A Handbook
for the
Independent Executor
TABLE OF CONTENTS
Caption Page
I. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. The Appointment Process.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Probate of Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
D. Issuance of Letters Testamentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
E. Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III. General Duties of Independent Executors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A. Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Application of General Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
C. Collection of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
IV. Duty to Keep Records and Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
A. Setting Up the Books and Records of the Estate.. . . . . . . . . . . . . . . . . . . . . . . . . . 4
B. Accounting Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
C. Custodianship Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
D. Record-keeping By Hand.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
E. Maintenance of Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
F. Required Accountings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
G. Accountings Required by Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
H. Additional Accountings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
V. Tax Related Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. Application for Taxpayer Identification Number (Form SS-4). . . . . . . . . . . . . . . 6
B. Notice of Fiduciary Relationship (Form 56). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
C. Decedent’s Final Income Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
D. Income Tax Returns for the Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
E. Federal Estate Tax (and Generation-Skipping Tax) Return (Form 706).. . . . . . . 7
VI. Required Court Filings.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. Inventory, Appraisement and List of Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
B. Notice to Beneficiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
C. Notice to Creditors.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
E. Closing the Estate.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
VII. Specific Recommended Steps That May Be Needed. . . . . . . . . . . . . . . . . . . . . . 9
A. Securing the Personal Residence of the Decedent. . . . . . . . . . . . . . . . . . . . . . . . . 9
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B. Secure Valuables.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
C. Insurance.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
D. Mortgage Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
E. Dealing with Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
F. Inventory of Personal Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
G. Automobiles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
H. Dividing Personal Property Among Beneficiaries.. . . . . . . . . . . . . . . . . . . . . . . . 11
I. Credit Cards and Bank Debit Cards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
J. Safe Deposit Box.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
K. Set Up Estate Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
L. Consolidation of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
M. Setting Aside Family Allowances and Exempt Property. . . . . . . . . . . . . . . . . . . 13
N. Review Assets Held by the Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
O. Funding Specific Bequests.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
VIII. Dealing with Claims by Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
A. Ability to Pay Claims when Estate is Solvent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. Classification of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
C. Notices to Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
D. Duty with Regard to Non-Probate Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IX. Sale of Estate Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. Sale of Real and Personal Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
B. Direct or Indirect Sales to Independent Executor. . . . . . . . . . . . . . . . . . . . . . . . 15
X. Property Subject to Administration by the Independent Executor. . . . . . . . . . . 16
A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
B. When Spouse is Independent Executor.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
C. Disposition of Community Estate at Termination of Administration. . . . . . . . 16
D. Early Partition and Distribution of Community One-Half. . . . . . . . . . . . . . . . . 16
XI. Obtaining Consents from Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
A. Disclosure to Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
B. Consents and Releases by Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
XII. Estate Taxes and Allocation of Estate Taxes to Beneficiaries.. . . . . . . . . . . . . 18
A. Due Date for Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
B. Selling Assets to Pay Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
C. Personal Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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XIII. Communications with Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
A. Send Pertinent Estate Planning Documents to the Beneficiaries. . . . . . . . . . . . 19
B. Timetable of Estate Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
C. Regular Accountings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
D. Disclaimer Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
E. Tax Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
F. Important Estate Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
G. Distribution Planning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
H. Income Tax Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
XIV. Final Settlement of Estate and Distribution to Beneficiaries. . . . . . . . . . . . . 20
XV. Closing the Estate Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
A. No Official Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
B. Closing of Estate by Affidavit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
C. Judicial Discharge.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
XVI. Executor*s Fees and Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. Provisions of Will. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
B. Statutory Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
C. Review With Counsel.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
D. Court Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
E. Income Taxation of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXHIBIT A: PROCESS TO OBTAIN EMPLOYER IDENTIFICATION NUMBER . . . . . . . . 23
EXHIBIT B: NOTICE TO BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
EXHIBIT C: NOTICE TO SECURED CREDITOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
EXHIBIT D: NOTICE TO UNSECURED CREDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXHIBIT E: TIMETABLE OF IMPORTANT ESTATE FUNCTIONS. . . . . . . . . . . . . . . . . . . 27
EXHIBIT F: INVENTORY INFORMATION FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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A HANDBOOK FOR THE INDEPENDENT EXECUTOR
I. Introduction. This Handbook is designed to assist you in performing your duties as
Independent Executor, by providing you with a resource for reference and general
information. I encourage you to use it as a reminder of matters that need to be handled,
as well as a springboard for discussion with the attorney for the estate. It is not designed
to be a comprehensive discussion of the matters involved in an independent administra-
tion in Texas, nor is it intended to substitute for legal advice that you should obtain in
the course of the estate administration. You should continue to work closely with your
counsel and accountant in administering the estate. First, there are a few general
recommendations for you as you begin your duties. These are:
A. Read the Will and discuss its provisions with your counsel, and follow the terms of the
Will. It is your guide, road map and rule book.
B. Follow the Independent Executor’s Golden Rule: treat estate beneficiaries as you
would want an Independent Executor to treat you if you were the beneficiary.
C. Be prompt in performing your duties and responsive to the attorney for the estate and
its beneficiaries. If your personal or business situation is likely to prevent this, it may
be advisable for you to decline to serve.
II. The Appointment Process.
A. Probate of Will. Before an Independent Executor can assume his or her duties as such,
the will must be admitted to probate and the court must appoint the Independent
Executor. The will cannot be admitted to probate until on or after the first Monday
after ten days have elapsed from the date of filing the will. This means that wills filed
on or before Thursday of a given week can be admitted to probate on or after the
second Monday following the filing date. The filing will have to be made by a certain
time of day on that Thursday in order to ensure that notice can be posted for the
requisite period of time. The application can be filed by any person interested in the
estate (such as a beneficiary or creditor of the estate), or by any person named in the
will as executor. If an executor named in the will makes application for a will to be
admitted to probate in good faith with just cause, the reasonable expenses of the
applicant are to be paid from the estate, even if the will is not ultimately admitted to
probate. SECTION 352.052, TEXAS ESTATES CODE.
B. Notices. Pursuant to the Texas Estates Code, the only pre-hearing notice that is
required is the posted public notice. Therefore, heirs and beneficiaries of the estate
do not generally need to be notified prior to the hearing date, though they do need
to be notified and given a copy of the will afterward. Some counties (including
Denton), however, may have local rules of law that require additional notices. The
public notice that is posted is prepared by the clerk*s office. It may be necessary for
the attorney to prepare notices under local rules.
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 1
C. The Probate Hearing. The attorney will set a hearing for the probate of the will to
occur on or after the Monday following ten days from the filing of the will. A special
setting may be scheduled for this hearing, or the court may require the hearings to
occur during “open court” when a number of uncontested matters will be before the
court. The hearing typically does not exceed five to ten minutes. Testimony must be
given by someone familiar with the decedent who is familiar with the will and the
circumstances of the decedent*s death. Testimony does not have to be given by the
person named as executor in the will, but it is frequently most convenient for the
person named as executor in the will to be present.
D. Issuance of Letters Testamentary. After the court has signed the order admitting the
will to probate, and appointing the Independent Executor named in the will, the
Independent Executor will sign an oath. Once this oath has been filed with the clerk*s
office, the clerk will issue Letters Testamentary (or Letters of Administration in the
case of a person not named as executor in the will). These Letters will be proof to
third parties dealing with the executor that he or she has powers as Independent
Executor of the estate. In many cases, the Independent Executor will be required to
supply original letters testamentary to the third party. Therefore, when Letters
Testamentary are obtained, enough copies should be obtained to allow the
Independent Executor to deal with the various entities that hold assets belonging to
the decedent. Additional Letters Testamentary can be obtained by the Independent
Executor or his or her attorney. For certain types of transfers, such as stock transfers,
Letters Testamentary must be dated within 60 days of the date they are issued. As a
result, it may be necessary for an Independent Executor to obtain “fresh” Letters
Testamentary at some point during the administration when transfers are being
made.
E. Bond. In most independent administrations, no bond will be required. This is because
Wills typically relieve an executor of the requirement to post a bond. If a bond is
required, no Letters Testamentary of Letters of Administration can issue until the
bond has been filed and approved by the court.
