Table of Contents
- GUARDIANSHIP OVERVIEW
- DIRECT CLIENT ISSUES
- INCAPACITY WITH DIVORCE
- SECTION 142 TRUSTS
- SECTION 867 TRUSTS
- SPECIAL NEEED TRUSTS
- CHILDREN SUPPORT ARREARS AND DISCLAIMERS
GUARDIANSHIP AND THE IMPAIRED DIVORCE CLIENT
As America grays, so do our clients. The Baby Boomers begin to reach age 70 starting next year, and their large numbers necessitate our business models to pay attention to their needs. And their needs through divorces will include more and more in guardianship and probate matters.
Tie the Baby Boomer’s aging population to the high rates of divorce and remarriage, the divorce of an aging blended family becomes ever more complicated. Retirement fund values are creeping back up, more double income houses, children having children and grandparents (both biological and step-grandparents) raising grandchildren continue to stress the second marriage relationships. As such, more divorces will occur with our older population which may include the incapacity of one of the parties. And step-children will get involved and claim incapacity of their biological parent. This paper will provide guidance on the issues presented.
As you assist your older clients in divorce, consider enlisting the aid of regular practitioner in the estate and probate arena. The overlap of trusts’ unique requirements, of the probate code intricacies and the long term effects of money management require some extra research and prior proper planning.
But don’t forget that the planning purposes evident for the older client who is ill are also relevant to a young client if they were to pass away unexpectedly. Many of the appellate cases we utilize went up on appeal because of the unexpected death of a party in the middle of a divorce. So prepare to be the first source of contact with family members if your client dies during the divorce and be able to explain that all precautions have been done to protect your client’s assets. Also, prepare for the claim of incapacity and need for guardianship being advanced by a child for their parent as a divorce looms.
II. GUARDIANSHIP OVERVIEW
Historically a person subject to a guardianship was presumed to lose his or her rights to engage in most transactions and make most decisions. Since at least 1993, under Section 675, an incapacitated person for whom a guardian is appointed retains all legal and civil rights and powers except those designated by court order as legal disabilities by virtue of having been specifically granted to the guardian. See TEX. PROB. CODE ANN. § 675.
When a guardianship is potentially needed, there are differing standards of review depending upon which issue is of concern for the prospective ward. As such you need to recognize there are differing applicable standards of capacity as relates to financial transactions, as to need of a full or temporary guardianship, or the capacity to execute testamentary instruments. This article does not address each issue, but if your client’s conduct is being called into question, it is important to know what specific allegations are asserted and what conduct is being questioned. Generally, a guardianship is either for the person and/or the estate.
A. Person vs. Estate
1. Guardianship of the Person
Section 767 grants the guardian of the person the right and duty to provide care to and control of the person, subject to any limitations set by the court. Specifically, Section 767 provides that the guardian of the person has the right to have physical possession of the person and to establish the person’s legal domicile, the duty of care, control, and protection of the person and to provide the person with clothing, food, medical care, shelter, and the power to consent to medical, psychiatric, and surgical treatment other than in-patient psychiatric commitment of the person. See TEX. PROB. CODE ANN. § 767(1)-(4.)
If a person is found to lack the capacity to handle any of his personal matters, the guardian would have full authority to handle such matters and the person is presumed to have no legal right to make such decisions. If, however, a person is not found to be totally incapacitated (either expressly by the court or pursuant to the current presumption) to handle his personal affairs, a person retains all civil rights and powers not expressly revoked or granted to a guardian of his person. See TEX. PROB. CODE ANN. § 675.
2. Guardianship of the Estate
Section 768 provides that a guardian of the estate is entitled to the possession and management of all property belonging to the person, to collect all debts, rentals, or claims that are due to the person, to enforce all obligations in favor of the person, and to bring and defend suits by or against the person, subject to the provisions of the Probate Code. TEX. PROB. CODE ANN. § 768.
Similarly to the guardian of the person, if a person is found to lack the capacity to handle any and all of his or her financial matters, the guardian would have full authority to handle such matters and the person is presumed to have no legal right to bind his estate. If, however, a person is not found to be totally incapacitated (either expressly by the court or pursuant to the current presumption) to handle his estate, a person may retain certain civil rights and powers relating to his estate. See TEX. PROB. CODE ANN. § 675.
B. Temporary vs. Permanent
1. Temporary Guardianships
In certain limited circumstances, a court may appoint a temporary guardian if it is presented with substantial evidence‖ that a person may be incapacitated and requires the immediate appointment of a guardian. TEX. PROB. CODE ANN. § 875(a). The intended purpose of a temporary guardianship is to protect the person’s health and well being, and/or preserve the estate until it can pass into the hands of a permanent guardian, the situation giving rise to the temporary guardianship is resolved by a less restrictive alternative, or the court has the opportunity to determine whether the person is not incapacitated.
To balance the civil rights of the person alleged to be incapacitated with the ability to protect him or her, the Probate Code limits both the circumstances under which a temporary guardian can be appointed and the powers and duties of the temporary guardian. A court is only to grant a temporary guardian those powers and duties that are necessary to protect the respondent against the imminent danger shown. Id. at 875(g). Even following a temporary guardian’s appointment, the person subject to a temporary guardianship is not presumed to be incapacitated. TEX. PROB. CODE ANN. § 875(a).
2. Permanent Guardianships
The majority of guardianships are permanent guardianships. A permanent guardianship requires that a court find, by clear and convincing evidence, that (i) the person is an incapacitated person; (ii) it is in the best interest of the person to have the court appoint a person as guardian of the person; and (iii) the rights of the person or the person’s property will be protected by the appointment of a guardian. See TEX. PROB. CODE ANN. § 684(a). Before appointing a permanent guardian, the court must also find by a preponderance of the evidence that an adult person is totally without capacity to care for himself and to manage the individual’s property, or the individual lacks the capacity to do some, but not all, of the tasks necessary to care for himself or herself or to manage the individual’s property. Id. at § 684(b). If the need for a guardianship is disputed, the proposed ward is entitled to a trial, either to the court or (if he requests) to a jury. Upon the conclusion of the trial, the court may appoint a permanent guardian of the individual’s person and/or estate with either full or limited authority.
C. Choice of Courts
If a spouse is a ward in a guardianship proceeding, the spouse with capacity may seek a divorce in district court and transfer the proceeding to the guardianship court or file the divorce proceeding directly in the guardianship court. TEX. PROB. CODE ANN. §§606, 607, 608; In Re Graham, 971 S.W. 2d 56 (Tex. 1998). If the spouse with capacity is serving as the guardian of the other spouse, he or she will no longer be able to serve as guardian and will need to request the appointment of a successor guardian.
