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A BILL TO BE ENTITLED
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AN ACT
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relating to the operation of a farm, ranch, factory, or other |
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business by the personal representative of a decedent's estate. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 238, Texas Probate Code, is amended to |
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read as follows: |
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Sec. 238. OPERATION OF FARM, RANCH, FACTORY, OR OTHER |
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BUSINESS. (a) In this section, "business" includes a farm, ranch, |
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or factory. |
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(b) A court, after notice to all interested persons and a |
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hearing, may order the personal representative of an estate to |
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operate a business that is part of the estate and may grant the |
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personal representative the powers to operate the business that the |
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court determines are appropriate, after considering the factors |
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listed in Subsection (f) of this section, if: |
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(1) [If the estate owns a farm, ranch, factory, or
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other business,] the disposition of the business [which] has not |
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been specifically directed by the decedent's will; |
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(2) it is not necessary to sell the business [, and if
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the same be not required to be sold] at once for the payment of debts |
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or other lawful purposes; and |
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(3) the court determines that the operation of the |
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business by the personal representative is in[, the representative,
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upon order of the court, shall carry on the operation of such farm,
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ranch, factory, or other business, or cause the same to be done, or
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rent the same, as shall appear to be for] the best interest of the |
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estate. |
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(c) A personal representative who is granted the power to |
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operate a business in an order entered under this section has the |
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powers granted under Section 234(b) of this code, regardless of |
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whether the order specifies that the personal representative has |
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those powers, unless the order specifically provides that the |
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personal representative does not have one or more of the powers |
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listed in that section. |
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(d) In addition to the powers granted to the personal |
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representative under Section 234(b) of this code, subject to any |
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specific limitation on those powers in accordance with Subsection |
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(c) of this section, an order entered under this section may grant |
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the personal representative one or more of the following powers: |
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(1) the power to hire, pay, and terminate the |
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employment of employees of the business; |
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(2) the power to incur debt on behalf of the business, |
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including debt secured by liens against assets of the business or |
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estate, if permitted or directed in the order; |
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(3) the power to purchase and sell property in the |
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ordinary course of the operation of the business, including the |
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power to purchase and sell real property if the court finds that the |
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principal purpose of the business is the purchasing and selling of |
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real property and the order states that finding; |
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(4) the power to enter into a lease or contract, the |
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term of which may extend beyond the settlement of the estate, but |
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only to the extent granting that power appears to be consistent with |
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the speedy settlement of the estate; and |
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(5) any other power the court finds is necessary with |
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respect to the operation of the business. |
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(e) If the order entered under this section gives the |
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personal representative the power to purchase, sell, lease, or |
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otherwise encumber real or personal property: |
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(1) the purchase, sale, lease, or encumbrance is |
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governed by the terms of the order; and |
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(2) the personal representative is not required to |
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comply with any other provision of this code regarding the |
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purchase, sale, lease, or encumbrance, including provisions |
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requiring citation or notice. |
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(f) In determining which powers to grant a personal |
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representative in an order entered under this section, the court |
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shall consider the following factors: |
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(1) the condition of the estate and the business; |
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(2) the necessity that may exist for the future sale of |
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the business or of business property to provide for payment of debts |
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or claims against the estate or other lawful expenditures with |
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respect to the estate; |
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(3) the effect of the order on the speedy settlement of |
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the estate; and |
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(4) the best interests of the estate. |
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(g) A personal representative who operates a business under |
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an order entered under this section has the same fiduciary duties as |
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a personal representative who does not operate a business that is |
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part of an estate. The personal representative shall: |
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(1) in operating the business, consider: |
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(A) the condition of the estate and the business; |
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(B) the necessity that may exist for the future |
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sale of the business or of business property to provide for payment |
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of debts or claims against the estate or other lawful expenditures |
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with respect to the estate; |
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(C) the effect of the order on the speedy |
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settlement of the estate; and |
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(D) the best interests of the estate; and |
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(2) report to the court with respect to the operation |
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and condition of the business as part of the accounts required by |
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Parts 11 and 12, Chapter VIII, of this code, unless the court orders |
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the reports regarding the business to be made more frequently or in |
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a different manner or form. |
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(h) Before purchasing, selling, leasing, or otherwise |
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encumbering any real property of the business in accordance with an |
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order entered under this section, the personal representative shall |
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file a notice in the real property records of the county in which |
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the real property is located. The notice must state: |
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(1) the name of the decedent; |
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(2) the county of the court in which the decedent's |
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estate is pending; |
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(3) the cause number assigned to the pending estate; |
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(4) that one or more orders have been entered under |
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this section; and |
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(5) a description of the property that is the subject |
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of the purchase, sale, lease, or other encumbrance. |
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(i) For purposes of determining a personal representative's |
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powers with respect to a purchase, sale, lease, or other |
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encumbrance of real property of a business that is part of an |
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estate, a third party who deals in good faith with a personal |
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representative with respect to the transaction may rely on the |
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notice under Subsection (h) of this section and an order that is |
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entered under this section and filed as part of the estate records |
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maintained by the clerk of the court in which the estate is pending. |
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[In deciding, the court shall consider the condition of the estate,
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and the necessity that may exist for future sale of such property or
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business for the payment of debts, claims, or other lawful
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expenditures, and shall not extend the time of renting any of the
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property beyond what appears consistent with the speedy settlement
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of the estate of a deceased person or the settlement of his estate.] |
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SECTION 2. The change in law made by this Act applies to the |
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estate of a decedent that is pending on or after the effective date |
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of this Act, regardless of the decedent's date of death. |
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SECTION 3. This Act takes effect September 1, 2007. |
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