III. General Duties of Independent Executors.
A. Overview. In very broad terms, the duty of the Independent Executor is to collect all
of the assets due to the estate, pay all of the debts and expenses of the estate, set aside
exempt property and allowances for the family, and distribute the estate to the
beneficiaries of the estate.
B. Application of General Fiduciary Duties. An Independent Executor is a fiduciary for
the beneficiaries and persons interested in the estate. Under Texas law, an executor
is generally held to the same fiduciary standard as is a trustee. Humane Society of
Austin and Travis County v. Austin National Bank, 531 S.W.2nd 574, 577 (Tex. 1975).
This means that the Independent Executor owes to the beneficiaries of the estate
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 2
fiduciary duties similar to those owed by a trustee to a trust beneficiary. Generally, a
trustee’s duties (and therefore the duties of an Independent Executor) include the
following:
1. Duty of Loyalty. It is the duty of the fiduciary to administer the estate solely in the
interest of the beneficiaries. The fiduciary is not permitted to place himself in a
position where it could benefit him to violate his duty to the beneficiaries.
2. Duty Not to Delegate. The fiduciary is under an obligation to personally
administer the estate and may not delegate to others acts that the fiduciary should
personally perform.
3. Duty to Keep and Render Accounts. A fiduciary is under a duty to the beneficiaries
to keep full accounts that are clear and accurate. Sections 404.001 and 405.001 of
the Texas Estates Code give a beneficiary the right to demand a written statement
of accounts covering the estate*s transactions at certain times.
4. Duty to Furnish Information. A fiduciary is under a common law duty to the
beneficiaries at reasonable times to give complete and accurate information
regarding the estate.
5. Duty to Exercise Reasonable Care and Skill. A fiduciary is under a duty in
administering the trust or estate to exercise the same care and skill as a man of
ordinary prudence would use in dealing with his own property.
6. Duty to Take and Retain Control of Trust Property. The fiduciary is under a duty
to take all reasonable steps to obtain and control the estate property.
7. Duty to Preserve Estate Property. A fiduciary must use the same care and skill that
a person of ordinary prudence would use to preserve estate property.
8. Duty to Enforce Claims. A fiduciary is under a duty to take reasonable actions to
collect claims that are due to the estate.
9. Duty to Defend. The fiduciary is under a duty to do what is reasonable, under the
circumstances, to defend actions by third parties against the estate.
10. Duty Not to Co-Mingle Estate Funds. The fiduciary has a duty to keep estate
property separate from other property, and to properly designate it as estate
property. Not only is it the fiduciary*s duty to keep the estate property separate
from the fiduciary*s own property, but also to keep that property separate from
other estates or trusts the fiduciary may administer.
11. Duty With Respect to Bank Deposits. Although a fiduciary may deposit funds in a
bank, he is under a duty to use reasonable care in selecting the bank and to
properly designate the deposit as an estate deposit. He may not subject the
deposit to unreasonable restrictions on withdrawal or leave the property in non-
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 3
interest bearing accounts for unduly long periods of time.
12. Duty With Respect to Investments. Because an Independent Executor*s primary
responsibility is to collect estate assets, pay creditors and distribute the estate, the
Executor will not typically actively manage investments. The Independent
Executor cannot ignore the investments, however, as he or she does have the duty
to preserve estate property. If the assets of the estate require active management
in order to preserve value, or when the estate administration will continue for a
lengthy time, the Independent Executor should oversee the management required
in a prudent manner.
13. Duty to Deal Impartially With Beneficiaries. When there are multiple beneficiaries
of an estate, it is the duty of the fiduciary to deal impartially among the beneficia-
ries. An executor will face tax elections and other situations that will require
careful attention to impartiality.
14. Duty With Respect to Co-Fiduciaries. Unless the will provides otherwise, all
fiduciaries are under a duty to participate in the estate administration. Therefore,
a fiduciary cannot properly delegate the acts required of the fiduciary to co-
fiduciaries. It is also the duty of a fiduciary to use reasonable care to prevent other
fiduciaries from committing a breach of trust. Pursuant to Texas law, any Executor
can act alone to bind the estate, except that all executors must execute any
conveyance of real estate. Section 307.002, Texas Estates Code. Nonetheless, co-
executors should act in concert whenever possible.
C. Collection of Information. The Independent Executor will collect information
regarding the estate for the preparation of the Inventory and Estate tax return (when
required). An Inventory Information Form is attached as Exhibit F which can be used
for this purpose.
IV. Duty to Keep Records and Accounts. It is imperative that the Independent
Executor keep detailed records for the estate from the time that the Independent
Executor first assumes his or her duties. Establishing proper accounts and record-
keeping procedures at the outset will greatly simplify the Independent Executor*s job.
A. Setting Up the Books and Records of the Estate. It will be difficult and time
consuming for an Independent Executor to supply the appropriate accountings that
it is his duty to provide if adequate books and records have not been established and
maintained during the administration of the estate. There are a variety of ways that
this record-keeping can be accomplished that will enable the Independent Executor
to provide regular accountings with a minimum of effort. These are discussed in more
detail in the following sections.
B. Accounting Program. There are a number of financial software packages (such as
Quicken by Intuit or Peachtree Accounting) that can assist the Independent Executor
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 4
in the record-keeping process. Most of these retail for less than $100. Although
Quicken and similar financial programs are not specifically designed for estate
administration, they can be modified very easily to provide meaningful reports to the
beneficiaries and maintain detailed records for the Independent Executor. There are
fiduciary accounting packages that provide more traditional fiduciary accountings for
estates, but their cost tends to be significantly more than Quicken and other more
general programs. In addition, they tend to be far less user-friendly. Once the assets
of an estate have been set up on Quicken or a similar program, checks can be entered
and printed directly from the program, thus recording and categorizing expenses,
income and sales or dispositions of property as they occur. Reports can then be
produced quite easily as needed.
C. Custodianship Accounts. For larger estates, estates in which there are likely to be
complex or large numbers of transactions, or estates in which there may be
potentially contentious beneficiaries, the Independent Executor may want to consider
setting up a custody account at a financial institution to hold the liquid assets of the
estate. The financial institution will then produce monthly or quarterly statements
showing the assets, disbursements, disposition of assets and other transactions, which
can be disseminated to beneficiaries as well as to the Independent Executor. For
beneficiaries who treat the Independent Executor with suspicion, holding the liquid
assets in this manner can provide comfort to the beneficiaries and therefore may
reduce discord with the Independent Executor.
D. Record-keeping By Hand. This method is generally not recommended unless the
estate is very simple and limited transactions will be occurring. Although there is no
requirement that records be kept on a computer, reconstructing the estate
transactions from hand-maintained records can be time-consuming. Nonetheless, as
long as the Independent Executor keeps copies of all of the checks written, account
statements from all financial institutions in which assets are held, records of any sales
of assets and disposition of proceeds, etc., the Independent Executor will be able to
produce an accounting if and when one is demanded by a beneficiary, and at the close
of the estate.
E. Maintenance of Records. Because of the Independent Executor’s duty to keep and
render accounts, it is imperative that the Independent Executor maintain adequate
records during the course of the administration, and in some cases for a number of
years thereafter. All statements from banks, financial institutions and other entities
holding assets of the estate should be maintained. In addition, invoices or other
evidence of debts or expenses paid by the estate should be maintained in the file.
Copies of stock certificates that are surrendered should be maintained, together with
copies of checks or wire transfers indicating the proceeds received from the
disposition of those items.
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F. Required Accountings. Section 404.001 of the Texas Estates Code allows a beneficiary
to demand from an Independent Executor, at any time after 15 months has expired
from the date the Independent Executor qualifies as such, an accounting for the
estate. The information required to be included the following:
1. The property belonging to the estate which has come into the hands of the
Independent Executor.
2. The disposition that has been made of such property.
3. The debts that have been paid.
4. The debts and expenses still owing, if any, by the estate.
5. The remaining property of the estate.
6. Such other facts as may be necessary to a full and definite understanding of the
exact condition of the estate.
