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Texas Tech Univ. School of Law

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Wednesday, January 30, 2013

Article on "Material Conflict of Interest" Language Added to the Texas Probate Code

6a00d8341bfae553ef016302487689970d-100wiElizabeth R. Kopecki (St. Mary's University School of Law, J.D. expected May 2013) recently published her comment entitled Removal of Independent Executors: Examining the Standard in Texas After the Addition of "Material Conflict of Interest" To Section 149C of the Texas Probate Code, 44 St. Mary's L.J. 281 (2012).  The introduction to the comment is below: 

The State of Texas allows independent executors to operate with minimal court supervision so executors can administer an estate with as little cost and delay as possible. Executors, from time to time, abuse the limited court supervision and fail to manage estates appropriately. Fortunately, there are several particular circumstances enumerated in section 149C of the Texas Probate Code that allow courts to step in and remove executors who would otherwise cause injury to an estate and its beneficiaries. These enumerated grounds for removal facilitate the effective administration of estates in Texas by authorizing courts to remove executors who are not acting in the best interests of an estate. However, each additional ground for removal under section 149C increases a beneficiary's ability to challenge the actions of an executor and consequently delays settlement of an estate.
Since the adoption of section 149C to the Texas Probate Code in 1979, the grounds for removal have remained relatively specific. Recently, however, the legislature added another ground for removal: “material conflict of interest.” Arguably, this addition to section 149C will open the door to litigation because precisely what circumstances may give rise to a material conflict are not yet defined. Fortunately, courts outside of Texas have considered conflicts of interest in suits brought for the removal of executors and disqualification of administrators for several years now. Though no bright-line rule exists, there is precedent that Texas courts can rely on to determine the existence of a material conflict. However, the legislature can reduce the superfluous litigation this amendment will inevitably create by removing the material conflict of interest provision from section 149C. Alternatively, the legislature should add another section to the probate code that clearly defines the situations that give rise to a material conflict.
This Comment will address the issue as follows: Examined first will be section 149C safeguards prior to the material conflict of interest amendment. Next, the amendment will be considered along with the possible consequences and benefits of providing courts with another tool to remove an executor. This Comment will conclude with the proposal that the material conflict of interest provision be either removed from section 149C, or refined with a new section to fulfill the goals of the Texas probate system better.

http://lawprofessors.typepad.com/trusts_estates_prof/2013/01/article-on-material-conflict-of-interest-language-added-to-the-texas-probate-code.html

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