Grace, Adriane. “Headnotes.”, Dallas Bar Association, December 2020, https://heinonline.org/HOL/P?h=hein.barjournals/hdba0045&i=282.
Probate & Guardianship Proceedings With Minor Children
Of primary concern to clients in probate cases involving minor children is how to quickly transfer inherited estate assets with minimal burden to the child or caregiver. Bypassing the obvious probate and guardianship proceedings of dependent administration and guardianship of the estate-oftentimes, costly and lengthy in duration-involves implementing unique solutions.
One type of proceeding providing for immediate transfer of estate assets to a surviving parent or caregiver is the Application for Family Allowance. This Application is made in an existing estate administration, or independently with a request for an order of no administration.
In the case of a deceased parent with no estate plan, debt, and minimal or exempt estate assets, an Application for Family Allowance and Order of No Administration under Chapters 353 and 451 of the Texas Estates Code is an essential tool. This Application can be made and heard without notice, “on behalf of’ the minor child, to request a sum of money equivalent to one year’s support of the child. This sum is paid out of remaining estate assets to the exclusion of most estate creditors. To be eligible for the Family Allowance, the applicant must swear that the Class 1 claims of the estate are paid or “secured” and that the minor child does not have adequate separate property for his/her maintenance. Class 1 claims include funeral expenses and expenses of last illness up to a total of $30,000 ($15,000 per each). Typically, these costs are paid or secured by insurance policies or by the family prior to filing. If expenses of last illness are substantial, the Applicant may consider negotiating with medical providers directly to seek a waiver or a discount to an amount they can personally “secure” prior to filing the Application.
Setting the allowance amount is in the discretion of the probate court. The amount requested in the application depends on available estate assets and the needs of the minor child(ren) involved. In the case of a small or insolvent estate, the amount of the allowance may be painfully obvious, e.g., the remaining balance in the parent’s bank accounts, a last paycheck, and/or set aside or sale of exempt property. In the context of a more complex estate and pending administration, when pleading an amount, the Applicant should consider how the deceased parent supported that child before they died and the child’s needs in the year following the parent’s death. One obvious need is grief counseling. Consider also, other extraordinary needs in the wake of a parent’s death. For example, are there increased transportation or caregiving needs for the child(ren) since their parent died? Applicants should be prepared to testify as to these needs at the hearing on the Application.
A well-drafted Order should specify the assets to be paid and how payment is made. Although the statute provides that a family allowance be paid directly to the child’s guardian, some probate courts may want to utilize the court’s registry instead. Determining what the court requires, and what language any financial institutions involved may require before obtaining the court’s final signed order, is crucial.
Oftentimes, parents who fail to make a formal estate plan also name their minor child as direct beneficiary of their life insurance or retirement plans. If the amount due to the minor child is $100,000 or less, Chapter 1355 of the Texas Estates Code can be utilized to collect these funds without a guardianship of the estate. Under this section, a creditor who owes money to a Texas resident under a legal disability, in a sum of $100,000 or less that is uncontested and liquidated, may pay it to the county clerk (court’s registry), where it can be held in an interestbearing account. Once deposited, the child’s guardian applies to the probate court to request disbursements from the account to pay for the child’s expenses.
Finally, in cases involving minor orphans, filing a guardianship proceeding can be more beneficial over a conservatorship proceeding. Caregiving and the administration of inherited estate assets should be carefully coordinated because the orphaned child’s caregiver, as “next friend”, has standing to request disbursement of estate funds. Probate courts have original jurisdiction over probate and guardianship proceedings and maintaining these actions in one court better protects the minor child’s interests. Guardianship for minor orphans is contained in Section 1104.052 of the Texas Estates Code. The Estates Code even provides a guardianship process for caregivers who need to manage a child’s social security survivor benefits.
These unique solutions are essential tools for practitioners helping estates involving minor children.