The probate courts will often hold funds in their registry. The probate court has authority and control over these funds.
Once the funds are in the registry and an independent administrator is appointed to administer the probate estate, who has control over these funds?
The concept of the independent administrator is that they are tasked with administering the estate without court intervention. They are tasked with gathering and using the probate assets, including any funds belonging to the estate, to administer the estate.
Can the probate court override the independent administrator’s discretion with respect to funds held in its registry? The appellate court addresses this in Estate of Fells, No. 09-17-00487-CV (Ct. App.–9th Dist [Beaumont] 2019).
Facts & Procedural History
This case involves a probate dispute. The stepmother died.
The estate owned an interest in real estate. The step-son also owned an interest in the real estate.
An independent administration was started for the stepmother’s estate. The step-son then sued the executor for the stepmother’s estate. He asked the court to partition the real property, to award him back rent collected from tenants for the property, and for taxes he paid for the property.
The probate court largely sided with the step-son. It ordered the real estate to be sold and the proceeds to be paid 75 percent to the step-son and 25 percent to be paid into the probate court register. The probate court awarded the step-son back rents and taxes.
The real estate was sold a year later and the title company paid 25 percent of the proceeds to the court registry. The court ordered these funds be distributed to the step-son, which the estate challenged. This challenge was the subject of the court opinion.
The question raised by the probate attorneys on appeal was whether the probate court or the independent administrator had the power to determine how the funds would be distributed or used.
Independent Administration, Generally
Texas law allows for independent administrations. With independent administrations, the executor is allowed to handle most of the actions to carry out the probate without the court’s involvement. This is different than dependent administrations, which require court involvement to make most decisions.
The Texas Estates Code grants broad powers to the independent administrator.
The Probate Court’s Power Over Funds
The court has jurisdiction over probate disputes. The probate court has the final say in probate matters (at the trial court level). It has the power to remove the independent administrator, for example.
But the probate court’s jurisdiction ends after it enters its order in the case. One might think this allows the independent administrator to take over and manage the probate estate guided only by Texas law. That is what the executor argued in this case.
The appeals court considered whether the probate court had jurisdiction over the funds in the court’s register. It noted that the court did not have the authority to modify its original order as the time for doing so had passed. But reading the order, the appeals court concluded that the probate court’s direction for payment of the funds was consistent with the prior order. So the appeals court, allowed the probate court to disperse funds as it saw fit over and above the independent administrator’s objections.
The probate court has broad powers over monies deposited to its register. This power continues until the funds are fully distributed, which may not happen for years or even decades later.
If a party finds this unacceptable, they need to challenge the original probate court order that resulted in the funds being deposited into the court register. This is the only way to ensure that the probate court does not disburse funds contrary to the wishes of the parties.