In re Graham is significant in that it forced the Court of Appeals to recognize the statutory powers of the probate courts. The Supreme Court outlined the statutory probate court’s jurisdiction and defined “appertaining to or incident to” an estate. Id., at 59. More importantly, it held that the probate court can effectively and efficiently resolve all claims in one court, including but not limited to issues of child support. Id. at 59, 60. As such, more family law conflicts that are appertaining to an estate are being brought in the probate court.
If the ward desires to seek a divorce, or the guardian determines it is necessary to do so, the guardian may seek approval from the probate court to pursue a divorce in the probate court on behalf of the ward. TEX. PROB. CODE ANN. §§606, 607. Similarly, the guardian may seek to address issues of annulment, child custody, child support and possession of or access to a child.
III. DIRECT CLIENT ISSUES
A. Abuse of Elderly and Duty to Report
We should all be cognizant of the stress that can result from having an incapacitated individual in the household. Sometimes that stress morphs into physical responses that become violent. If a person has cause to believe that an elderly or disabled person is in the state of abuse, neglect or exploitation, the person shall report the information immediately to the Department of Family and Protective Services. TEX. HUM. RES. CODE ANN. §48.051(b). If such abuse, neglect or exploitation occurred in a facililty operated, licensed, certified or registered by a state agency other than the Texas Department of Mental Health and Mental Retardation, the person shall report the information to the state agency. TEX. HUM. RES. CODE ANN. §48.051(b). Attorneys always have a duty to report abuse of the elderly and disabled. TEX. HUM. RES. CODE ANN. §48.051.
B. Death During Divorce
If a divorce is pending and one of the spouses in the suit dies, the suit is abated and counsel should move to dismiss the case. Whatley v. Bacon, 649 S.W.2d 297, 299 (Tex. 1983). The Court with original jurisdiction over the divorce matter will no longer have jurisdiction over the property, and, if applicable, children. Id. Any property issues of the deceased spouse would then be determined in the probate court. Death during a divorce not only abates the divorce proceeding, but an intervening suit as well. Smelscer v. Smelscer, 901 S.W.2d 708, 710 (Tex. App. – El Paso 1995, no writ).
The El Paso Court of Appeals has summarized the possible scenarios when a party dies during a divorce:
- until judgment on the merits is rendered, a death of the party abates the cause and it must be dismissed;
- after judgment is rendered, the cause does not abate upon the death of the party, but the judgment can be modified or withdrawn, or a new trial granted, during the period of the trial court’s plenary power; and
- the court of appeals has jurisdiction of the appeal after the death of a party if the divorce decree substantially affects the parties’ property rights.
Turner v. Ward, 910 S.W.2d 500, 503-504 (Tex. App. – El Paso 1994, no writ). If the judgment has been rendered but a written order has not been entered, the trial court has no jurisdiction to grant a motion for new trial to undo the divorce absent a showing of fraud, duress or deprivation of due process. Marriage of Wilburn, 18 S.W.3d 837, 843 (Tex. App. – Tyler 200, pet. denied).
But also consider that mediators within the family law realm may be considered to have gained judicial powers in Spiegel V. KLRU Endowment Fund, 228 S.W. 3d 237 (Tex. App. – Austin 2007, pet. denied). In Spiegel, the parties in a divorce proceeding entered into a mediated settlement agreement (MSA) that included the following language:
THIS AGREEMENT CONSTITUTES A BINDING MEDIATED SETTLEMENT AGREEMENT. IT HAS BEEN REVIEWED BY BOTH PARTIES AND THEIR ATTORNEYS. THIS AGREEMENT WILL BE FILED WITH THE COURT AND IS NOT SUBJECT TO REVOCATION.
The husband attempted to set aside the agreement for over two years. The wife died the day before the hearing to enter the final divorce decree. The Appellate Court held that if the MSA meets the requirements of Texas Family Code §6.602(b) and the plain language of the agreement illustrates the parties’ intent to have the agreement be effective immediately, the agreement should be binding even in the absence of a judgment incorporating it. Spiegel, at 242.
C. New Will and trust designations
Texas Probate Code § 69A states very clearly that “a court may not prohibit a person from executing a new will or a codicil to an existing will.”
Tell your client in writing to do it and do it now. Either be prepared to handle the new will or get her in quick with an attorney to rework the existing will. At the minimum, execute a short codicil withdrawing the divorcing spouse from taking under the current will.
D. Death After Divorce
The divorce has been completed and a former spouse dies. What happens if the former spouse did not remove the other spouse as the designated beneficiary? A designation of a former spouse as a beneficiary for life insurance in force at the time of the rendition of divorce is not effective unless:
- the divorce decree ordered the ex-spouse to be named as a beneficiary;
- the insured person redesignated the ex-spouse as beneficiary after the rendition of the decree; or,
- the ex-spouse was designated to receive the insurance proceeds in trust or for the benefit of a child or dependent of either former spouse.
Tex. Fam. Code Ann. §9.301(a). If the designation is ineffective, the insurance proceeds shall be payable to named alternate beneficiaries or to the estate of the insured. Tex. Fam. Code Ann. §9.301(b).
E. Deposition of the Impaired Client
A person under a guardianship may still provide his deposition and witness stand testimony. Mobil Oil Corp v Floyd, 810 S.W.2d 321, 324 (Tex.App–Beaumont 1991, no writ). The guardianship does create the rebuttable presumption that the ward is unable to testify. For purposes of discovery, the relevant inquiry is whether the ward is capable of understanding the oath, and can recall and narrate events. If medical or other evidence establishes this, a party may be able to examine a ward under oath for discovery purposes even though such deposition testimony may or may not be admissible at trial. Id.
IV. INCAPACITY WITH DIVORCE
Texas follows the minority view that a guardian may petition for divorce on behalf of the ward notwithstanding the fact that there is no statute that expressly authorizes a guardian to do so. See Stubbs v. Ortega, 977 S.W.2d 718, 724 (Tex.App—Fort Worth 1998, writ denied) ("Texas public policy does not prohibit authorizing a guardian to petition for divorce on behalf of her mentally incapacitated ward"); Wahlenmaier v. Wahlenmaier, 750 S.W.2d 837, 838 (Tex.App.—El Paso 1998, writ denied)(Section 576.001 of the Texas Health and Safety Code ―gives every person who has a mental incapacity every right and privilege guaranteed by our constitution and laws, it must include a right to obtain a divorce. It follows that, since the person may not be able to act for themselves, a court appointed guardian ad litem or next friend must be able to exercise those rights for a mentally ill person.)
