Families who lose loved ones often find themselves in disagreements about property that may have been improperly transferred before a loved one’s death. When these disputes arise, the question arises as to who has the legal authority to challenge these transfers? Is it limited to the estate’s personal representative or can the heirs bring suit themselves? And what about when property was transferred shortly before death and the heirs believe the decedent lacked mental capacity to make the transfer?
In situations where heirs believe the estate’s administrator isn’t taking appropriate action to recover assets, can they step in and file suit themselves? Or must they defer to the estate’s personal representative, even when they suspect that valuable assets are being lost?
A recent case from the Court of Appeals of Texas, Second District, Fort Worth provides an opportunity to examine this question. In In the Estate of Julia Ann Smith, Deceased, No. 02-24-00175-CV (Tex. App.—Fort Worth Nov. 27, 2024), the court addressed when heirs have standing to bring suit to recover estate assets.
Facts & Procedural History
The decedent was diagnosed with Stage IV lung cancer in September 2019. As her health declined, she was primarily cared for by her great granddaughter-in-law, neighbors, and friends. Her three adult children were not in close contact with her during this period.
On January 22, 2020, while undergoing cancer treatment, the decedent executed a deed conveying her home and acreage (the Property) to her grandson and granddaughter-in-law (the “‘Hammonses”) in exchange for a $300,000 promissory note secured by a deed of trust. Two days later, the decedent executed a will naming her adult children as her sole beneficiaries.
After the decedent died in March 2020, her son filed an application to probate the will, stating under oath that the decedent “was competent when she signed the will on January 24, 2020.” The will was admitted to probate, and the son was appointed independent executor. In December 2020, the son filed an Inventory, Appraisement, and List of Claims acknowledging the decedent’s sale of the Property to the Hammonses—listing the $300,000 loan as a “miscellaneous” asset but not including the Property itself among the estate’s real property.
For nearly three years, the son and his siblings accepted payments on the promissory note. However, in August 2023, after learning that the Hammonses were getting divorced and would be selling the Property, the siblings filed suit seeking to invalidate the deed on the ground that the decedent lacked legal capacity when she executed it.
After a jurisdictional dispute between district court and probate court, the son filed an application to resign as independent executor, claiming he had been mistaken when he stated his mother was competent. The adult children ultimately filed suit in probate court, where the Hammonses challenged their standing. The probate court found that the children lacked standing and dismissed their lawsuit with prejudice.
Personal Representatives Have Priority to Sue
The Texas Estates Code establishes a clear hierarchy of who may bring suit on behalf of an estate.
Section 351.054(a) of the Texas Estates Code provides that “an executor or administrator may commence a suit for recovery of personal property, debts, or damages or title to or possession of land.” This statutory authority grants the personal representative—whether executor or administrator—the primary right to pursue legal claims belonging to the estate.
This general rule serves important purposes in the probate system. It centralizes control of estate litigation in one person, preventing multiple heirs from potentially filing competing or duplicative lawsuits. It also ensures that recovery of assets benefits all estate beneficiaries proportionally, rather than only those heirs who choose to pursue litigation.
The Texas Supreme Court has reinforced this principle in Frazier v. Wynn, 472 S.W.2d 750, 752 (Tex. 1971), establishing that ordinarily, only the estate’s personal representative has standing to sue for the recovery of property belonging to the estate. This concept reflects the personal representative’s fiduciary duty to marshal and protect estate assets for the benefit of all beneficiaries and creditors.
The Three Recognized Exceptions When Can Heirs Sue
While the general rule grants litigation authority to the personal representative, Texas courts have recognized three specific exceptions that allow heirs to bring suit on behalf of an estate. This case addresses several of the more common exceptions.
Exception 1: No Administration Pending and None Necessary
The first and most commonly invoked exception occurs when there is no administration pending on the estate and none is necessary. As the Texas Supreme Court explained in Shepherd v. Ledford, 962 S.W.2d 28, 31-32 (Tex. 1998), heirs may bring suit if they plead and prove these two elements.
What constitutes “no administration pending” is relatively straightforward—if no executor or administrator has been appointed by a court, or if the administration has been formally closed, then no administration is pending. However, in the context of independent administration, which is common in Texas, determining whether an administration is “pending” can be more complex. Since independent executors are not required to formally close an estate, many independent administrations remain technically open indefinitely.