7. Such facts, if any, that show why the administration should not be closed and the
estate distributed.
In addition, Section 405.001 of the Texas Estates Code also gives a beneficiary the
right, after two years from the date that an independent administration is created, to
require a similar accounting and distribution of the estate unless the court finds there
is a continued necessity for administration. This right is in addition to the right to an
accounting under Section 149A.
G. Accountings Required by Will. The Independent Executor must always comply with
the terms of the will. If more frequent accountings are required by the Will, the
Executor must supply them.
H. Additional Accountings. Beneficiaries of estates frequently become disgruntled
because of lack of information about estate matters. In estates which will continue for
a lengthy period of time, frequently supplied accountings to keep the beneficiaries up
to date on the progress of the estate will be time and effort well spent by the
Independent Executor.
V. Tax Related Filings. For most estates, the Independent Executor will be required to
make a number of tax-related filings. The Independent Executor should consult with his
or her accountant and attorney with regard to the applicability of these in any given
estate, but these may include the following:
A. Application for Taxpayer Identification Number (Form SS-4). In general, immediately
after appointment as Independent Executor, the Independent Executor should obtain
from the Internal Revenue Service a Taxpayer Identification Number (Form SS-4)
which will be used for the estate during the course of the administration of the estate.
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 6
Attached as Exhibit A are instructions on obtaining the SS-4 from the Internal
Revenue Service.
B. Notice of Fiduciary Relationship (Form 56). It may be advisable to file a Form 56
which notifies the Internal Revenue Service that the Independent Executor is serving
in that capacity. The purpose of this is to put the Internal Revenue Service on notice
as to the proper party to notify should there be a tax issue that arises with respect to
the decedent. If the Service is not on notice that a fiduciary has been appointed, and
if a deficiency or similar tax notice is sent to the last address used by the decedent on
a tax form, and is not forwarded to the Independent Executor, the rights of the
decedent*s estate to challenge actions by the IRS may be jeopardized. In cases in
which there is a surviving spouse who has been filing joint income tax returns with
the decedent, or in cases in which a responsible party will remain at the decedent*s
last address to receive any notices, this potential problem is less likely to arise.
Nonetheless, it is fairly simple for the Independent Executor to fill out the Form 56
so that the Internal Revenue Service is on notice as to the proper party to receive
notices on behalf of the decedent.
C. Decedent’s Final Income Tax Return. The Independent Executor will have the
responsibility for filing the decedent*s final income tax return. Typically, a certified
public accountant will be hired by the Independent Executor to perform this duty, but
in some simpler estates, the Independent Executor may prepare this return.
D. Income Tax Returns for the Estate. During the course of the administration of the
estate, a fiduciary income tax return (Form 1041) must be filed for the estate for each
year. These returns will be due the 15
th
day of the fourth month following the close of
the estate’s fiscal year. A certified public accountant normally prepares these returns
for the Independent Executor. There may be some tax benefit to selecting a fiscal year
end other than December 31 in some cases, but in many cases, the simplicity of using
a calendar year end will outweigh these benefits. Estimated tax payments will not be
required for the estate unless the estate administration lasts longer than two years.
E. Federal Estate Tax (and Generation-Skipping Tax) Return (Form 706). If an estate
meets the filing requirement, a Form 706 must be filed for the decedent*s estate, even
if no taxes will be due. The estate tax return is typically prepared by the attorney. In
some cases, accountants who do a substantial amount of work in the estate area will
prepare the return instead. This return is required to be filed nine months
following the date of the decedent*s death. An extension can be obtained for up
to six months following that original due date (15 months from the date of the
decedent’s death). This extension, however, is not an automatic extension and must
be specifically requested and approved by the Internal Revenue Service. Requests are
routinely approved. If the decedent has a gross estate of more than $5,250,000, the
return must be filed. The Independent Executor should carefully review with the
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 7
estate’s attorney and/or the accountant the assets of the decedent that would be
considered to be included in the estate for estate tax purposes. Assets of the decedent
which pass outside of probate (such as life insurance and retirement benefits) will be
included in the gross estate, so the Independent Executor will need to obtain
information regarding the non-probate assets as well. In addition, if taxable gifts were
made during lifetime (gifts in excess of $10,000 to $13,000 per person per year), those
gifts will have to be taken into consideration in determining whether the filing
requirement is met.
VI. Required Court Filings. An Independent Executor is generally free from court
supervision, and thus may act on behalf of the estate without additional court
authority. Nonetheless, in addition to the original court filings for the Independent
Executor*s appointment, there are a few court filings that are required or may be
advisable.
A. Inventory, Appraisement and List of Claims.
1. The Independent Executor is required to file an Inventory, Appraisement and List
of Claims (the “Inventory”) within 90 days of the date the Independent Executor
qualifies. TEXAS ESTATES CODE SECTION 309.051. Qualification occurs when the
Order appointing the Independent Executor has been signed by the court, and the
Independent Executor has filed his or her oath with the court (and posted bond,
if applicable). The Inventory must list all property of the estate which has come
into the possession or knowledge of the Independent Executor, including all real
property in the State of Texas and all personal property wherever situated. The
Independent Executor must set out in the Inventory the fair market value of each
item thereof as of the date of death. The Inventory values are typically determined
by the Independent Executor, with information from appraisers hired by the
Independent Executor or the attorney for the estate, where appropriate. The court
does have the authority to appoint an appraiser of the estate, in which case those
appraisers assist the Independent Execute in determining the value of the
property. Court-appointed appraisers are very rarely, if ever, utilized in independ-
ent administrations. The Inventory must specify the property as being separate or
community. In addition, if property is co-owned with others, the interest owned
by the estate must be shown, together with the names and relationship of co-
owners. The Inventory must also contain a list of claims setting out all claims due
or owing to the estate. These are not claims that the estate owes, but rather are
owed to the estate. The Inventory must contain an affidavit by the Independent
Executor sworn before a notary public that the Inventory is a true and complete
statement of the property and claims of the estate that have come to the
Independent Executor*s knowledge. The Independent Executor is not required to
list property that passes outside of the probate estate (such as life insurance and
other assets that pass by beneficiary designation or contract rights, and property
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 8
in revocable management trusts or living trusts).
2. Extension of Time to File Inventory. Most courts will routinely grant extensions of
time to file inventories in independent administrations, particularly when an
estate tax return is required to be filed. Some courts may require the consent of
beneficiaries for an extension request. In cases in which an estate tax return will
be filed, it is common to request an Inventory extension so that appraisals can be
obtained prior to the time the Inventory is filed and items of the estate can be
treated consistently on the Form 706 (estate tax return) and the Inventory.
B. Notice to Beneficiaries. Within sixty days of the date of the Order Probating Will, the
Independent Executor is required to give anyone named as a devisee in a will, if the
address of the person or entity can be ascertained with reasonable diligence, notice
that the person or other entity is named as a devisee in the will. A copy of the Order
admitting the will to probate and copy of the will must normally be attached. The
notice must be sent by registered or certified mail, return receipt requested. Often the
simpler procedure, especially with family members and friends, is to get each devisee
to sign a Waiver of this notice and file those with the Affidavit. Following the notice,
the applicant must file an affidavit with the court in which the will was admitted to
probate that the proper notices were given. There are some exceptions: the procedure
is set forth in Sections 308.001 - 308.004 of the TEXAS ESTATES CODE. A sample notice
is attached as Exhibit B.
C. Notice to Creditors. The Independent Executor must file a copy of the printed notice
to creditors (detailed in paragraph VIII.C.1 on page 14 of this Handbook), together
with an affidavit of the publisher, in the court in which the cause is pending.
D. Affidavit of Notice to Secured Creditors. A copy of each notice (detailed in paragraph
VIII.C.2 on page 14 of this Handbook) must be filed with the court along with an
affidavit that the notices were properly provided.
E. Closing the Estate. In many independent administrations, the estate will never be
officially “closed” with the court. In some cases, however, the Independent Executor
may utilize one of the closing methods described in Section XV of this Handbook.
