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Texas Executor’s Guide to Sales of Estate Property

— June 12, 2015

Generally any debts of the deceased arepayable primarily out of the probate assets. What is not available is the homestead, exempt personal property are set aside and family allowances.

Underneath Texas law TEC 355.109 The probate representative must follow a will, if one exists. Otherwise the deceased’s property is liable for debts and expenses of administration other that estate taxes, and bequests abate in the following order:

(1) property not disposed of by will, but passing by intestacy;

(2) personal property of the residuary estate;

(3) real property of the residuary estate;

(4) general bequests of personal property;

(5) general devises of real property;

(6) specific bequests of personal property; and

(7) specific devises of real property.

A general bequest typically means something like a cash bequest or a portion of stock. By comparison a specific devise is something that can be pointed out, like a family heirloom or a specific car. The residuary is everything else leftover.

A typical situation that occurs when there is not proper probate planning is an estate that is short on cash. Assuming that the estate is solvent, but the estate does not have that much cash. The PR will need to raise cash to cover any debts and funeral expenses. The only way to do this is to borrow – which will postpone the inevitable- or to sell assets. The problem is that estate property can not be sold without a court order authorizing the sale, a lengthy and expensive process. Generally, the court will only grant an application to the court for an order to sell estate property if the sale appears “necessary or advisable” to pay expenses of administration, funeral, deceased’s illness, family allowances or claims against the estate. TEC 356.251 How can an estate get around this? Plan ahead and authorize the sale of property to pay for any debts of the estate. TEC 356.001; TEC 356.002

This problem may also be avoided if the executor is independent. An independent executor may, without order of the probate court, do any act that an ordinary executor or administrator could do with or under an order of the probate court. See Rowland v. Moore, 141 Tex. 469, 174 S.W.2d 248, 250 (1943); Gatesville Redi–Mix, Inc. v. Jones, 787 S.W.2d 443, 445 (Tex.App.-Waco 1990, writ denied); Dallas Servs. for Visually Impaired Children, Inc. v. Broadmoor II, 635 S.W.2d 572, 576 (Tex.App.-Dallas 1982, writ ref’d n.r.e.). Section 341(2) authorizes the probate court to direct a sale of any interest in real property when it is to the best interest of the estate. Smith v. Hodges, 294 S.W.3d 774, 778 (Tex. App. 2009). However, Devisees and heirs may show that the sale was not to the best interest of the estate or there were no debts, title to the real estate sold by an independent executor without court order can be voidable.

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