Who serves as Executor?
An executor is the person responsible for performing a number of tasks necessary to wind down the decedent’s affairs. Generally, the executor’s responsibilities involve taking charge of the deceased person’s assets, notifying beneficiaries and creditors, paying the estate’s debts and distributing the property to the beneficiaries. The executor may also be a beneficiary of the Will, though he or she must treat all beneficiaries fairly and in accordance with the provisions of the Will.
The duties of an independent executor are those of a trustee. He holds property interests, not his own, for the benefit of others. He manages those interests under an equitable obligation to act for the others' benefit and not his own. He is a “fiduciary” of whom the law requires an unusually high standard of ethical or moral conduct in reference to the beneficiaries and their interests. His “duties” are more than the ordinary “duties” of the marketplace. They connote fair dealing, good faith, fidelity, and integrity.
Texas Estates Code 304.001 sets out the order of preference for who the court will appoint:
(a) The court shall grant letters testamentary or of administration to persons qualified to act, in the following order:
(1) the person named as executor in the decedent's will;
(2) the decedent's surviving spouse;
(3) the principal devisee of the decedent;
(4) any devisee of the decedent;
(5) the next of kin of the decedent;
(6) a creditor of the decedent;
(7) any person of good character residing in the county who applies for the letters;
(8) any other person who is not disqualified under Section 304.003; and
(9) any appointed public probate administrator.
Generally, a will specifies who should serve as the executor. Most wills in Texas specify that the executor will serve independent of court supervision, without bond. Generally, if an independent executor named in a will comes forward within the statutory period for probating a will, offers it for probate, and applies for letters testamentary, the court has no discretionary power to refuse to issue letters to the named executor unless he is a minor, an incompetent, or otherwise disqualified under statute. But a person named in a will does not automatically qualify to be appointed as executor of the estate. Texas law provides that a person is not qualified to serve as an executor or administrator if the person is:
(2) a felon convicted under the laws of the United States or of any state of the United States unless, in accordance with law, the person has been pardoned or has had the person’s civil rights restored;
(3) a nonresident of this state who:
(a) is a natural person or corporation; and
(b) has not:
(i) appointed a resident agent to accept service of process in all actions or proceedings with respect to the estate; or
(ii) had that appointment filed with the court;
(4) a corporation not authorized to act as a fiduciary in this state; or
(5) a person whom the court finds unsuitable.
The term “unsuitable” is not defined in the Texas Probate Code, leaving the implication that the trial court has discretion in making that determination. No comprehensive, discrete explanation exists delineating the attributes which make someone unsuitable” to serve as an administrator.
The trial court is given broad discretion in determining whether an individual is suitable to serve as an executor or administrator. An appellate court will not disturb a trial court’s determination of an administrator’s suitability absent an abuse of discretion. The trial court abuses its discretion if its determination that the applicant is unsuitable is arbitrary or unreasonable. The mere fact that a trial court may decide a matter within its discretionary authority in a different manner than an appellate court in a similar circumstance does not demonstrate that an abuse of discretion has occurred.
When there is no will, the court will appoint an administrator to oversee the estate. If all the heirs agree, the court can appoint an independent administrator. If all the heirs do not agree, the court will appoint a dependent administrator.
An independent executor can be removed after they are appointed. Texas Estates Code Section 404.0035 provides that the court may remove an independent executor if the independent executor:
(1) the independent executor fails to make an accounting which is required by law to be made;
(2) the independent executor is proved to have been guilty of gross misconduct or gross mismanagement in the performance of the independent executor's duties;
(3) the independent executor becomes an incapacitated person, or is sentenced to the penitentiary, or from any other cause becomes legally incapacitated from properly performing the independent executor's fiduciary duties; or
(4) the independent executor becomes incapable of properly performing the independent executor's fiduciary duties due to a material conflict of interest.
The term “incapable” is not well discussed in the case law. It could be defined as “lacking the necessary competence, ability, or strength” or “unable to behave rationally or manage one's affairs.” An executor should have the competence and integrity to put the interests of the Estate ahead of his personal financial interests and to manage the affairs of the estate in the fiduciary manner required of an executor.
Further, the order of removal of an independent executor shall state the cause of removal and shall direct by order the disposition of the assets remaining in the name or under the control of the removed independent executor. The order of removal shall require that letters issued to the removed independent executor shall be surrendered and that all letters shall be canceled of record.
Demand for Accounting
What if you are a beneficiary or heir and the executor or administrator has not been responsive to your requests for information? Fortunately, Texas law provides a remedy.
For an independent administration, Texas Estates Code § 404.001 provides:
(a) At any time after the expiration of 15 months after the date that the court clerk first issues letters testamentary or of administration to any personal representative of an estate, any person interested in the estate may demand an accounting from the independent executor. The independent executor shall furnish to the person or persons making the demand an exhibit in writing, sworn and subscribed by the independent executor, setting forth in detail:
(1) the property belonging to the estate that has come into the executor's possession as executor;
(2) the disposition that has been made of the property described by Subdivision (1);
(3) the debts that have been paid;
(4) the debts and expenses, if any, still owing by the estate;
(5) the property of the estate, if any, still remaining in the executor's possession;
(6) other facts as may be necessary to a full and definite understanding of the exact condition of the estate; and
(7) the facts, if any, that show why the administration should not be closed and the estate distributed.
(a-1) Any other interested person shall, on demand, be entitled to a copy of any exhibit or accounting that has been made by an independent executor in compliance with this section.
(b) Should the independent executor not comply with a demand for an accounting authorized by this section within 60 days after receipt of the demand, the person making the demand may compel compliance by an action in the probate court. After a hearing, the court shall enter an order requiring the accounting to be made at such time as it considers proper under the circumstances.
(c) After an initial accounting has been given by an independent executor, any person interested in an estate may demand subsequent periodic accountings at intervals of not less than 12 months, and such subsequent demands may be enforced in the same manner as an initial demand.
(d) The right to an accounting accorded by this section is cumulative of any other remedies which persons interested in an estate may have against the independent executor of the estate.
An executor who fails to provide an accounting may be removed by the court.
An accounting is often the first step, in obtaining information and setting up a demand to distribute the remaining estate assets. If the executor fails to comply, they may be removed and/or sued for breach of fiduciary duty.
Texas Estates Code § 405.001 provides:
(a) In addition to or in lieu of the right to an accounting provided by Section 404.001, at any time after the expiration of two years after the date the court clerk first issues letters testamentary or of administration to any personal representative of an estate, a person interested in the estate then subject to independent administration may petition the court for an accounting and distribution. The court may order an accounting to be made with the court by the independent executor at such time as the court considers proper. The accounting shall include the information that the court considers necessary to determine whether any part of the estate should be distributed.
(b) On receipt of the accounting and, after notice to the independent executor and a hearing, unless the court finds a continued necessity for administration of the estate, the court shall order its distribution by the independent executor to the distributees entitled to the property. If the court finds there is a continued necessity for administration of the estate, the court shall order the distribution of any portion of the estate that the court finds should not be subject to further administration by the independent executor. If any portion of the estate that is ordered to be distributed is incapable of distribution without prior partition or sale, the court may:
(1) order partition and distribution, or sale, in the manner provided for the partition and distribution of property incapable of division in supervised estates; or
(2) order distribution of that portion of the estate incapable of distribution without prior partition or sale in undivided interests.
(c) If all the property in the estate is ordered distributed by the court and the estate is fully administered, the court may also order the independent executor to file a final account with the court and may enter an order closing the administration and terminating the power of the independent executor to act as executor.