VII. Specific Recommended Steps That May Be Needed. Although the actions listed
below will not be appropriate or necessary in every estate administration, the
Independent Executor should consider the following to determine if action is
required.
A. Securing the Personal Residence of the Decedent. If a spouse survives the decedent,
the surviving spouse has the sole and exclusive right to continue occupying the
residence until the surviving spouse*s death or abandonment of the residence. If there
is no surviving spouse (and no minor children with similar rights), the Independent
Executor should take steps to secure the residence. These might include the
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 9
following:
1. Change locks so that persons who may have had access keys during the decedent*s
lifetime are no longer able to enter the residence without the consent of the
Independent Executor. To avoid creating adversarial situations where none exist,
the Independent Executor should communicate this to the beneficiaries of the
estate so that the beneficiaries do not feel unnecessarily shut out of the adminis-
tration. Although it is the Independent Executor*s duty and responsibility to
administer the estate and safeguard the property, this needs to be done with
sensitivity to the beneficiaries and their needs, if the Independent Executor does
not want to create a hostile situation which may ultimately lead to claims being
made against the Independent Executor.
2. Stop deliveries and utilities, where appropriate. Newspaper deliveries and other
deliveries that may be made to the house should be stopped. It may be advisable
for utilities such as water, gas and electric to be left on to protect the house. The
Independent Executor may want to evaluate whether phone service continues to
be necessary. Items such as cable television should be discontinued.
B. Secure Valuables. If any cash, jewelry or other valuables are found in the residence or
other premises, they should be carefully inventoried by the Independent Executor and
placed in a safe deposit box or other appropriate place for safekeeping.
C. Insurance. The Independent Executor should confirm that insurance is in place on all
real property, automobiles and other valuables. The Independent Executor should
review the homeowner*s policies to determine how long the residence may remain
vacant without jeopardizing insurance coverage.
D. Mortgage Information. The Independent Executor should determine whether there
are any mortgages on the residence or other property, and if so, determine their status
and the proper method for payment.
E. Dealing with Personal Property.
1. The Independent Executor should determine how the personal property of the
estate will be handled. Frequently, items such as furniture, furnishings, jewelry,
clothing, etc., are left to a specified individual or group of individuals. If there is
a surviving spouse and/or minor children, the Texas Estates Code provides that
the property of the estate that is exempt from execution or for sale under Texas
law (which would generally include items of personal use, such as furniture,
furnishings, cars, etc.) be set apart for the use and benefit of the surviving spouse
and minor children and unmarried children remaining with the family during the
administration. If the estate is determined to be solvent at the final settlement of
the estate, then those items will be subject to distribution among the heirs and
distributees of the estate.
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2. After the temporary setting aside of exempt property as discussed above, the
Independent Executor should follow carefully the provisions of the will in terms
of distributing the personal property of the decedent. For personal property not
disposed of by the will, and assuming the Independent Executor has authority
pursuant to the will to sell property, the Independent Executor may want to
arrange an estate sale to dispose of the personal property of the estate. In order
to avoid problems, this is something the Independent Executor should discuss
with the beneficiaries of the estate prior to selling items that may have sentimen-
tal value to the beneficiaries.
F. Inventory of Personal Items. In any event, the Independent Executor may want to
obtain an early inventory of items in the residence and other places in which there is
property belonging to the decedent. There are appraisers available who for a relatively
small fee will inventory the assets of the house. If an Independent Executor
anticipates any problems with the family, it would be wise to have an immediate
inventory made to avoid questions arising at a later date from the beneficiaries.
G. Automobiles. The Independent Executor should make arrangements for the
automobiles of the estate to insure that they do not create liability for the estate.
Insurance should be checked to make sure that it is still in effect. The automobiles
should be stored in as secure a manner as possible without undue cost. If the
automobiles are left to a specific individual or individuals, and if they are not set aside
as exempt property to a spouse or surviving spouse, it would be advisable for the
Independent Executor to distribute these as soon as possible in a solvent estate, so
that the expense of maintaining the automobiles passes to the beneficiaries. To do
this, the car title should be changed with the Department of Motor Vehicles.
H. Dividing Personal Property Among Beneficiaries. In many cases, the personal property
of the estate will be left to multiple beneficiaries (such as the children of the
decedent). In this case, the will may state how the property is to be divided. In many
cases, however, the will simply states that the property will be distributed as
determined by the executor, or as agreed upon by the beneficiaries. Even if the
executor is to make the determination, it is wise to do this with the participation of
the beneficiaries. If the beneficiaries are unable to agree between themselves as to the
disposition of the personal property, the executor may want to devise a system to
govern the distribution of items. For example, the beneficiaries could have a meeting
at which each draws a number and selects items in the order drawn. Alternatively, the
executor may want to ask for a list from each beneficiary of the items that they want
in the order that they desire the items, and compare lists and priorities and make a
determination between the beneficiaries. Once again, the executor should make sure
that whatever method he or she selects is not at odds with the terms of the will,
unless all of the beneficiaries have agreed that they wish to have it distributed in some
way other than as provided in the will.
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 11
I. Credit Cards and Bank Debit Cards. The Independent Executor should notify any
financial institutions which issued credit cards or bank debit cards to the decedent
of the decedent’s death. The cards should be destroyed by the Independent Executor.
In addition, the Independent Executor may wish to give the discretionary notice to
creditors discussed in Section VIII.C.3 to all credit card companies and banks with
whom the decedent has known to have done business.
J. Safe Deposit Box. The Independent Executor should gain access to any safe deposit
boxes held by the decedent for the purpose of determining whether any valuable
items are in those safe deposit boxes. If any safe deposit boxes permit joint access by
persons other than the Independent Executor, the Independent Executor may find it
advisable to move any such valuable items that belonged to the decedent to a safe
deposit box accessible only by the Independent Executor. In visiting the safe deposit
box, the Independent Executor may want to take the beneficiaries with him to view
the contents as they are opened, or may want to take another credible person who can
testify as to the contents of the box. It is not uncommon for beneficiaries to believe
that items were kept in a safe deposit box or were held by the decedent which had
been disposed by the decedent many years ago (or are simply missing). Credible third
parties or beneficiaries who will witness and inventory the box the first time that it
is entered by the Independent Executor can be valuable allies if a question is later
raised with regard to missing valuables. A written inventory can be prepared at that
time, signed by the third party.
K. Set Up Estate Bank Accounts. Shortly after appointment, the Independent Executor
will need to set up accounts at banks or other financial institutions to transact the
business of the estate. In general, the estate will need an account on which checks can
be written for the payment of expenses and debts of the estate. Unless size of account
and account fees makes this unwise, it is typically desirable to set this up in an
interest-bearing account. In addition, the Independent Executor is likely to need to
set up one or more additional accounts to hold the more significant assets of the
estate. To the extent assets are in financial institutions, the deposits should be fully
covered by the FDIC or should be otherwise evaluated for safety of the principal. The
Independent Executor may want to consider setting up a custodianship account with
a financial institution. It is generally advisable to set up the minimum number of
accounts that will allow the Independent Executor to effectively manage the estate.
It is easier for record-keeping purposes if all debts and expenses flow through a single
account, such as the estate*s checking account. Money can be periodically moved to
this account from investment accounts as needed.
L. Consolidation of Accounts. If the decedent held multiple accounts at a variety of
financial institutions, such as brokerage houses and mutual funds, the Independent
Executor may want to consolidate these accounts for ease in administration.
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 12
M. Setting Aside Family Allowances and Exempt Property. In the vast majority of estates,
no property will be set aside to the surviving spouse and minor children as exempt
property, homestead, or family allowance. This is because in most cases, the estate
will in fact pass to the person or persons who would be entitled to have these set
asides. Nonetheless, the Independent Executor should be aware that there are cases
in which exempt property (such as personal effects, cars, furniture, etc.), the primary
residence of a decedent, and property sufficient to support the family for a year, may
be required to be set aside to the spouse and/or minor children. The Independent
Executor will need to consult with his or her attorney regarding the appropriate
amounts and procedure for setting aside such property, as well as to whom it is
properly paid.