1. Seek Authority for Ward To Divorce
The basis for a divorce may arise from a number of facts and circumstances. In guardianship proceedings, a divorce is often sought on one of two grounds: (i) it is requested by the ward, or (ii) the guardian believes it would be in the ward’s best interest.
The ward may desire a divorce and request that the guardian pursue such an action. If the guardian is the person the ward seeks to divorce, then the ward should retain counsel for the purpose of bringing the issue to the court’s attention. Another option is for an interested person to intervene for purposes of raising the issue with the court. Generally, the court will appoint a guardian ad litem to investigate the issue.
When a divorce is requested by the ward, the guardian or third party should confirm via medical experts and otherwise that the ward has sufficient capacity to understand the concept of divorce and its effect. The guardian or third party should also confirm that the ward is not being pressured to seek a divorce by a third party. For example, a child may convince her parent that they want a divorce to alter the ward’s estate plan by voiding any gifts to the other spouse. Again, a qualified psychiatrist or neurologist can often determine the ward’s capacity or ability to understand these matters and confirm that it is not the result of pressure or third party influence. Once it is confirmed the ward understands the resulting effect it will have on him or her personally, the guardian may then seek authority to pursue a divorce, retain qualified counsel, and attempt to negotiate a property settlement.
Alternatively, the guardian may seek to divorce a ward on the basis that it is in the ward’s best interest. It remains unclear what evidence a guardian is required to present to obtain court authority to seek a divorce. In Stubbs v. Ortega, the appellate court reviewed the application based on the terms of a prior partition agreement negotiated between the ward’s guardian and the competent spouse. The agreement provided that the guardian may seek a divorce in the event of physical abuse by the competent spouse or upon a showing of good cause as determined by the probate court. 977 S.W.2d at 718. On appeal, the appellate court held that sufficient evidence to support the trial court’s conclusion that, per the parties’ contract, good cause existed to allow the guardian to petition for ward’s divorce. See Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965)(assertion evidence is "insufficient" to support fact finding means evidence supporting finding is so weak or evidence to contrary is so overwhelming that answer should be set aside and new trial ordered). The appellate court made clear, however, that they were not determining ―whether sufficient grounds existed on which to grant a divorce between the [couple], whether a guardian may sue for divorce on behalf of her ward without authorization from the probate court, or the rights of a husband to stay married to his incapacitated spouse. Stubbs, 977 S.W.2d at 718. Therefore, an issue remains whether a guardian can seek a divorce over the ward’s objection.
2. Challenging Attorney’s Standing to Represent Ward
A guardian or any other interested person may challenge the authority of counsel to represent a ward. Lack of authority may be based on the client’s inability to retain counsel. A guardian should disaffirm the contract and inform the attorney that the guardian believes the ward lacks the capacity to engage counsel. The exclusive procedural tool for challenging the authority of counsel is Rule 12 of the Texas Rules of Civil Procedure. See Angelina County v. McFarland, 374 S.W.2d 417, 423 (Tex. 1964); Gulf Regional Educ. Television Affiliates v. University of Houston, 746 S.W.2d 803, 809 (Tex. App.–Houston [14th Dist.] 1988, writ denied); Valley Int’l Properties, Inc. v. Brownsville Sav. & Loan Ass’n, 581 S.W.2d 222 (Tex. Civ. App.–Corpus Christi 1979, no writ). A plea in abatement or a motion to dismiss will not suffice. See Fulcher v. Texas State Bd. of Public Accountancy, 571 S.W.2d 366, 372 (Tex. Civ. App.–Corpus Christi 1978, writ ref’d n.r.e.); Cook v. City of Booker, 167 S.W.2d 232, 233 (Tex. Civ. App.–Amarillo 1942, no writ).
B. Death During the Divorce
As surviving spouse, one has the legal right to occupy the parties’ homestead during her lifetime, regardless of whether the homestead was community property, was either spouse’s separate property, or will be eventually partitioned amongst her or decedent’s heirs. Tex. Est. Code §§ 102.005, 102.002; Tex. Const. art. XVI, § 52.
A surviving spouse has the right to occupy the homestead during her lifetime regardless of any other factors; she can receive an allowance for one year following decedent’s death if her separate property is inadequate for her support; and she is entitled to 50% of the community estate regardless of the contents of decedent’s will.
2. Family Allowance
After the inventory of decedent’s estate is approved, the court may fix a family allowance for surviving spouse sufficient for her maintenance for one year following the death. Tex. Est. Code §§ 353.101(a), 353.102(a). She can also apply to have the court fix her allowance before the inventory is approved by submitting a verified affidavit describing the amount necessary for her support for one year and describing her separate property. Id., at § 353.101(b).
The allowance can be paid in installments or in a lump sum, and the allowance must be fixed with regard to the current circumstances and the circumstances anticipated during the first year following his death. Id., at § 353.102. She can also take personal property of the estate as partial or full payment of her allowance. Id., at § 353.106(a).
However, if surviving spouse has separate property adequate for her maintenance, then she is not entitled to an allowance. Id. at 353.101(d)(1).
So, if surviving spouse’s separate property is inadequate for her support, she can either seek her allowance before or after the inventory is approved, and she can take personal property of the estate as her allowance if she so desires.
On decedent’s death, only his half of the community estate passes under his will; surviving spouse retains her half of the community estate.
See Marshall v. Land, 413 S.W.2d 820, 823 (Tex. Civ. App.—Dallas 1967) aff’d as reformed, 426 S.W.2d 841 (Tex. 1968); Langehennig v. Hohmann, 139 Tex. 452, 460, 163 S.W.2d 402, 406 (Tex. Comm’n App. 1942).
3. Death During Divorce Article
This Author also recommends Jim Loveless’ Until Death Do Us Part, SBOT Advanced Family Law, August, 2013, for a thorough discussion of death during divorce.
What can you do if your ward is mentally incapacitated and he gets married to a woman who is 40 years younger than him? A court may annul a marriage on a suit brought by a guardian if, at the time of the marriage, the ward did not have the mental capacity to consent to marriage or to understand the nature of the marriage ceremony and has not voluntarily cohabited with the other party since the ceremony. Tex. Fam. Code Ann. §6.108(a). The Court may also grant an annulment where the other party did not have the mental capacity to consent to marriage or to understand the nature of the marriage ceremony, the petitioner neither knew nor reasonably should have known of the mental disease and, since discovering the mental disease, has not voluntarily cohabited with the other party. Tex. Fam. Code Ann. §6.108(b).
