By Corte H.B. No. 19 77R524 KLA-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to personal representatives of decedents' estates and the 1-3 regulation of attorneys representing those personal 1-4 representatives. 1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-6 SECTION 1. Subtitle G, Title 1, Government Code, is amended 1-7 by adding Chapter 85 to read as follows: 1-8 CHAPTER 85. REGULATION OF ATTORNEYS 1-9 REPRESENTING PERSONAL REPRESENTATIVES OF DECEDENTS' ESTATES 1-10 SUBCHAPTER A. GENERAL PROVISIONS 1-11 Sec. 85.001. DEFINITIONS. In this chapter: 1-12 (1) "Attorney" means a person who is licensed to 1-13 practice law in this state. 1-14 (2) "Estate" has the meaning assigned by Section 3, 1-15 Texas Probate Code. 1-16 (3) "Personal representative" has the meaning assigned 1-17 by Section 3, Texas Probate Code. 1-18 (4) "Representing attorney" means an attorney to whom 1-19 this chapter applies. 1-20 Sec. 85.002. APPLICABILITY. (a) Except as provided by 1-21 Subsection (b), this chapter applies only to an attorney who is 1-22 retained to provide legal services to a person in the person's 1-23 capacity as a personal representative of a decedent's estate. 1-24 (b) Sections 85.052 and 85.053 do not apply to an attorney 2-1 who is retained to defend the personal representative of a 2-2 decedent's estate in an action for a breach of the representative's 2-3 fiduciary duty after the breach is alleged to have occurred. 2-4 Sec. 85.003. CONSTRUCTION. Nothing in this chapter may be 2-5 construed as creating an attorney-client relationship between an 2-6 attorney who represents a personal representative of the estate of 2-7 a decedent and an heir or beneficiary of the decedent. 2-8 Sec. 85.004. EFFECT ON OTHER LAW. (a) This chapter controls 2-9 to the extent of any conflict between this chapter and the Texas 2-10 Rules of Evidence, the Texas Disciplinary Rules of Professional 2-11 Conduct, or any other law governing an attorney-client 2-12 relationship. 2-13 (b) Notwithstanding Section 81.024, the supreme court may 2-14 not amend or adopt rules in conflict with this chapter. 2-15 (Sections 85.005-85.050 reserved for expansion 2-16 SUBCHAPTER B. DUTIES OF AND PROHIBITIONS ON ATTORNEYS 2-17 Sec. 85.051. DISCLOSURE OF DUTIES AND PROHIBITIONS REQUIRED. 2-18 A representing attorney shall disclose to the personal 2-19 representative in writing the duties and prohibitions prescribed by 2-20 this subchapter. 2-21 Sec. 85.052. DISCLOSURE OF CERTAIN ACTIONS OR OMISSIONS OF 2-22 PERSONAL REPRESENTATIVE REQUIRED. (a) A representing attorney 2-23 shall disclose to each of the known or reasonably ascertainable 2-24 heirs or beneficiaries of the decedent and to the court in which 2-25 the estate is pending: 2-26 (1) any action taken or omission made by the personal 2-27 representative with respect to estate property that constitutes a 3-1 breach of the personal representative's fiduciary duty, including 3-2 the misuse, misappropriation, or unlawful conversion of estate 3-3 property; and 3-4 (2) any material misrepresentation made by the 3-5 personal representative to the court with respect to estate 3-6 property that adversely affects or has the potential to adversely 3-7 affect the value of the estate. 3-8 (b) The attorney shall make the disclosure required by this 3-9 section not later than the 10th day after the date the attorney 3-10 becomes aware of the action taken or omission or misrepresentation 3-11 made by the personal representative. 3-12 Sec. 85.053. ASSISTANCE OF CERTAIN CONDUCT PROHIBITED. (a) 3-13 In this section, "knowingly assist" includes a failure to disclose. 3-14 (b) A representing attorney may not knowingly assist the 3-15 personal representative in engaging in conduct described by Section 3-16 85.052. 3-17 Sec. 85.054. ACCEPTANCE OF PAYMENT FOR SERVICES FROM ESTATE 3-18 PROHIBITED UNDER CERTAIN CIRCUMSTANCES. (a) Except as provided by 3-19 Subsection (b), an attorney may not accept payment from a 3-20 decedent's estate for legal services provided by the attorney in 3-21 defending the decedent's personal representative in an action 3-22 brought by an heir or beneficiary of the decedent for breach of a 3-23 fiduciary duty. 3-24 (b) An attorney may accept payment from the estate for legal 3-25 services described by Subsection (a) if: 3-26 (1) the court in which the estate is pending 3-27 determines, after a preliminary hearing, that the personal 4-1 representative is likely to prevail in the action; and 4-2 (2) the personal representative posts a bond in an 4-3 amount determined by the court to be sufficient to pay the 4-4 attorney's fees in the action. 4-5 (Sections 85.055-85.100 reserved for expansion 4-6 SUBCHAPTER C. CAUSE OF ACTION 4-7 Sec. 85.101. CIVIL ACTION. (a) An heir or beneficiary of a 4-8 decedent may file on behalf of the estate an action against an 4-9 attorney who violates this chapter, other than Section 85.051. 