N. Review Assets Held by the Estate. Although an Independent Executor*s job is more
limited than a trustee*s job, since it is the Independent Executor*s primary obligation
to collect assets, pay bills and then distribute the assets (rather than investing them
for a long period of time), the Independent Executor should nonetheless review the
investments and assets of the estate to determine that there are no “problem” assets
which need to be dealt with by disposition or otherwise. In most cases, an Independ-
ent Executor will have the power to sell assets. If the Independent Executor continues
to maintain assets which are highly risky for the estate, the Independent Executor
may find that the beneficiaries attempt to hold him or her liable for not behaving
prudently with respect to the asset.
O. Funding Specific Bequests. The Independent Executor should discuss with his or her
attorney when specific bequests made in the will should be funded. If gifts of cash or
dollar amounts are not funded within twelve months, the estate may need to pay
interest to the beneficiary when the gifts are finally funded.
VIII. Dealing with Claims by Creditors. One of the initial determinations that should be
made by the Independent Executor is whether or not the estate appears to be solvent.
In most cases, the debts owed by the decedent will be small in relation to the overall
value of the estate, and it will be clear that there are sufficient liquid assets in order
to be able to pay all creditors. In cases in which it appears that there may be more
debts than assets in the estate, or in cases in which there is an issue as to whether the
estate will be solvent or not, the Independent Executor should work closely with the
attorney regarding the administration of the estate and the payment of debts.
A. Ability to Pay Claims when Estate is Solvent. In general, an Independent Executor will
classify and pay claims in the same order of priority, classification and proration
described in the Texas Estates Code for dependent executors. TEXAS ESTATES CODE
SECTION 403.051. An Independent Executor is, however, free from personal liability
from paying a claim at any time (to the extent it is approved and classified by the
personal representative), if the claim is not barred by limitations and at the time of
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 13
payment, and the Independent Executor reasonably believes the estate will have
sufficient assets to pay all claims against the estate. TEXAS ESTATES CODE SECTION
403.0585.
B. Classification of Claims. Claims against an estate are classified and shall have priority
of payment in the following order:
1. Class 1: funeral expenses and expenses of last sickness up to $15,000 (the balance
of which will be paid as Class 8 claims);
2. Class 2: expenses of administration and expenses incurred in the preservation,
safekeeping and management of the estate;
3. Class 3: secured claims for money (such as mortgages, car liens, etc.), so far as the
claims can be paid out of the proceeds of the property subject to the lien;
4. Class 4: claims for delinquent child support and child support arrearages;
5. Class 5: claims for taxes, penalties and interests due to the state of Texas;
6. Class 6: claims for the cost of confinement through the Texas Department of
Criminal Justice;
7. Class 7: claims for repayment of medical assistant payments made by the state to
or for the benefit of the decedent;
8. Class 8: all other claims.
Note: A federal statute gives claims of the United States government priority before
all other debts of a deceased debtor. 31 U.S.C.A. SECTION 3713(A). Debts to the United
States (such as tax payments) are not listed in the Texas statute, but an independent
executor who fails to give priority to claims of the United States over other creditors
is personally liable for those claims. Funeral and administration expenses are
permitted to be paid first, since they are not considered to be debts of the decedent.
In addition, family allowances are not considered debts and therefore take priority
over debts due to the United States as well.
C. Notices to Creditors.
1. Published Notice to Creditors. The Independent Executor must publish a notice to
all persons having claims against the estate within one month after being
appointed as Independent Executor. This is normally handled by the attorney.
Proof of publication is filed in the court.
2. Notice to Holders of Secured Claims. Within two months of receiving letters
testamentary, the Independent Executor shall give notice of the issuance of the
letters to all persons having a claim for money against the estate that is secured
by real or personal property of the estate. In addition, if the personal representa-
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 14
tive obtains actual notice of additional secured claims following that two-month
period, the personal representative is to give notice to the person having the
claim. An affidavit that these notices were given is filed with the court.
3. Permissive Notice to Unsecured Creditors. At any time before an estate is closed,
an Independent Executor may give notice by certified or registered mail, return
receipt requested, to an unsecured creditor having a claim for money against the
estate, stating that the creditor must present a claim within four months after the
date of the receipt of the notice or the claim is barred. Certain information must
be included in that notice (a sample copy of which is attached as Exhibit D).
TEXAS ESTATES CODE, SECTION 308.054. This is a very useful method for the
Independent Executor to notify credit card companies and other persons who
might have claims against the decedent’s estate. It enables the Independent
Executor to know for certain whether claims will be made by any of the persons
notified within the four-month period following notice. Otherwise, claims can
continue to be made until the statute of limitations runs on the claim.
D. Duty with Regard to Non-Probate Assets. In some cases, substantial assets will pass
outside of the probate estate. The Independent Executor generally does not have
access to these non-probate assets, but some of them may be subject to the debts of
the decedent. If the probate estate is insolvent, but there are other assets subject to
the creditors of the decedent, the Independent Executor may be required to proceed
against certain types of non-probate assets. For example, if an Independent Executor
receives a written demand by a surviving spouse, a creditor, or a person acting for a
minor child of the decedent, within two years of the death of the decedent, the
Independent Executor may be required to collect from a beneficiary who receives
funds from a multiple party account (such as a joint and survivorship account)
amounts owned in the account by the decedent immediately before his death, to the
extent necessary to discharge debts, taxes, expenses of administration, and statutory
allowances to the surviving spouse and minor children.
IX. Sale of Estate Assets.
A. Sale of Real and Personal Property. In most cases in which an Independent Executor
is appointed, the will provides that the Independent Executor has the power of sale
over the estate assets. This enables the Independent Executor to sell estate assets.
Even in absence of a power of sale in the will, the Independent Executor will generally
be able to sell assets if necessary to pay the debts of the decedent, or if it is otherwise
in the best interest of the estate. In absence of a power of sale, the Independent
Executor should consult with his or her attorney regarding the propriety of selling
estate assets.
B. Direct or Indirect Sales to Independent Executor. There are strict restrictions upon
the ability of an Independent Executor to purchase, directly or indirectly, any
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 15
property of the estate that he sells during the course of administration. An Independ-
ent Executor may purchase property from the estate only if:
1. The will admitted to probate and appointing the Independent Executor expressly
authorizes the sale.
2. The sale is in compliance with the terms of a written executory contract signed by
the decedent, including contract for deed, earnest money contract, buy/sell
agreement, or stock purchase or redemption agreement.
3. The court makes a determination that the sale is in the best interest of the estate,
after proper notice is given.
Even if an Independent Executor is authorized to make a sale to himself of estate
property, he should be very careful in doing so. Beneficiaries and a court will tend to
scrutinize any transaction in which the Independent Executor (or a family member
or related entity) benefits.
X. Property Subject to Administration by the Independent Executor.
A. General. In general, an Independent Executor has control and access over the separate
property of the decedent, the property subject to the sole management, control and
disposition of the decedent (which would typically be assets acquired by the decedent
during marriage which are not separate, and which have stayed within the decedent*s
sole management and control). The Independent Executor is also entitled to joint
management community property. This is generally community property that was
acquired by either spouse during marriage and which has been jointly managed or
which has been placed into their joint names. The Independent Executor does not
have control over the sole management property of the surviving spouse. The
surviving spouse is entitled to administer that community property.
B. When Spouse is Independent Executor. When the spouse is the Independent
Executor, this will generally be immaterial, since the surviving spouse will control all
of the property, either as Independent Executor or as the surviving spouse. If the
surviving spouse is not the Independent Executor, in a friendly executor/surviving
spouse situation, the surviving spouse may choose to let the Independent Executor
administer all of the community estate.
C. Disposition of Community Estate at Termination of Administration. Once the
administration of the community estate is completed, the Independent Executor is
required to turn over to the surviving spouse his or her share of the community
property. Likewise, the surviving spouse is to transfer to the Independent Executor
of the estate, the decedent*s interest in the community property administered by the
surviving spouse, once community administration on that property is complete.
