the court may order the personal
20-20 representative to pay any claim that is allowed and approved.
20-21 SECTION 22. Section 320A, Texas Probate Code, is amended to
20-22 read as follows:
20-23 Sec. 320A. Funeral Expenses. When personal representatives
20-24 <executors, independent executors, and administrators> pay claims
20-25 for funeral expenses and for items incident thereto, such as
20-26 tombstones, grave markers, crypts or burial plots, they shall
20-27 charge the whole of such claims to the decedent's estate and shall
21-1 charge no part thereof to the community share of a surviving
21-2 spouse.
21-3 SECTION 23. Section 321, Texas Probate Code, is amended to
21-4 read as follows:
21-5 Sec. 321. Deficiency of Assets. When there is a deficiency
21-6 of assets to pay all claims of the same class, other than secured
21-7 claims for money, the claims in such class shall be paid pro rata,
21-8 as directed by the court, and in the order directed. No personal
21-9 representative <executor or administrator> shall be allowed to pay
21-10 the <any> claims, whether the estate is solvent or insolvent,
21-11 except with the pro rata amount of the funds of the estate that
21-12 have come to hand.
21-13 SECTION 24. Section 322, Texas Probate Code, is amended to
21-14 read as follows:
21-15 Sec. 322. Classification of Claims Against Estates of
21-16 Decedent. Claims against an estate of a decedent shall be
21-17 classified <classed> and have priority of payment, as follows:
21-18 Class 1. Funeral expenses and expenses of last
21-19 sickness for a reasonable amount to be approved by the court, not
21-20 to exceed Five Thousand Dollars, with any excess to be classified
21-21 and paid as other unsecured claims.
21-22 Class 2. Expenses of administration and expenses
21-23 incurred in the preservation, safekeeping, and management of the
21-24 estate.
21-25 Class 3. Secured claims for money under Section
21-26 306(a)(1) <Claims secured by mortgage or other liens>, including
21-27 tax liens, so far as the same can be paid out of the proceeds of
22-1 the property subject to such mortgage or other lien, and when more
22-2 than one mortgage, <or> lien, or security interest shall exist upon
22-3 the same property, they shall be paid in order of their priority
22-4 <the oldest shall be first paid; but no preference shall be given
22-5 to such mortgage or lien>.
22-6 Class 4. Claims for taxes, penalties, and interest due
22-7 under Title 2, Tax Code; Chapter 8, Title 132, Revised Statutes;
22-8 Section 81.111, Natural Resources Code; the Municipal Sales and Use
22-9 Tax Act (Chapter 321, Tax Code); Section 11B, Chapter 141, Acts of
22-10 the 63rd Legislature, Regular Session, 1973 (Article 1118x,
22-11 Vernon's Texas Civil Statutes); or Section 16, Chapter 683, Acts of
22-12 the 66th Legislature, Regular Session, 1979 (Article 1118y,
22-13 Vernon's Texas Civil Statutes).
22-14 Class 5. Claims for the cost of confinement
22-15 established by the institutional division of the Texas Department
22-16 of Criminal Justice <Corrections> under Section 501.017, Government
22-17 Code <Article 6184s, Revised Statutes>.
22-18 Class 6. Claims for repayment of medical assistance
22-19 payments made by the state under Chapter 32, Human Resources Code,
22-20 to or for the benefit of the decedent.
22-21 Class 7. All other claims <legally exhibited within
22-22 six months after the original grant of letters testamentary or of
22-23 administration>.
22-24 <Class 8. All claims legally exhibited after the lapse
22-25 of six months from the original grant of letters testamentary or of
22-26 administration.>
22-27 SECTION 25. Section 323, Texas Probate Code, is amended to
23-1 read as follows:
23-2 Sec. 323. Joint Obligation. When two or more persons are
23-3 jointly bound for the payment of a debt, or for any other purpose,
23-4 upon the death of any of the persons so bound, the decedent's <his>
23-5 estate shall be charged by virtue of such obligation in the same
23-6 manner as if the obligors had been bound severally as well as
23-7 jointly.
