Guardianship Texas

Guardianships Require Expertise

Guardianships can be very complex and should be left to those who are thoroughly familiar with the law. However, any attorney involved in estate planning must be aware of what a guardianship entails. A court-appointed attorney in any guardianship proceeding must be certified by the State Bar of Texas or a person or other entity designated by the State Bar as having successfully completed a course of study in guardianship law and procedure sponsored by the State Bar.

Purpose and Types of Guardianship

In creating a guardianship, the court must design the guardianship to encourage the development or maintenance of maximum self-reliance and independence in the incapacitated person.  An incapacitated person (previously called "incompetent person") is defined as any of the following:

(1)    A minor;
(2)    An adult individual who, because of a physical or mental condition, is substantially unable to provide food, clothing, or shelter for himself or herself, to care for the individual's own physical health, or to manage the individual's own financial affairs;
(3)    A person who must have a guardian appointed to receive funds due the person from any governmental source.

According to the incapacitated person's actual mental or physical limitations, the court may appoint either:

• A guardian with full authority over an incapacitated person; or
• A guardian with limited authority over an incapacitated person

Look for Less Restrictive Alternatives

Explore whether a less restrictive alternative to a guardianship might be available. Some possible alternatives are:

• A durable power of attorney (this is not available if the ward is already incapacitated);
• A spousal management of community property, if a husband or wife is judicially declared to be incapacitated, the other spouse acquires full power to manage, control and dispose of the entire community estate;
• A Payment of Claim Without Guardianship if the need for a guardianship is based on an estate but the value of the estate is less than $100,000;
• A veteran's benefits fiduciary;
• A representative payee to manage social security benefits;
• A medical power of attorney and/or a directive to physicians;
• A §142 trust. In a suit in which a minor who has no legal guardian is represented by a next friend or an appointed guardian ad litem, the court may, on application by the next friend or the guardian ad litem and on finding that the creation of a trust would be in the best interests of the minor, enter a decree in the record directing the clerk to deliver any funds accruing to the minor under the judgment to a trust company or a state or national bank having trust powers in this state.

Temporary (Immediate) Guardianships

If there is a need for an immediate temporary appointment, a hearing is necessary to establish that both:

• The proposed ward is a minor or incapacitated person; and
• Either there is imminent danger that the physical health or safety of the proposed ward will be seriously impaired, or the estate will be seriously damaged or dissipated unless immediate action is taken.

There is a distinction in the burden of proof required for the appointment of a temporary as opposed to a permanent guardian. For a temporary appointment the burden is "substantial evidence." However, for appointment of a permanent guardian findings must be made by "clear and convincing evidence."
It has been held that a physician's certificate is not necessary for appointment of a temporary guardian.  However, some courts may still take the position that even a temporary guardian may not be appointed without a physician's certificate. This creates a problem as health care providers are reluctant to provide any medical or psychiatric information without a release.

Representing the Ward

An attorney ad litem appointed to represent a proposed ward must interview the ward and discuss:

• The law and facts of the case;
• The proposed ward's legal options;
• The grounds on which guardianship is sought.

A ward is entitled to a jury trial

Always file an answer. The answer filed should contain a request for attorneys' fees. At the hearing, elicit testimony regarding monthly expenditures so these expenditures will be in the order. Ad litem fees must be paid by the county treasurer if the person is indigent.

ESTABLISHING THE GUARDIANSHIP

The Guardianship Application

If you are representing the guardian, obtain a letter from a physician before proceeding. The letter should indicate the condition of the ward.

Persons entitled to appointment as guardian are set out in the Probate Code. Effective September 1, 2007, criminal background checks are required for all guardians, except family members and lawyers. If the ward is a spouse, the spouse will probably only need a guardianship of the person as the spouse can manage the community estate. If there is separate property of the ward, a guardianship of the person and the estate will be necessary. Prepare and file the Application for Letters of Guardianship in County Court. The county court appoints guardians of minors and other incapacitated persons.

Preparation for the Hearing

Prepare the following forms for the hearing:

• Waiver of Notice and Citation if the Ward is 14 years of age or more;
• Selection of Guardian by a Minor if the Ward is 14 years of age or more and less than 18;
• Oath of Guardian;
• Waiver and Renunciation of Right for each person with a prior right to be appointed;
• Order Appointing Attorney Ad Litem if the Ward is incapacitated;
• Proof of Facts;
• Order Appointing Guardian.