D. Early Partition and Distribution of Community One-Half. It frequently simplifies the
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 16
administration and ultimate disposition of the community estate if all or part of the
community estate is partitioned, or divided, soon after the death of the first spouse.
Generally, funds that are spent by the surviving spouse will need to come from the
surviving spouse*s share (unless classified as a family allowance). Similarly, some of
the estate expenses will be properly chargeable only to the decedent*s estate (such as
funeral expenses, estate taxes, if any, and legal fees relating solely to the settlement
of the estate).
By making an early division of the community estate, the Independent Executor will not
have to reclassify and allocate expenses among the surviving spouse and the estate at a
later date. An early division is practical only if there are adequate liquid funds to pay all
of the debts and expenses for the estate. In many cases, the Independent Executor may
want to only divide a portion of the community estate. For example, if the Independent
Executor believes that each of the surviving spouse and the estate will need no more than
$50,000 during the course of administration, the Independent Executor might simply
divide $100,000, setting aside $50,000 to the surviving spouse as her share of that
community property, and the remaining $50,000 to an estate bank account through
which the estate expenses will flow. Joint expenses of the spouse and the decedent can
continue to be paid through other accounts which have not yet been partitioned. The
surviving spouse can then utilize the funds set aside for his or her benefit to pay for her
expenses until the rest of the community is divided. Likewise, the Independent Executor
can pay expenses which should not be divided with the surviving spouse from the
account established for the estate. The attorney for the estate should be consulted in
connection with any partition of the community estate.
XI. Obtaining Consents from Beneficiaries.
A. Disclosure to Beneficiaries. An Independent Executor will be required to make many
tax elections, decisions to sell assets or not sell assets, and other major decisions
during the course of an estate administration. Because the Independent Executor
owes the beneficiaries a duty of full disclosure, the Independent Executor must
discuss with the beneficiaries transactions involving major assets of the estate. The
Independent Executor is not required to obtain the approval of the beneficiaries, but
prompt and full disclosure of items under consideration, may prevent beneficiaries
from later second-guessing the propriety of transactions. For example, if the estate
owns an interest in a closely-held business which is a substantial portion of the estate,
the Independent Executor should inform and consult with the beneficiaries regarding
any proposed sales of the closely-held business.
B. Consents and Releases by Beneficiaries. Although the Texas Estates Code does not
contain any specific provisions relieving an Independent Executor of liability if a
beneficiary consents to an action or releases the Independent Executor from liability
for an action, general fiduciary law holds that a beneficiary who has consented to a
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 17
transaction or released a fiduciary from liability for a transaction cannot later
complain of that transaction. Therefore, if the beneficiaries of the estate desire certain
actions to be taken or not taken, the Independent Executor will be wise to obtain
written documentation of the beneficiary*s consent and release for the actions. In
order for such a consent or release to be effective against a beneficiary, the
Independent Executor needs to fully disclose all pertinent information to the
beneficiary.
XII. Estate Taxes and Allocation of Estate Taxes to Beneficiaries.
A. Due Date for Estate Taxes. Except in rare circumstances, federal estate taxes will be
due nine months from the date of the decedent*s death. In many cases in which a
decedent is survived by a surviving spouse, there will be no estate taxes due, but this
should be carefully evaluated with the attorney for the estate, based on the estate
planning documents involved. When farm land or closely-held businesses are
involved, there may be some ability to defer the payment of the taxes, but very
specific requirements have to be met in order to do so. As a result, the Independent
Executor needs to get an early estimate regarding the estate taxes that will be due, so
that proper arrangements can be made for payment of the estate taxes.
B. Selling Assets to Pay Estate Taxes. If there will be significant estate taxes, the earlier
the Independent Executor begins to focus on what assets will need to be sold in order
to pay estate taxes, the better off the estate will be. For instance, if there is a residence
which is desired to be sold, it should be put on the market fairly promptly, rather than
waiting until near the nine month due date. Although stocks and bonds can be sold
in a shorter period, an Independent Executor should begin taking into consideration
what stocks and bonds will need to be sold, as well. An early determination gives the
Independent Executor the ability to sell these assets over a period of time (rather than
being forced to sell them during a market downswing), and also leaves the Independ-
ent Executor adequate time for funds to be transferred and checks to be written. The
Independent Executor should remember that even in the most liquid situation, it may
take five trading days for a mutual fund or stock to sell, and may take several more
days to actually get the funds into an appropriate account for tax payment. It is
generally preferable for the money to be on hand two weeks prior to the tax payment
due date, to ensure that the funds are available.
C. Personal Liability. An Independent Executor is personally liable for the payment of
estate taxes to the extent of the assets of the estate. Therefore, the Independent
Executor should not make distributions to beneficiaries unless it is absolutely clear
that there will be sufficient assets remaining to pay the taxes.
XIII. Communications with Beneficiaries. One of the most important tasks of the
Independent Executor, and one that will ultimately avoid many of the problems that
arise in administration of estates, is prompt and proper communication with the
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 18
beneficiaries of the estate. Below are some of the types of communications that may
be appropriate for the Independent Executor to have with the beneficiaries during the
course of an estate administration.
A. Send Pertinent Estate Planning Documents to the Beneficiaries. As stated in
paragraph VI.B on page 9 of this Handbook, the Independent Executor is required to
provide a copy of the will and Order probating the will to the beneficiaries of the
estate. In addition, if an irrevocable trust or other instrument is involved which gives
benefits to the beneficiaries, the beneficiaries should also receive from the Independ-
ent Executor (or directly from the Trustee) a copy of that document.
B. Timetable of Estate Events. It will prevent frustration on the part of beneficiaries if
the Independent Executor communicates with the beneficiaries at the outset the
expected timetable for the estate. This needs to be a realistic timetable, which will
allow for delays that may arise during the course of an estate administration. Counsel
for the Independent Executor can help the Independent Executor determine the
timetable that is appropriate, given the assets of the estate, whether an estate tax
return will be required to be filed, whether assets are such that an audit may be likely,
as well as whether there are creditor or other issues that may impact the length of
time for the estate administration.
C. Regular Accountings. As mentioned in the section on accountings and record-
keeping, an Independent Executor is not required to provide accountings until 15
months have expired from the time the Independent Executor is appointed. It may
be unnecessary for the Independent Executor to provide early accountings in simple
estates in which the entire estate administration will be wound up in a short time
period. For estates that are expected to last several years, however, it is advisable for
the Independent Executor to communicate financial information to the beneficiaries
of the estate throughout the administration through use of accountings prepared by
the Independent Executor.
D. Disclaimer Options. Many times, the Independent Executor is represented by counsel
in the estate, but the beneficiaries of the estate do not have counsel of their own.
Beneficiaries have nine months following the date of the decedent*s death during
which they can “disclaim” (or refuse to take) benefits from the decedent’s estate.
There may be personal reasons, tax reasons or creditor reasons for utilizing
disclaimers. The Independent Executor should communicate to the beneficiaries that
they may have tax options which should be considered. Although disclaimer planning
technically falls outside of the duties of the Independent Executor, it could be
beneficial to the family for this to be evaluated early. Once a beneficiary has accepted
benefits, he can no longer disclaim the property. The beneficiaries should be
encouraged to obtain counsel to evaluate planning that may be beneficial to them.
E. Tax Allocations. In some cases, beneficiaries will receive non-probate assets for which
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 19
they may be liable for estate taxes. In these cases, the Independent Executor should
notify the beneficiaries of that fact as early as possible (i.e., before the beneficiary has
expended all the funds). When possible, the Independent Executor may want to
encourage the family members to deposit funds for the taxes in escrow with the
Independent Executor so that they will be available when the time for payment of the
taxes comes.
F. Important Estate Transactions. As discussed earlier, the Independent Executor should
discuss with the beneficiaries any important estate transactions involving major assets
of the estate.