23-8 SECTION 26. Section 324, Texas Probate Code, is amended to
23-9 read as follows:
23-10 Sec. 324. Representatives Not to Purchase Claims. It shall
23-11 be unlawful, and cause for removal, for a personal representative
23-12 <an executor or administrator,> whether acting under appointment by
23-13 will or under orders of the court, to purchase for the personal
23-14 representative's <his> own use or for any purposes whatsoever, any
23-15 claim against the estate the personal representative <he>
23-16 represents. Upon written complaint by any person interested in the
23-17 estate, and satisfactory proof of violation of this provision,
23-18 after citation and hearing, the court shall enter its order
23-19 cancelling the claim, and no part thereof shall be paid out of the
23-20 estate; and the court <judge> may, in the court's <his> discretion,
23-21 remove such representative.
23-22 SECTION 27. Section 328(b), Texas Probate Code, is amended
23-23 to read as follows:
23-24 (b) Penalty Against Representative. Upon return of the
23-25 execution not satisfied, or merely upon the affidavit of demand and
23-26 failure to pay, the court may cite the representative and the
23-27 sureties on the representative's <his> bond to show cause why they
24-1 should not be held liable for such debt, interest, costs, and
24-2 damages. Upon return of citation duly served, if good cause to the
24-3 contrary be not shown, the court shall render judgment against the
24-4 representative and sureties so cited, in favor of the holder of
24-5 such claim, for the amount theretofore ordered to be paid or
24-6 established by suit, and remaining unpaid, together with interest
24-7 and costs, and also for damages upon the amount neglected to be
24-8 paid, at the rate of five per cent per month for each month, or
24-9 fraction thereof, that the payment was neglected to be paid after
24-10 demand made therefor, which damages may be collected in any court
24-11 of competent jurisdiction.
24-12 SECTION 28. Sections 329(a) and (c), Texas Probate Code, are
24-13 amended to read as follows:
24-14 (a) Circumstances Under Which Money May Be Borrowed. Any
24-15 real or personal property of an estate may be mortgaged or pledged
24-16 by deed of trust or otherwise as security for an indebtedness,
24-17 under order of the court, when necessary for any of the following
24-18 purposes:
24-19 (1) For the payment of any ad valorem, income, gift,
24-20 estate, inheritance, or transfer taxes upon the transfer of an
24-21 estate or due from a decedent or the <his> estate, regardless of
24-22 whether such taxes are assessed by a state, or any of its political
24-23 subdivisions, or by the federal government or by a foreign country;
24-24 or
24-25 (2) For payment of expenses of administration,
24-26 including sums necessary for operation of a business, farm, or
24-27 ranch owned by the estate; or
25-1 (3) For payment of claims allowed and approved, or
25-2 established by suit, against the estate; or
25-3 (4) To renew and extend a valid, existing lien.
25-4 (c) Order Authorizing Such Borrowing, or Extension of Lien.
25-5 The court, if satisfied by the evidence adduced at the hearing upon
25-6 said application that it is to the interest of the estate to borrow
25-7 money, or to extend and renew an existing lien, shall issue its
25-8 order to that effect, setting out the terms and conditions of the
25-9 authority granted; provided, however, the loan or renewal shall not
25-10 be for a term longer than three years from the granting of original
25-11 letters to the representative of such estate, but the court may
25-12 authorize an extension of such lien for not more than one
25-13 additional year without further citation or notice. If a new lien
25-14 is created on property of an estate, the court may require that the
25-15 representative's general bond be increased, or an additional bond
25-16 given, for the protection of the estate and the creditors, as for
25-17 the sale of real property belonging to the estate.
25-18 SECTION 29. Sections 300, 325, and 327, Texas Probate Code,
25-19 are repealed.
25-20 SECTION 30. The change in law made by this Act applies only
25-21 to the estates of persons who die on or after the effective date of
25-22 this Act. An estate of a person who dies before the effective date
25-23 of this Act is covered by the law in effect when the person died,
25-24 and the former law continues in effect for that purpose.
25-25 SECTION 31. This Act takes effect January 1, 1996.
25-26 SECTION 32. The importance of this legislation and the
25-27 crowded condition of the calendars in both houses create an
26-1 emergency and an imperative public necessity that the
26-2 constitutional rule requiring bills to be read on three several
26-3 days in each house be suspended, and this rule is hereby suspended.