Arrange for the date for the hearing. Send a letter to all interested parties with a copy of the Proof of Facts and information of the time and date of the hearing. Review your checklist to ensure that you have done everything.

The Hearing

For the specifics of what must be established at the guardianship hearing see Probate Code §685. For the specifics of a temporary guardianship see Probate Code §875(g). Obtain Letters of Guardianship at the hearing. If the ward is not present at a hearing, elicit testimony at the hearing as to why the ward was not present.  Put on testimony of fees and costs:

• Have the guardian testify to monthly expenditures so it will be in the order;
• Consider whether to make an application for monthly (known) expenses at the initial hearing-this will greatly reduce the expenses and attorneys' fee for the client;
• If there have been considerable expenditures by the Guardian already, file an Application for Compensation for the Guardian.

After the Hearing

Advise the guardian to not expend funds before discussing the proposed expenditures with his or her attorney. Failure to obtain prior court approval, except in very limited circumstances, may subject the guardian to personal liability. For the same reason, the guardian should never sign a contract without discussing the matter with the attorney. Explain the powers and duties of guardians to the guardian. Deadlines are important, including:

• Notice of claims;
• Inventory;
• Annual accountings;
• Sale of property

The bond must be obtained within 20 days of the hearing. Some courts have pre-printed forms for the bond and oath and the order approving the bond. Check the local rules and customs for your particular court. Be sure that a Power of Attorney executed by a person in authority is attached to the bond that authorizes your local agent to execute the bond on behalf of the surety.

Letters of Guardianship

After the appointment and qualification are official, Letters of Guardianship will be issued to the guardian. These letters serve as evidence of the appointment and authority of the guardian to act for the ward.

CONDUCTING THE GUARDIANSHIP

Powers and Duties

A guardian of the estate has the power to control all property belonging to the ward. Any cash received should be placed in a bank account separate from the guardian's personal funds. Either use the ward's tax identification number on this account or obtain a separate tax id number for the guardianship. Do not use the guardian's or the attorney's tax identification numbers to open the account. Property belonging to the ward's estate should never be commingled with the guardian's personal assets. The guardian must use diligence in collecting all claims and debts owed to the ward. It is the duty of the guardian of the estate to take care of and manage the estate as a prudent person would manage the person's own property. He or she may also sell property, if it is advantageous to the estate or if it is necessary to pay expenses, claims, or allowances owed by the ward. Subject to certain restrictions, the guardian may invest the ward's funds and lend the ward's money.

Inventory and Appraisement

Within thirty days after qualification, the guardian must file a complete inventory of the estate, together with a list of claims owing to the ward to be verified by a sworn affidavit. Attach a list of claims to the inventory. Do not consent to or approve an inventory that designates a decedent's property in a manner contrary to your client's interests. If the order appointing the guardian requires appraisers for the estate, they must also sign a sworn affidavit and attach it to the inventory. This inventory must contain a complete list of all property located within the state of Texas belonging to the estate and of all personal property belonging to the estate regardless of its location. If property not included in the inventory is discovered at any time during the pendency of the guardianship, the guardian should file a supplemental inventory showing the newly discovered assets.

Support and Maintenance of the Ward

If it is necessary for the guardian to expend funds for the ward's support, maintenance, and education, the guardian must apply to the probate court for an order authorizing these disbursements. This application must state the amounts required and the purposes for which the funds will be expended. It is also possible, in many instances to get a blanket order, in advance, allowing the guardian to spend a definite sum of money each month for the general support and maintenance of the ward.