G. Distribution Planning. The Independent Executor should make sure that the
beneficiary understands the timing of any distributions that will be made to
beneficiaries. If the estate is likely to last a lengthy period of time, interim distribu-
tions to beneficiaries may be made when appropriate. Again, the Independent
Executor should discuss with his or her attorney the timing of distributions and the
effect of any distributions.
H. Income Tax Results. It is helpful for the Independent Executor to obtain information
from the estate*s accountant so the Independent Executor can inform the beneficia-
ries of the expected income tax results of interim and final distributions.
XIV. Final Settlement of Estate and Distribution to Beneficiaries. When all of the
debts of the estate have been paid, and the estate taxes have been paid in full (and a
“closing letter” received from the IRS), the Independent Executor will need to finalize
the administration of the estate and distribute the estate assets to the beneficiaries
of the estate. Counsel should assist the Independent Executor in making any final
division of the community estate and distribution of estate assets. In many cases,
trusts will be funded under the will, and the Independent Executor will need the
assistance of the attorney or the accountant in determining the amounts to fund in
each trust. In most situations, the attorney will prepare a document that sets forth all
of the distributions and trust fundings, which can be agreed to by the beneficiaries of
the estate.
XV. Closing the Estate Administration.
A. No Official Closing. In Texas, there is usually no formal closing of the estate, other
than the distribution of estate assets and signing of documents that reflect the
division of the community estate and the distribution of estate assets. It is advisable
for the Independent Executor to have all beneficiaries sign off on the administration
of the estate by signing final estate settlement documentation (normally prepared by
the attorney) and releasing the Independent Executor from further liability for his or
her actions during the course of the independent administration. Documentation
setting forth the final settlement and distribution of the estate is not only valuable in
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 20
terms of providing the Independent Executor with a potential release from liability
by the beneficiaries, but also because it provides a written record for the future which
may be very useful. For example, if trusts are to be funded under the will at the death
of the first spouse, the Internal Revenue Service may question the manner in which
trusts were established at the death of the second spouse. By having a record of the
determinations that were made and the funding of the trusts, this can be easily
provided.
B. Closing of Estate by Affidavit. An Independent Executor may close an estate by filing
an affidavit with the probate court closing the estate. The effect of the affidavit is that
it terminates the independent administration and the power and authority of the
Independent Executor. It does not, however, relieve the Independent Executor from
liability for any mismanagement of the estate or from liability for any false statements
contained in the affidavit. The affidavit is required to include information showing the
property of the estate which came into the hands of the Independent Executor, the
debts that have been paid, the debts still owing, the property remaining on hand, and
the names and residences of the persons to whom the property of the estate is to be
distributed. Because this technique does not give the Independent Executor any
protection from liability for acts undertaken during the course of the administration,
it is not frequently used.
C. Judicial Discharge. The Independent Executor may obtain a judicial discharge from
his duties as Independent Executor. SECTION 405.003, TEXAS ESTATES CODE. In order
to obtain the discharge, the Independent Execute files an action for declaratory
judgment seeking discharge from liability for any matters that have been fully and
fairly disclosed. Each beneficiary of the estate will be personally served if an
Independent Executor utilizes this process. A final account will typically be required
prior to the time the court rules on the declaratory judgment action. The court may
audit, settle or approve the final account filed pursuant to these provisions. This will
be an additional expense of an estate administration and, in most cases, will be
considered to be an unnecessary expense. But for an Independent Executor who wants
to insure that the beneficiaries are satisfied and are not going to later make claims
against the him or her for his or her services as such, the Independent Executor
should proceed with a judicial discharge, or to obtain from the beneficiaries a release
in lieu of the judicial discharge. In many cases, beneficiaries will be prepared to sign
an appropriate release to avoid the additional time and expense of a judicial
discharge. The Independent Executor who is concerned about future liability must be
careful to disclose all pertinent information: he or she will not be discharged or
released from transactions that are not disclosed to the beneficiaries or the court.
XVI. Executor*s Fees and Compensation.
A. Provisions of Will. The decedent’s will may specify the manner in which fees are to
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 21
be computed, or may provide that no fees will be paid to the Independent Executor.
B. Statutory Fees. Section 352.002 of the Texas Estates Code sets forth the compensation
method for an executor or administrator in the absence of will provisions governing
compensation.
C. Review With Counsel. Any fees to be taken by the Independent Executor should be
reviewed with the estate’s attorney.
D. Court Approval. An Independent Executor may go to Court to obtain approval for fees
beyond the statutory fees if desired. TEXAS ESTATES CODE SECTION 352.003.
E. Income Taxation of Fees. An Independent Executor will pay personal income taxes on
the fees paid to the Independent Executor. The estate will obtain an estate tax or
income tax deduction for the fees.
A HANDBOOK FOR THE INDEPENDENT EXECUTOR Page 22
EXHIBIT A:
PROCESS TO OBTAIN EMPLOYER IDENTIFICATION NUMBER
ON THE INTERNET:
1. Paste this URL into your Web browser and go there:
https://sa.www4.irs.gov/modiein/individual/index.jsp
2. Fill out the form completely. Make sure there is NO punctuation (periods, commas, and
so on) or the form will give you an error. For instance, instead of “Estate of [NAME],
Deceased” use “Estate of [NAME] Deceased”.
BY FACSIMILE:
1. Fax signed and dated form SS-4 to (512) 460-8000 Attn: Tele-Tin.
2. The IRS says they will assign an employer identification number by fax within 8 days.
BY TELEPHONE:
PLEASE NOTE: If you have patience, you may want to try to obtain the number by telephone.
Typically, results are better before 8:30 a.m.
1. Call the IRS at (866) 816-2065 weekdays between the hours of 7:30 a.m. and 5:00 p.m.
(Central Standard Time). Notify the law firm if you need assistance in contacting the IRS.
2. An IRS representative will input the information from the completed form SS-4 and
assign an employer identification number (“EIN”) immediately.
3. The EIN will be given over the telephone only to a duly authorized individual as
determined by the type of organization, i.e., settlor or trustee of a trust, individual owner,
corporate president, vice-president, other principal officer, partnership member, fiduciary
for an estate or authorized agent or executor.
4. Write the EIN on the upper right hand corner of the form SS-4, sign and date it.
5. Mail Form SS-4 to Internal Revenue Service, Austin, Texas 73301.
Please e-mail, mail, or fax a copy of the SS-4 form (with assigned EIN noted thereon) to:
[NAME AND ADDRESS OF ATTORNEY]
EXHIBIT B:
NOTICE TO BENEFICIARY
[APPLICANT], [TITLE OF PERSONAL REPRESENTATIVE]
[ADDRESS]
[CITY, STATE, ZIP]
[PHONE]
[DATE]
CERTIFIED MAIL, RETURN RECEIPT REOUESTED
[NAME OF BENEFICIARY]
[ADDRESS OF BENEFICIARY]
Re: Estate of [NAME], Deceased
As required by Chapter 308 of the Texas Estates Code, you are hereby given notice that you
are named as a devisee under the Will of [NAME], Deceased. The Will was admitted to
Probate in [COUNTY] County, Texas, on [DATE ADMITTED].
Enclosed for your files are copies of the Last Will of [NAME] and the Order Admitting Will
to Probate and for Issuance of Letters Testamentary.
If you have any questions, please call me.
Sincerely yours,
[APPLICANT]
Enclosures
EXHIBIT C:
NOTICE TO SECURED CREDITOR
[APPLICANT], [TITLE OF PERSONAL REPRESENTATIVE]
[ADDRESS]
[CITY, STATE, ZIP]
[PHONE]
[DATE]
CERTIFIED MAIL RETURN RECEIPT REOUESTED
[NAME OF CREDITOR]
[ADDRESS OF CREDITOR]
Re: Estate of [NAME], Deceased (the “Estate”)
Cause No. [CAUSE NUMBER], Probate Court Number [COURT NUMBER] of [COUNTY]
County, Texas
Account No. ______________
Dear Sir or Madam:
Notice is given under Section 308.053 of the Texas Estates Code that original Letters
Testamentary were issued to [APPLICANT] (the “[TITLE OF PERSONAL REPRESENTA-
TIVE]”) on [DATE ADMITTED], in the above-referenced cause, pending in the Probate Court
of [COUNTY] County, Texas. The address at which you may contact the [TITLE OF
PERSONAL REPRESENTATIVE] is as follows:
Estate of [NAME], Deceased
c/o [APPLICANT], [TITLE OF PERSONAL REPRESENTATIVE]
[ADDRESS]
[CITY, STATE, ZIP]
You should contact the [TITLE OF PERSONAL REPRESENTATIVE] if you have any questions
concerning the secured claim.