If a proceeding under Family Code §6.108 is pending and one of the parties dies, the Court may make the determination and declare the marriage void after the decedent’s death. Tex. Prob. Code Ann. §47A(a). If the ward’s marriage commenced no later than three years before his death and he remained married on the date of death, a proceeding to declare a marriage void may be filed no later than the first anniversary of the decedent’s death. Tex. Prob. Code Ann. §47A(b). In a proceeding filed after a ward’s death, if the court finds that the decedent gained the mental capacity to recognize the marriage relationship and did recognize the marriage relationship, the court may not declare the marriage void.Tex. Prob. Code Ann. §47A(e). Evidence of mental incapacity at other times may be used to establish mental incapacity on the date of marriage. Kerckhoff v. Kerckhoff, 805 S.W.2d 937, 940 (Tex. App. – San Antonio 1991, no writ).
D. Putative Spouse
A putative marriage is one that was entered into in good faith by one of the parties but is invalid because of a legal impediment. Weaver v. State, 855 S.W.2d 116, 120 (Tex. App. – Houston [14th Dist.] 1993, no pet.). The marriage is void if the parties entered into the marriage when either party had an existing marriage that had not been dissolved by legal action or terminated by death. Tex. Fam. Code Ann. §6.202(a).
However, a putative marriage gives an innocent spouse, who acted in good faith, entitlement to the same rights in property acquired during the putative marriage as a legal spouse. Davis v. Davis, 521 S.W.2d 603, 606 (Tex. 1975). A putative spouse is entitled to a one-half interest in community property acquired during the existence of the putative marriage. Lee v. Lee, 247 S.W. 830 (Tex. 1923). A temporary support order is a perfectly legitimate means to protect the welfare of a financially dependent spouse between the time a petition is filed and divorce is granted. Garduno v. Garduno, 760 S.W.2d 735, 742 (Tex. App. – Corpus Christi 1988, no writ). She also has the right to maintenance. Tex. Fam. Code Ann. §8.060.
In order to find a putative marriage, the court must have evidence of a purported marriage (ceremonial or informal). Garduno, 760 S.W.2d at 738. The alleged putative spouse must have entered into the marriage in good faith. Woods v. Hardware Mut. Cas. Co., 141 S.W.2d 972, 975-976 (Tex. App. – Austin 1940, writ ref’d.). If a spouse becomes aware of a legal impediment, the question of good faith now becomes how reasonable it was for the spouse to ignore the information and not investigate it further. Garduno, 760 S.W.2d at 740.
A putative marriage ends when the spouse discovers that the other spouse’s prior marriage was never terminated. Id. It may also end upon the death of either of the parties. Curtin v. State, 238 S.W.2d 187, 190 (Tex. Crim. App. 1950).
V. SECTION 142 TRUSTS
A. Background and General Information
Courts have created trusts in the past to deal with a variety of different scenarios. For a comprehensive discussion of the history of court-created trusts, including constructive, resulting, and statutory trusts, and of some of the substantive issues, see Glenn M. Karisch, Court-Created Trusts in Texas, (2008), available at http://texasprobate.org/articles/courtcreatedtrusts.pdf.
Under Section 142.005, any court of record with jurisdiction to hear a suit involving a beneficiary may, on application and on a finding that the creation of a trust would be in the best interests of the beneficiary, create a trust by directing any funds accruing to the beneficiary under the judgment to a financial institution or another person given certain circumstances. The section can be broken down into distinct elements, requiring:
- a court of record with jurisdiction to hear;
- a suit;
- involving a beneficiary;
- on finding that a trust would be in the beneficiary’s best interest; and
- a judgment with funds accruing to the beneficiary.
Four observations may be made regarding the elements. First, a beneficiary is defined as a minor or incapacitated person who has no legal guardian and is represented by a next friend or an appointed guardian ad litem. Tex. Prop. Code § 142.005(o)(1)(A). A beneficiary may also be a person with a physical disability. Tex. Prop. Code § 142.005(o)(1)(B).
Second, courts may take widely differing interpretations regarding what constitutes a “suit” for Section 142.005 purposes such that the term could possibly embrace an interpleader suit, a suit for declaratory judgment, and maybe even a claim for a distribution to an estate or will beneficiary in a probate administration. Traditionally, however, 142 trusts are most often encountered in personal injury lawsuit settlements.
Third, the creation of a 142 Trust and its provisions should support a finding that the trust is in the best interests of the proposed beneficiary. Thus, a person representing the beneficiary’s interests should presumably consider any other reasonable mechanism available for the beneficiary to receive their funds. For example, the funds may be deposited into the registry of the court with restricted investment options, invested by the next friend or guardian ad litem in the Texas tomorrow fund or in FDIC insured accounts, or disbursed as a part of a structured settlement annuity. See generally Tex. Prop. Code §§ 142.004 (discussing limited investment options for the registry of the court, next friend, and guardian ad litem), 142.008 (explaining the structured settlement annuity options), and 142.009 (stating the annuity contract requirements). However, these options have limited ability to provide active management of the person’s assets and to continually adjust to account for the beneficiary’s circumstances and best interests at the time a distribution or other transaction regarding the beneficiary is considered.
And the final observation is that, under Section 142.007, Texas Property Code, an “incapacitated person” is defined broadly as follows:
[A] person who is impaired because of mental illness, mental deficiency, physical illness or disability, advanced age, chronic use of drugs, chronic intoxication, or any other cause except status as a minor to the extent that the person lacks sufficient understanding or capacity to make or communicate responsible decisions concerning his person.
The definition is different from the definition of an incapacitated person for purposes of a guardianship or an 867 Trust. The creation of a 142 Trust for an incapacitated person does not in of itself put before the court a determination regarding all of a beneficiary’s rights that would be involved in a full guardianship proceeding, such as the right to vote or to drive. Incapacity, in the 142 Trust context, is strictly limited to the management of property proposed to be held in trust. The creation of the 142 Trust does not affect the other rights of the trust beneficiary.
B. Mandatory 142 Trust Provisions
A 142 Trust must contain several provisions to comply with Section 142.005(b). Section 142.005(b)(1) requires that the beneficiary be the sole beneficiary of the trust.
Under Sections 142.005(b)(2) and (b)(3), the trustee must be authorized to disburse amounts of the trust’s principal, income, or both as the trustee in the trustee’s sole discretion determines to be reasonably necessary for the health, education, support, or maintenance of the beneficiary, and the income not disbursed must be added to the principal of the trust.