Creditors

The guardian must see to it that all creditors of the ward are given notice of the guardian's appointment to give them the opportunity to present any claims they may have against the ward. Prepare notice of claims within one month of obtaining letters. Be sure to obtain a publisher's affidavit as to the notice and file it with the court clerk. The deadline is important because the personal representative is personally liable for damages caused by the failure to give notice. Within one month after receiving letters, personal representatives must send to the comptroller of public accounts by certified or registered mail if the ward remitted or should have remitted taxes administered by the comptroller of public accounts and publish in some newspaper in the county a notice requiring all persons having a claim against the estate being administered to present the claim within the time prescribed by law. Within four months after receiving letters, the guardian must give notice of the issuance of the letters to each person having a claim against the estate of a ward if the claim is secured by a deed of trust, mortgage, or vendor's, mechanic's or other contractor's lien on real estate belonging to the estate and notice to each person having an outstanding claim against the estate if the guardian has actual knowledge of the claim. The guardian should consult with his or her attorney regarding creditors' claims against the estate. Creditors' claims against the ward may be presented to the guardian at any time while the ward's estate remains open. The guardian may approve (i.e., recommend approval by the court) any claim that is properly authenticated and presented, as long as the claim is not barred by the statutes of limitationsOnce the guardian has allowed the claim, it will be presented to the probate court for approval or disapproval. If a claim is disallowed by operation of law, the creditor has the right to file suit in the district court to secure payment of the claim, and if the claim is found to be a just one, the guardian may be held personally liable for the costs of suit and may even be removed from office for his failure to act properly on the claim.  The procedure for making sales is quite complicated and time consuming and requires the filing of a number of pleadings with the court.  No sale of the ward's property may be made without a court order authorizing the sale. Sales will be allowed only when it appears necessary or advisable for specific reasons set out in the Probate Code. An accurate description and sworn affidavit of the condition of the estate, the debts existing and property to pay debts, and facts showing the reason and necessity for the sale must be filed with the application to the court.

Compensation

Generally, a guardian of the estate is entitled to a fee of 5 percent of the gross income of the ward's estate and 5 percent of all money paid out. However, there are some exceptions, such as annuity payments (where it is sometimes difficult to determine income from return of corpus) and Social Security. Guardians are also allowed reimbursement for reasonable and necessary expenses, such as attorneys' fees, when they are properly verified in writing. However, all compensation to the guardian must first be approved by the court. The Supreme Court has held that a guardian ad litem's fee of $100,000 was unreasonable even though the guardian was an attorney and advised attorneys in the case on the best manner to proceed with the personal injury litigation. The Court held that "as the personal representative of a minor, a guardian ad litem is required to participate in the case only to the extent necessary to protect the minor's interest and should not duplicate the work performed by the plaintiff's attorney. ... If a guardian ad litem performs work beyond the scope of this role, such work is non-compensable."

Veteran's Benefits

If the ward receives benefits from the Veterans' Administration (V.A.), an application to expend or invest funds must be submitted to the probate court. [Tex. Prob. Code §636.]
Any such application or any accounting submitted to the court must first be submitted to the V.A. office. If the V.A. approves the request or accounting, it will execute a waiver of hearing, which will enable the court to process the request or accounting without delay. [Tex. Prob. Code §636.] If the ward is a recipient of V.A. benefits, no instrument can be processed by the court without the V.A. waiver.

Annual Accounts

Under certain circumstances the annual account may be waived upon motion and order of the court if the estate's assets are small. However, generally, an annual account must be prepared no later than the 60th day after the expiration of 12 months from the date of qualification.

The annual account must show:

• All receipts and disbursements that have occurred since the filing of the original inventory;
• The status of all claims pending against the estate;
• The nature and extent of all property currently being administered.

A sworn affidavit must be attached. Any cash or securities in the guardian's possession or held in safekeeping by any bank or depository must be verified by an appropriate letter or certificate.  After the account has remained on file for ten days, it will be examined and reviewed by the court. If it is found to be correct, the court will enter an order, prepared by the guardians' attorney, approving it. The guardian must continue to file an annual account every twelve months while the ward's estate remains open.

Annual Determinations

Letters of guardianship expire one year and four months after the date of issuance unless they are renewed.
The court reviews the guardianship annually to determine whether the guardianship should be continued, modified, or terminated.

Closing the Guardianship

The guardian of a minor may apply to close the minor ward's estate when the minor reaches eighteen years of age or marries. A guardian of an incapacitated person may apply to close the guardianship when the ward's mental capacity has been restored. Either type of guardianship may be closed if the ward dies or if the funds of the estate are exhausted. To close the guardianship, the guardian must prepare and file a sworn final account showing all property that has come into the guardian's hands since the last annual account or the initial inventory, as well as any disposition of property. The accounting must also show the debts that have been paid and any debts still unpaid. If any property remains in the guardian's possession, it should be fully reported and verified in the same manner as set forth above for annual accounts. The estate may not be closed until all inheritance taxes are paid. After the court has audited the final account and entered an order approving it, the guardian may deliver the assets in his possession to the ward (or to his legal representative). The guardian must then show the court that he has complied in full. After all the property has been accounted for and all costs have been paid, the court will enter an order closing the guardianship and relieving the guardian and his surety of further responsibility for the guardianship.