Sincerely yours,
[APPLICANT]
[TITLE OF PERSONAL REPRESENTATIVE] of the Estate of [NAME]
EXHIBIT D:
NOTICE TO UNSECURED CREDITOR
[APPLICANT], [TITLE OF PERSONAL REPRESENTATIVE]
[ADDRESS]
[CITY, STATE, ZIP]
[PHONE]
[DATE]
CERTIFIED MAIL, RETURN RECEIPT REQUESTED
[NAME OF CREDITOR]
[ADDRESS OF CREDITOR]
Re: Estate of [NAME], Deceased (the “Estate”)
Cause No. [CAUSE NUMBER], Probate Court Number [COURT NUMBER] of [COUNTY]
County, Texas
Account No. ______________
Dear Sir or Madam:
Notice is hereby given that original Letters Testamentary were issued to [APPLICANT] (the
“[TITLE OF PERSONAL REPRESENTATIVE]”) on [DATE ADMITTED], in the referenced
cause, pending in the above-referenced court. Pursuant to Section 308.054 of the Texas
Estates Code, you must present your claim to the [TITLE OF PERSONAL REPRESENTATIVE]
within four months from the date hereof at the following address or the claim is barred, or
earlier, if the claim would be barred prior to that time by the general statutes of limitation:
Estate of [NAME], Deceased
c/o [APPLICANT], [TITLE OF PERSONAL REPRESENTATIVE]
[ADDRESS]
[CITY, STATE, ZIP]
No claims for money against [NAME], Deceased, or against the Estate, on which a suit is
barred under Section 308.054 of the Texas Estates Code, or by a general statute of limitation
applicable thereto shall be allowed by the [TITLE OF PERSONAL REPRESENTATIVE].
Your claim may only be effectively presented by one of the methods prescribed by Section
403.056 of the Texas Estates Code. Thank you for your attention to this matter.
Sincerely yours,
[APPLICANT]
[TITLE OF PERSONAL REPRESENTATIVE] of the Estate of [NAME]
EXHIBIT E:
TIMETABLE OF IMPORTANT ESTATE FUNCTIONS
ESTATE OF [NAME]
Date of Death: [DATE OF DEATH]
Cause No [CAUSE NUMBER]
Function Requirement Date Done
1 . Filing will for probate Filed: [DATE OF FILING]
2 . Probate hearing After the Monday following the
expiration of ten days from filing
of will: [DATE ADMITTED]
3 . Filing of Oath (and bond, if required)
and issuance of Letters Testamentary
Within 30 days of hearing date
4 . Publish Notice to Creditors Within 1 month after issuance of
Letters Testamentary
5 . Mail Notice to Secured Creditors Within 2 months after issuance
Letters Testamentary
6 . File Inventory, Appraisement and List
of Claims or Affidavit in Lieu thereof
(or get extension of time)
Within 90 days after issuance of
Letters
7 . File Final Individual Income Tax
Return Form 1040 (or joint return
with surviving spouse)
By the 15
th
day of the fourth
month after the close of the cal-
endar year (or decedent*s fiscal
year)
8 . Consider use of alternative valuation Six months after the date of
death
9 . File Federal Form 706 - Federal Estate
Tax Return and pay tax (consider
making request of early determina-
tion of tax)
Within 9 months of date of death
10 . File Fiduciary Income Tax Return By the 15
th
day of the fourth
month after the close of the fiscal
year of the estate
EXHIBIT F:
INVENTORY INFORMATION FORM
The following questionnaire is designed to help you provide the basic information needed
for the Inventory, Appraisement, and List of Claims required by the Texas Estates Code. This
consists of a list of all the probate assets owned by the Decedent on the date of his or her
death, plus a list of claims the Estate has against someone else (e.g., a debt owed to the
Decedent – not debts owed by the Decedent). Probate Assets are those which pass under the
Will, so they do not include survivorship accounts (e.g., bank accounts that go automatically
to a survivor, or P.O.D. accounts) or retirement plans and life insurance policies (unless they
are payable to the Decedent’s Estate, or to his or her “personal representative”). For policies
and accounts, please provide the account number: I will redact a portion (e.g., “1234567890”
becomes “12345XXXXX”) when submitting it to the court. Generally speaking, the more
information the better. For personal property (clothing, household furnishings, general
stuff), unless you have collectibles or other items that have specific value (like a coin
collection, or art), a simple note of “Personal Property located at 111 Main Street, Dallas, Texas
77777” with a general statement of its value (often 15% - 20% of the value of the home) will
do.
As always, if you have any questions at all, please call me. Thanks.
EXHIBIT E TO EXECUTOR HANDBOOK
INVENTORY INFORMATION FORM
All information that you provide is confidential and is protected
from forced disclosure by the attorney-client privilege.
BANK, FINANCIAL INSTITUTION, BROKERAGE ACCOUNTS
1.
Institution Owner(s)
Account Number Balance
2
Institution Owner(s)
Account Number Balance
3
Institution Owner(s)
Account Number Balance
4
Institution Owner(s)
Account Number Balance
5
Institution Owner(s)
Account Number Balance
6
Institution Owner(s)
Account Number Balance
7
Institution Owner(s)
Account Number Balance
8
Institution Owner(s)
Account Number Balance
INVENTORY INFORMATION FORM Page 1 of 4
PENSION/IRA/RETIREMENT ACCOUNTS
(ONLY INCLUDE THOSE PAYABLE TO THE ESTATE)
1.
Institution Beneficiary(ies)
Account Number Balance
2
Institution Beneficiary(ies)
Account Number Balance
3
Institution Beneficiary(ies)
Account Number Balance
4
Institution Beneficiary(ies)
Account Number Balance
REAL ESTATE
1.
Address Owner(s) Approx. Value
Legal Description
2.
Address Owner(s) Approx. Value
Legal Description
3.
Address Owner(s) Approx. Value
Legal Description
4.
Address Owner(s) Approx. Value
Legal Description
INVENTORY INFORMATION FORM Page 2 of 4
LIFE INSURANCE POLICIES
(ONLY INCLUDE THOSE PAYABLE TO THE ESTATE)
1.
Company Insured Name Death Benefit
Beneficiary(ies) Policy Number
2.
Company Insured Name Death Benefit
Beneficiary(ies) Policy Number
3.
Company Insured Name Death Benefit
Beneficiary(ies) Policy Number
4.
Company Insured Name Death Benefit
Beneficiary(ies) Policy Number
BUSINESSES OWNED
1.
Name of Entity Type of Entity Value
Owner(s) Percentage Owned
2.
Name of Entity Type of Entity Value
Owner(s) Percentage Owned
3.
Name of Entity Type of Entity Value
Owner(s) Percentage Owned
CLAIMS OWED TO ESTATE
1.
Nature of Claim Debtor Value
2.
Nature of Claim Debtor Value
3.
Nature of Claim Debtor Value
INVENTORY INFORMATION FORM Page 3 of 4
CARS, TRUCKS, VEHICLES
1.
Make, Model, Year Owner(s) Value
VIN
2.
Make, Model, Year Owner(s) Value
VIN
3.
Make, Model, Year Owner(s) Value
VIN
PERSONAL PROPERTY AND OTHER ASSETS (CONTINUE ON BACK IF NECESSARY)
1.
Description
Owner(s) Value
2.
Description
Owner(s) Value
3.
Description
Owner(s) Value
4.
Description
Owner(s) Value
5.
Description
Owner(s) Value
6.
Description
Owner(s) Value
INVENTORY INFORMATION FORM Page 4 of 4