Section 142.005(b)(4) deals with mandatory trust termination provisions. If the beneficiary of a 142 Trust is a minor, the trust must terminate on the beneficiary’s death, when the beneficiary attains an age stated by the trust, or on the beneficiary’s 25th birthday, whichever occurs first. Thus, the default age is set at 25 unless provided otherwise. If a 142 Trust is created for an incapacitated person, the trust must terminate on the death of the beneficiary or when the person regains capacity. The statute does not expressly provide when a trust created for a person with a physical disability terminates. In any event, under Section 142.005(e), when a trust terminates under its terms or on the death of the beneficiary, the trust principal and any undistributed income must be paid to the beneficiary or to the representative of the estate of the beneficiary.
Section 142.005(b)(5) provides that a trustee that is a financial institution (defined in Subsection (o)(2) of that section) must serve without bond. A financial institution must be the trustee of the trust, unless (i) the trust principal is $50,000 or less and the appointment of a person other than a financial institution to be trustee is in the beneficiary’s best interests, or (ii) the trust principal is greater than $50,000, no financial institution is willing to serve, and the appointment of the person to be trustee is in the beneficiary’s best interests. See Tex. Prop. Code §§ 142.005(m) and (n).
Section 142.005(b)(6) requires that trustees receive reasonable compensation paid from trust’s income, principal, or both on application and approval of the court. A corporate trustee usually prefers that compensation be paid as fees accrue under its customary fee schedule for managing similar trusts. It is advisable for a trustee to apply for and have approved its trustee fees contemporaneously with the Court’s creation of the 142 Trust.
C. Optional 142 Trust Provisions
Section 142.005(c) also contains a couple of optional statutory provisions that may be used in addition to the mandatory provisions. Section 142.005(c)(1) would authorize disbursements of trust principal as the beneficiary attains designated ages and at designated percentages. It is unclear whether this provision is meant to supplement or is a type of a distribution that may be made under the HEMS standard under Section 142.005(b)(2). The optional provision would appear to be useful in circumstances where the trustee, or the person who represents the beneficiary with respect to the creation of the trust, is aware of the need to make a substantial distribution at a particular future point in time. However, a financial institution serving as trustee may not want to administer a trust containing such a provision if it allowed for disbursements well into the future, without the ability to adjust for changed circumstances.
Also, Section 142.005(c)(2) authorizes a facility of payment provision that would provide several options for a trustee to make disbursements, payments, uses, and applications of all trust funds for the benefit of the beneficiary, without the intervention of any legal guardian or other legal representative of the beneficiary.
Section 142.005(j) also implicitly permits an exculpatory clause that may be enforceable under certain circumstances. However, such a provision is enforceable only if: (1) the provision is limited to facts and circumstances unique to the trust property and is not applicable generally to the trust, and (2) there is clear and convincing evidence that the provision is in the beneficiary’s best interest. Thus, a provision generally absolving a trustee from liability for actions other than those due to the trustee’s own gross negligence or intentional misconduct would not be enforceable. Given the high bar for enforceability under Section 142.005(j), court approval of a trustee exculpatory clause would seem unlikely except potentially in a situation where the trust owns an especially high liability asset, and absent such an exculpatory clause regarding this asset, it would be unlikely to get any corporate trustee to agree to serve.
Providing further flexibility, Section 142.005(b) allows a Court to approve terms, conditions, and limitations of the trust that are not in conflict with the mandatory provisions found in the section. A drafting attorney of a 142 Trust should exercise caution, however, before including a provision that may produce a different result than the result that would be produced by strictly applying the mandatory provisions. To explain, in Aguilar v. Garcia , 880 S.W.2d 279 (Tex. App.—Houston [14th] 1994, orig. proceeding), minors were awarded settlement proceeds for the payment of medical expenses as a result of exposure to toxic wastes. The trial court ordered the creation of a 142 trust for each of the minors. However, notwithstanding the objections of the minors’ guardian ad litem and the would be trustee of the trusts, the court required a provision that authorized trust distributions to provide for the health needs of the beneficiary when it was demonstrated that the parents of the minors had no resources available, such as insurance, or other means to provide for the minor’s medical needs. Id. at 280. The appellate court, however, opined that:
[t]he clear language of the statute requires that the trustee have the sole discretion to determine what is reasonably necessary for the health, education, support, or maintenance of the beneficiary. The statute also clearly states that this provision is mandatory. Even though the trial judge’s motives were laudable, she did not have discretion to limit the mandatory powers given to the trustee.
Id. at 281 (citation and footnote omitted). Holding that the court ordered a conflicting modification to the trust, the court granted mandamus relief for an order that would grant the trustee full statutory power to make disbursements in compliance with Section 142.005. Id. at 281-82.
The language and rationale on which the appellate court based its holding in the Aguilar case may leave attorneys plenty of room to argue that other provisions are not controlled by that holding. For example, a drafting attorney may argue that the holding does not prohibit a provision that expands the trustee’s discretion to make disbursements, as opposed to limiting it, beyond those permitted by the mandatory disbursement provision. Regardless, it would probably be prudent for a drafting attorney in so doing to secure the agreement of any person representing the beneficiary’s interests along with the would be trustee.
With the caveat above, there are few provision that a drafting attorney might want to consider inserting into a 142 Trust. For example, estate planners often recommend the use of a spendthrift provision, even with the understanding that the provision may not be enforced against creditors under the argument that the beneficiary is the settlor of the trust. Section 112.035(d), Texas Property Code, provides that, “[i]f the settlor is also a beneficiary of the trust, a provision restraining the voluntary or involuntary transfer of the settlor’s beneficial interest does not prevent the settlor’ s creditors from satisfying claims from the settlor’s interest in the trust estate.” However, an argument could be made that the court is the settlor. In any event, it is probably more prudent to include the provision and not to concede the issue. Other provisions the drafting attorney may want to consider, include: (1) a severability provision that preserves the validity of the trust in the event that a court finds a particular provision invalid or illegal, and (2) a savings provision that expresses the intent to comply with the provisions of Section 142.005 and to have the agreement interpreted in accordance with that objective.
D. Additional Drafting Considerations for 142 Trusts
In drafting a 142 Trust, the drafting attorney should also consider two other points. First, under Section 142.005(d), a 142 Trust can be modified or terminated by the court that created the trust at any time, and the trust is not subject to revocation by the beneficiary or guardian of the beneficiary’s estate. And second, under Section 142.005(h), the Texas Trust Code applies to a 142 Trust. Therefore, for example, even though Section 142.005 does not contain a specific provision that would require an accounting, the accounting duties imposed by the Texas Trust Code would need to be considered. Practically, from the perspective of a beneficiary and the court, including a provision that specifically provides that regular trust account statements be sent to the beneficiary or the person taking care of the beneficiary is a good idea.