To establish that “no administration is necessary,” heirs typically must show that all estate debts have been paid and all assets have been distributed, such that there is no need for further administration. Additionally, some courts have considered whether there are any creditor claims against the estate that would require administration.
Exception 2: Personal Representative Unable, Unwilling, or Conflicted
The second exception allows heirs to sue when the personal representative cannot or will not act, or when they have a conflict of interest. As recognized in Mayhew v. Dealey, 143 S.W.3d 356, 371 (Tex. App.—Dallas 2004, pet. denied), this exception acknowledges situations where waiting for the personal representative to act would prejudice the estate.
This exception can arise in several scenarios:
- When the personal representative has a personal interest that conflicts with their fiduciary duty to the estate
- When the personal representative has refused to bring a necessary suit despite being requested to do so
- When the personal representative is actively working against the estate’s interests
Some courts have expanded this exception to situations requiring “immediate action” to protect estate interests, as discussed in Izard v. Townsend, 208 S.W.2d 666, 668 (Tex. App.—Galveston 1948, no writ). However, heirs invoking this exception must specifically plead facts showing why immediate action is necessary.
Exception 3: Administration Closed
The third exception applies when the estate’s administration has been formally closed. As noted in Jordan v. Lyles, 455 S.W.3d 785, 791 (Tex. App.—Tyler 2015, no pet.), once administration concludes, heirs gain standing to pursue estate claims.
In Texas, an independent administration can be closed in two ways:
- Formally, through filing the appropriate documentation with the probate court
- Informally, when all estate debts have been paid and assets distributed, making further administration unnecessary
Determining whether an independent administration has been informally closed requires examining whether “the debts of the estate have been paid and the property distributed such that there was no need for further administration,” as stated in Alford-Shaw v. Nicholson, No. 02-20-00387-CV, 2021 WL 2753508, at *5 (Tex. App.—Fort Worth July 1, 2021, pet. denied).
Why Did the Heirs Lack Standing in Smith?
The court in Smith focused its analysis on whether any of the three exceptions applied to grant the heirs standing. The court determined none did.
Despite the heirs’ arguments that no administration was pending or necessary, the court found otherwise. The court noted that although the independent executor had resigned, this did not automatically close the administration. In fact, the record showed that the independent executor had sought appointment of an attorney ad litem to represent any unknown heirs—indicating that the administration remained active and necessary.
The court emphasized that in the independent executor’s application for determination of heirship, he had expressly acknowledged that “an administration of the estate remains necessary” because “the assets of the estate require distribution.” This directly contradicted the heirs’ claim that no administration was necessary.
The Smith court also considered whether the independent administration was closed. Since independent executors aren’t required to formally close an estate, as noted above, the court noted that independent administrations are often not formally closed. In the absence of formal closure, an independent administration may be considered closed when:
- All debts and claims against the estate have been paid
- The estate’s net assets have been distributed
- There is no need for further administration
The court found that none of these criteria had been met in the Smith case. The inventory did not state that the estate’s debts had been paid or that assets had been distributed. Moreover, the appointment of an attorney ad litem suggested that further estate distributions might be necessary and created a potential future claim against the estate for professional fees.
The court’s analysis highlights an important practice point: an executor’s inventory can help establish whether an administration has been informally closed. In Smith, the inventory acknowledged that “[n]o claims [we]re due and owing to the [e]state,” but it did not state that the estate’s debts had been paid or that assets had been distributed.
This omission proved fatal to the heirs’ argument that the administration had been informally closed. As the court noted, the inventory did not “in and of itself” provide the information necessary to show that the administration had been informally closed.
One might wonder why the second exception—allowing heirs to sue when the personal representative has a conflict of interest—didn’t apply in this case. The court noted that while this exception might allow heirs to sue when immediate action is required and no qualified representative exists, the heirs failed to plead such facts.
The court pointed out that although the heirs’ petition mentioned the executor’s resignation, it did not allege that the estate’s interests required immediate action. This procedural oversight highlights the importance of pleading the specific facts that establish an exception to the general rule.
The Takeaway
The Smith case is instructive for heirs who believe estate assets need to be recovered through litigation. Simply being an heir or beneficiary is insufficient to confer standing if an administration remains pending. To establish standing to sue on behalf of an estate, heirs must clearly fit within one of the recognized exceptions. As relevant to this case, this involves showing either that no administration is pending and none is necessary, that the personal representative cannot or will not act, or that the administration has been formally or informally closed.
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Disclaimer: The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
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