4-10 (b) An heir or beneficiary must file an action under this 4-11 section in the court in which the estate is pending. If the estate 4-12 is closed, the heir or beneficiary must file the action in a 4-13 county court or district court in the county in which: 4-14 (1) the attorney provided legal services to the 4-15 personal representative; or 4-16 (2) the attorney's office is located. 4-17 (c) If an action authorized by this section is filed in the 4-18 court in which the estate is pending, the judge, on the motion of 4-19 any heir or beneficiary of the decedent, may transfer the action to 4-20 the district court located in the county in which the action was 4-21 filed. 4-22 (d) An heir or beneficiary must bring an action under this 4-23 section not later than the fourth anniversary of the date the cause 4-24 of action accrues. 4-25 Sec. 85.102. CERTAIN ACTIONS NOT AUTHORIZED. A personal 4-26 representative may not bring an action against the personal 4-27 representative's attorney for a breach of the attorney-client 5-1 privilege resulting from a duty required to be performed by the 5-2 attorney under this chapter. 5-3 Sec. 85.103. DAMAGES. (a) An attorney who violates Section 5-4 85.052, 85.053, or 85.054 is liable: 5-5 (1) to the decedent's estate for actual damages; and 5-6 (2) to the heir or beneficiary bringing the action on 5-7 behalf of the estate for exemplary damages and reasonable expenses 5-8 incurred in filing the action, including reasonable attorney's 5-9 fees, reasonable expert witness fees, and deposition expenses. 5-10 (b) Actual damages for a violation of Section 85.052 or 5-11 85.053 include: 5-12 (1) an amount equal to the attorney's fees charged to 5-13 and collected from the estate by the attorney for legal services 5-14 provided on or after the date the act or omission that constituted 5-15 the violation occurred; and 5-16 (2) an amount equal to the amount by which the value 5-17 of the estate property was depleted as a result of the personal 5-18 representative's breach of fiduciary duty or misrepresentation, as 5-19 appropriate, and the attorney's violation of Section 85.052 or 5-20 85.053. 5-21 (c) Actual damages for a violation of Section 85.054 include 5-22 all fees collected by the attorney in violation of that section. 5-23 The court shall order that all fees charged to the estate but not 5-24 yet collected by the attorney be canceled. 5-25 SECTION 2. Section 221(a), Texas Probate Code, is amended to 5-26 read as follows: 5-27 (a) Application to Resign. A personal representative who 6-1 wishes to resign his trust shall file with the clerk his written 6-2 application to the court to that effect, accompanied by a full and 6-3 complete exhibit and final account, duly verified, showing the true 6-4 condition of the estate entrusted to his care. A personal 6-5 representative who filed an application for resignation with the 6-6 court but has not been discharged may not sell, distribute, or 6-7 otherwise dispose of estate property except as provided by an order 6-8 of the court. 6-9 SECTION 3. Section 222(c), Texas Probate Code, is amended to 6-10 read as follows: 6-11 (c) Order of Removal. The order of removal shall state the 6-12 cause thereof. It shall require that any letters issued to the one 6-13 removed shall, if he has been personally served with citation, be 6-14 surrendered, and that all such letters be cancelled of record, 6-15 whether delivered or not. The order of removal shall prohibit the 6-16 personal representative from selling, distributing, or otherwise 6-17 disposing of estate property for any purpose except as provided in 6-18 the order. It shall further require, as to all the estate 6-19 remaining in the hands of a removed person, delivery thereof to the 6-20 person or persons entitled thereto, or to one who has been 6-21 appointed and has qualified as successor representative. 6-22 SECTION 4. (a) This Act takes effect September 1, 2001. 6-23 (b) Chapter 85, Government Code, as added by this Act, 6-24 applies only to an attorney retained by a personal representative 6-25 on or after the effective date of this Act. An attorney who is 6-26 retained by a personal representative before the effective date of 6-27 this Act is governed by the law in effect on the date the attorney 7-1 was retained, and the former law is continued in effect for that 7-2 purpose. 7-3 (c) Section 221(a), Texas Probate Code, as amended by this 7-4 Act, applies only to a personal representative who files an 7-5 application for resignation on or after the effective date of this 7-6 Act. A personal representative who files an application for 7-7 resignation before the effective date of this Act is governed by 7-8 the law in effect on the date the application was filed, and the 7-9 former law is continued in effect for that purpose.