VI. SECTION 867 TRUSTS
A. Background and General Information
In 1993, with the enactment of Section 867, Texas Probate Code, the Legislature provided broader authorization for a court to create a trust to manage property for a minor or incapacitated person that is or would otherwise require a guardianship. An 867 Trust may be created even though a guardianship is already in place and the beneficiary is not recovering under a judgment in a lawsuit.
An 867 Trust provides a viable alternative to a guardianship of the estate, and it offers several advantages in certain situations in addition to a 142 trust. For example, an 867 Trust provides an option for a professional fiduciary in situations where the only other option is management by a guardian who is not sophisticated in property management and financial matters. The option may be particularly significant for estates involving substantial assets. Also, for an 867 Trust created for a minor, if a reason exists to delay the ultimate disbursement of trust funds to the beneficiary past age 18, the trust if provided in the trust instrument may continue up to age 25. Another advantage is that an 867 Trust can reduce certain administrative expenses associated with a guardianship of the estate, such as the cost necessary to seek court preapproval before making most estate disbursements.
Section 867 authorizes certain persons to apply to the court for the creation of an 867 Trust, depending on whether a guardian has been appointed for the proposed beneficiary. If a guardian has been appointed, the following persons are authorized to apply for the trust: (1) a guardian of the ward, or (2) an attorney ad litem or guardian ad litem appointed to represent the ward or ward’s interests. See Tex. Prob. Code § 867(a-1) (Tex. Estates Code § 1301.051). In this situation, the creation of the trust is less cumbersome because no new finding of incapacity is needed. Compare Tex. Prob. Code §§ 867(b) (Tex. Estates Code § 1301.053) (making the creation of an 867 Trust subject to 867(b-1), with Section 867(b-1) (Tex. Estates Code § 1301.054 (requiring a finding that the person is “incapacitated”).
In contrast, if no guardian has been appointed, notwithstanding any pending guardianship application, the following persons may apply for an 867 Trust: (1) a person interested in the welfare of the alleged incapacitated person, (2) an attorney ad litem or guardian ad litem appointed to represent the alleged incapacitated person, or (3) a person who has only a physical disability. See Tex. Prob. Code § 867(a-1) (Tex. Estates Code § 1301. 051). If no guardian has been appointed, however, the court must make a finding of incapacity after conducting a hearing on the issue using the same procedures and evidentiary standards as required in a usual guardianship proceeding. See Tex. Prob. Code §§ 867(b-1) and (b- 3) (Tex. Estates Code § 1301.054).
With the new Texas Estates Code becoming effective on January 1, 2014, it is probably time to think of a new name for an 867 Trust. The corresponding section in the Texas Estates Code is in Chapter 1301, so maybe the trusts will be commonly referred to as “Chapter 1301 Trusts.” Another possibility is “Guardianship Management Trusts,” as the trusts are now often called.
B. Required Terms for 867 Trusts
The required terms of an 867 Trust are similar to the mandatory provisions of a Section 142 Trust in several respects. The beneficiary must be the sole beneficiary. Tex. Prob. Code § 868(a)(1) (Tex. Estates Code §§ 1301.101(a)(1)). The trustee may disburse amounts of trust principal or income as the trustee determines is necessary to spend for the health, education, maintenance, or support of the beneficiary, and the income not disbursed must be added to the principal of the trust. Tex. Prob. Code §§ 868(a)(2) and (3) (Tex. Estates Code §§ 1301.101(a)(2) and (3)). And, a trustee that is a corporate fiduciary must serve without giving bond. Tex. Prob. Code § 868(a)(4) (Tex. Estates Code § 1301.101(a)(4)).
A drafting attorney, however, should be cognizant of certain required terms that are different between an 867 and a 142 Trust. An 867 Trust created for a person, other than a person who has only a physical disability, must provide that the trustee is entitled to receive reasonable compensation subject to the court’s approval, but the compensation must be determined in the same manner as compensation of a guardian of the estate is determined. See Tex. Prob. Code § 868(a)(5) (Tex. Estates Code § 1301. 101(a)(5)). Sections 868 and 665, Texas Probate Code (Section 1301.101 and Subchapter A, Chapter 1155, Tex. Estates Code), allow for annual compensation paid in arrears, or after services have been rendered, based on annual accounts submitted to the court. The amount of compensation considered reasonable is five percent of the gross income of the estate and five percent of all money paid out of the estate, unless a court determines that such compensation would be unreasonably low when considering the services rendered. Tex. Prob. Code § 665(b), (c), and (d) (Tex. Estates Code §§ 1155.003, 1155.005, and 1155.006). A finding that compensation is unreasonably low may not be established by a showing that the trustee usually and customarily charges more for such services. Id. § 665(d) (Tex. Estates Code § 1155.006). Notably, a court may also preapprove estimated fees before a trustee files an annual or final accounting if delaying payment would create a hardship for the trustee. Id. § 665(c) (Tex. Estates Code § 1155.006). On the issue of trustee compensation, it is worth noting that courts take widely varying interpretations of the applicable statutes and may approve a fee charged in accordance with a trustee’s regularly published fee schedule, provided that interested parties are reserved a right to challenge the fees at some later time.
Another important distinction pertains to the exceptions to the general requirement for a corporate trustee. With an 867 Trust, on a finding that an appointment is in the best interests of the beneficiary, as an alternative to a financial institution, a court may appoint one of following persons to serve as trustee: (1) an individual, including a private professional guardian, (2) a nonprofit corporation qualified to serve as a guardian, or (3) a guardianship program. See Tex. Prob. Code §§ 867(c), (d), and (e) (Tex. Estates Code §§ 1301.057(c) and (d)). However, such a person may not serve if the value of the trust principal is more than $150,000, unless the court also finds that the applicant for the creation of the trust, after the exercise of due diligence, has been unable to find a financial institution in the geographic area willing to serve. Tex. Prob. Code §§ 867(d) and (e) (Tex. Estates Code §§ 1301.057(c) and (d)). A few other distinctions are worth noting. Unlike a 142 Trust, Section 871 clearly provides for the preparation and filing with the court of an annual accounting of trust transactions in the same manner and form that is required of a guardian of the estate. See Tex. Prob. Code §871(a) (Tex. Estates Code § 1301.154). Section 873, however, does allow a court more leeway in an 867 Trust than a 142 Trust to approve disbursements on termination of the trust to persons other than the beneficiary or the representative of the beneficiary’s estate. See Tex. Prob. Code § 873(a) (providing that, on trust termination, trust assets are to be distributed to the beneficiary, the successor trustee, or the representative of the beneficiary’s estate, “unless otherwise provided by the court”) (Tex. Estates Code § 1301.204).
C. Optional 867 Trust Provisions
As with a 142 Trust, the Texas Legislature provides some statutorily authorized optional terms that may be included in an 867 Trust. Section 868(b) allows for the disbursement, payment, use, or application of trust funds for the health, education, maintenance, or support of the beneficiary and of another person that the beneficiary has a legal obligation to support. 12 The section further authorizes those disbursements, payments, uses, and applications, without the intervention of any legal guardian or other legal representative of the beneficiary or person who has only a physical disability, to: (1) the ward’s guardian, (2) a person having physical custody of the beneficiary or another person the beneficiary is legally obligated to support, or (3) a person providing a good or service to the beneficiary or another person the beneficiary is legally obligated to support. See Tex. Prob. Code § 868(b) (Tex. Estates Code § 1301.102) A person the beneficiary is legally obligated to support apparently would include, if applicable, the beneficiary’s spouse and minor children.
A drafting attorney representing a trustee may also want to consider an exculpatory provision for the trust. See Tex. Prob. Code § 868(c) (Tex. Estates Code § 1301.103. The findings necessary for the enforceability of such a provision are substantially similar to those required in a 142 Trust; the provision is enforceable only if (1) the provision is limited to facts and circumstances unique to the property of the trust and is not applicable generally to the trust, and (2) there is clear and convincing evidence that the provision is in the beneficiary’s best interest. Thus, as discussed above in the context of a 142 Trust, a provision generally absolving a trustee of liability for ordinary negligence would be unenforceable. Also, a court would unlikely approve such a provision absent some situation in which the trustee faced a peculiar risk of liability directly linked to certain trust activity, such as holding an especially high liability asset, and absent such a provision, any corporate trustee would be unlikely willing to serve.
The Legislature has also authorized a provision that would permit investments by the trustee in the Texas tomorrow fund if the trustee determines the investment is in the best interest of the beneficiary. Tex. Prob. Code § 868(f) (Tex. Estates Code § 1301.153).
Aside from the optional terms authorized by statute, Section 868(e) allows a court to include additional provisions that do not conflict with the required terms provided by Section 868(a). For example, the drafting attorney of an 867 Trust should consider inserting a spendthrift provision. The enforceability of such a provision in this context, however, appears even more questionable than in the 142 Trust context, given that, in the case of an 867 Trust, trust assets originate from assets belonging to the beneficiary as opposed to some third-party in a lawsuit. In any event, as with a Section 142 Trust, it is probably more prudent to include the provision and not to concede the issue.
The drafting attorney may also want to have a provision that expresses an intent that trust funds not be used in a way that would excuse the legal obligation of another to provide for the beneficiary.
Consider including: (1) a severability provision that preserves the validity of the trust in the event that a court finds a particular provision invalid or illegal, and (2) a savings provision that expresses the intent to comply with the provisions of Sections 867 through 873 (Chapter 1301, Tex. Estates Code) and to have the trust instrument be interpreted in accordance with that objective.
D. Additional Drafting Considerations for 867 Trusts
The drafting attorney should also consider two other points. The trust can be modified or revoked by the court at any time and may not be revoked by the beneficiary for whom the trust was created or, if a ward is the beneficiary, the guardian of the ward’s estate. See Tex. Prob. Code § 869 (Tex. Estates Code § 1301.201). And, the Texas Trust Code applies to the trust and may supply terms to the extent that the terms are not in conflict with Section 867-73, Texas Probate Code, or the terms of the trust. Tex. Prob. Code §869B (Tex. Estates Code § 1301.058).
VII. SPECIAL NEEED TRUSTS
Government benefits often have been seen as a deterrent to a just and right division of property. Medicaid and SSI (supplemental security income) are means-tested government benefit programs that, until recently, made it difficult on disabled or incapacitated beneficiaries to receive support through the divorce and SAPCR settings. Medicaid and SSI count the value of assets held in trust and consider those assets as resources available to the trust beneficiary if the beneficiary has the authority to revoke the trust or demand a distribution from the trustee under an ascertainable standard of care or support; or if the trustee has discretion to make distributions to the beneficiary and the beneficiary contributed the property to the trust. 40 T.A.C. §15.415(h)(1), Medicaid Eligibility Handbook §2313.3.
The divorce attorney may find that a ward had a trust created for her that was funded with that person’s earned, inherited or gifted property or the proceeds of her personal injury cause of action. This trust is considered a self-settled special needs trust (SNT). A self-settled SNT is one in which the trust corpus is made up of assets that either belonged to the trust beneficiary before he or she transferred the assets to the trust, or that the beneficiary had a present right to receive prior to transferring the assets into the trust.
VIII. CHILDREN SUPPORT ARREARS AND DISCLAIMERS
If a beneficiary under an estate payout owes child support arrears, then the SDU will have a claim to the amount up to the arrears. IF the obligor / beneficiary is current on child support but still owes future child support on a monthly basis, then no ‘capture’ of the beneficiaries property is allowed.
Disclaimer to Avoid Paying Child Support (Secs. 122.051 and 122.107). requires a disclaimer of property by a beneficiary to include a statement whether the beneficiary is a child support obligor. A disclaimer by a beneficiary who is a child support obligor would be ineffective if (1) the property the beneficiary would otherwise receive could be applied to satisfy the beneficiary’s support obligations and (2) the beneficiary owes administratively-determined arrearages or those arrearages have been reduced to judgment.
Enforcement of Forfeiture Clauses (Sec. 254.005).
Add a statement similar to one of the following to disclaimers of property receivable from a decedent’s estate (assuming that the statement is true):
“Disclaimant is not a child support obligor described by Estates Code Section 122.107.
“Disclaimant is a child support obligor described by Estates Code Section 122.107, but owes no child support arrearages described by Estates Code Section 122.107(a)(1) or (2).
See the below articles that were helpful and cover this topic from a variety of perspectives.
Sarah Patel Pacheco; Hot Topics for The Incapacitated; SBOT, Advanced Guardianship Law Course, April, 2011.
Barbara Schare-Zeldes; COGS in the Wheel – When Family Law and Guardianship Meet; SBOT, Advanced Guardianship Law Course, April, 2011.
Sarah Patel Pacheco; Guardianship of the Person, Guardianship of the Estate, and Ad Litem Appointments; SBOT, Estate Planning and Probate 101 Course, June, 2012
Bob Augsburger; Family Law In Probate Court; SBOT, Advanced Guardianship Law Course, April, 2011.
Omar Leal, Wendy Yates & Alex Longoria; Drafting Considerations for Court-Created Trusts; SBOT, Estate Planning and Probate Drafting, October, 2013
Selected Texas Family Code Sections
§ 6.111. DEATH OF PARTY TO VOIDABLE MARRIAGE
Except as provided by Section 47A, Texas Probate Code, a marriage subject to annulment may not be challenged in a proceeding instituted after the death of either party to the marriage.
8.056. TERMINATION [SPOUSAL MAINTANENCE]
(a) The obligation to pay future maintenance terminates on the death of either party or on the remarriage of the obligee.
(b) After a hearing, the court shall order the termination of the maintenance obligation if the court finds that the obligee cohabits with another person with whom the obligee has a dating or romantic relationship in a permanent place of abode on a continuing basis.
(c) Termination of the maintenance obligation does not terminate the obligation to pay any maintenance that accrued before the date of termination, whether as a result of death or remarriage under Subsection (a) or a court order under Subsection (b).
§ 9.301. PRE-DECREE DESIGNATION OF EX-SPOUSE AS BENEFICIARY OF LIFE INSURANCE
(a) If a decree of divorce or annulment is rendered after an insured has designated the insured’s spouse as a beneficiary under a life insurance policy in force at the time of rendition, a provision in the policy in favor of the insured’s former spouse is not effective unless:
- the decree designates the insured’s former spouse as the beneficiary;
- the insured redesignates the former spouse as the beneficiary after rendition of the decree; or
- the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse.
(b) If a designation is not effective under Subsection (a), the proceeds of the policy are payable to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the estate of the insured.
(c) An insurer who pays the proceeds of a life insurance policy issued by the insurer to the beneficiary under a designation that is not effective under Subsection (a) is liable for payment of the proceeds to the person or estate provided by Subsection (b) only if:
- before payment of the proceeds to the designated beneficiary, the insurer receives written notice at the home office of the insurer from an interested person that the designation is not effective under Subsection (a); and
- the insurer has not interpleaded the proceeds into the registry of a court of competent jurisdiction in accordance with the Texas Rules of Procedure.
§ 9.302. PRE-DECREE DESIGNATION OF EX-SPOUSE AS BENEFICIARY IN RETIREMENT BENEFITS AND OTHER FINANCIAL PLANS
(a) If a decree of divorce or annulment is rendered after a spouse, acting in the capacity of a participant, annuitant, or account holder, has designated the other spouse as a beneficiary under an individual retirement account, employee stock option plan, stock option, or other form of savings, bonus, profit-sharing, or other employer plan or financial plan of an employee or a participant in force at the time of rendition, the designating provision in the plan in favor of the other former spouse is not effective unless:
- the decree designates the other former spouse as the beneficiary;
- the designating former spouse redesignates the other former spouse as the beneficiary after rendition of the decree; or
- the other former spouse is designated to receive the proceeds or benefits in trust for, on behalf of, or for the benefit of a child or dependent of either former spouse.
(b) If a designation is not effective under Subsection (a), the benefits or proceeds are payable to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the designating former spouse.
(c) A business entity, employer, pension trust, insurer, financial institution, or other person obligated to pay retirement benefits or proceeds of a financial plan covered by this section who pays the benefits or proceeds to the beneficiary under a designation of the other former spouse that is not effective under Subsection (a) is liable for payment of the benefits or proceeds to the person provided by Subsection (b) only if:
- before payment of the benefits or proceeds to the designated beneficiary, the payor receives written notice at the home office or principal office of the payor from an interested person that the designation of the beneficiary or fiduciary is not effective under Subsection (a); and
- the payor has not interpleaded the benefits or proceeds into the registry of a court of competent jurisdiction in accordance with the Texas Rules of Civil Procedure.
(d) This section does not affect the right of a former spouse to assert an ownership interest in an undivided pension, retirement, annuity, or other financial plan described by this section as provided by this subchapter.
(e) This section does not apply to the disposition of a beneficial interest in a retirement benefit or other financial plan of a public retirement system as defined by Section 802.001, Government Code.
Selected Texas Rules of Civil Procedure
RUE 12 SHOW AUTHORITY
A party in a suit or proceeding pending in a court of this state may, by sworn written motion stating that he believes the suit or proceeding is being prosecuted or defended without authority, cause the attorney to be cited to appear before the court and show his authority to act. The notice of the motion shall be served upon the challenged attorney at least ten days before the hearing on the motion. At the hearing on the motion, the burden of proof shall be upon the challenged attorney to show sufficient authority to prosecute or defend the suit on behalf of the other party. Upon his failure to show such authority, the court shall refuse to permit the attorney to appear in the cause, and shall strike the pleadings if no person who is authorized to prosecute or defend appears. The motion may be heard and determined at any time before the parties have announced ready for trial, but the trial shall not be unnecessarily continued or delayed for the hearing.
RULE 63. AMENDMENTS AND RESPONSIVE PLEADINGS
Parties may amend their pleadings, respond to pleadings on file of other parties, file suggestions of death and make representative parties, and file such other pleas as they may desire by filing such pleas with the clerk at such time as not to operate as a surprise to the opposite party; provided, that any pleadings, responses or pleas offered for filing within seven days of the date of trial or thereafter, or after such time as may be ordered by the judge under Rule 166, shall be filed only after leave of the judge is obtained, which leave shall be granted by the judge unless there is a showing that such filing will operate as a surprise to the opposite party.
Rule 150. DEATH OF PARTY
Where the cause of action is one which survives, no suit shall abate because of the death of any party thereto before the verdict or decision of the court is rendered, but such suit may proceed to judgment as hereinafter provided.
Rule 151. DEATH OF PLAINTIFF
If the plaintiff dies, the heirs, or the administrator or executor of such decedent may appear and upon suggestion of such death being entered of record in open court, may be made plaintiff, and the suit shall proceed in his or their name. If no such appearance and suggestion be made within a reasonable time after the death of the plaintiff, the clerk upon the application of defendant, his agent or attorney, shall issue a scire facias for the heirs or the administrator or executor of such decedent, requiring him to appear and prosecute such suit. After service of such scire facias, should such heir or administrator or executor fail to enter appearance within the time provided, the defendant may have the suit dismissed.
Rule 152. DEATH OF DEFENDANT
Where the defendant shall die, upon the suggestion of death being entered of record in open court, or upon petition of the plaintiff, the clerk shall issue a scire facias for the administrator or executor or heir requiring him to appear and defend the suit and upon the return of such service, the suit shall proceed against such administrator or executor or heir.
Rule 156. DEATH AFTER VERDICT OR CLOSE OF EVIDENCE
When a party in a jury case dies between verdict and judgment, or a party in a non-jury case dies after the evidence is closed and before judgment is pronounced, judgment shall be rendered and entered as if all parties were living.