by Price L. Johnson and Matthew Bourque
Do you handle cases that involve deceased parties or catastrophic injuries? Do you want to? If the answer to either of those questions is yes, then read on, because probate issues will affect your practice.
Probate issues lurk beneath every facet of personal injury cases. They can create additional venue opportunities, render your settlement release invalid, or make your judgment unenforceable. Whether you represent plaintiffs or defendants, a basic understanding of probate pitfalls can save you time, money, and potential malpractice exposure.
Name the Correct Parties
We often see lawsuits incorrectly name “the estate” or an incapacitated person as a party. The proper party is the personal representative (the executor or administrator of a deceased person’s estate) or the guardian of an incapacitated person’s estate. With few exceptions, only a properly appointed personal representative may sue or be sued on behalf of the estate, and only the guardian of the estate may sue on behalf of an incapacitated person. A lawyer who names the incorrect party may expose himself or herself to malpractice, sanctions, or contempt.
The Dangerous Exception
Intrepid lawyers sometimes rely on Texas Rule of Civil Procedure 151 to avoid the probate process. This rule and related case law provide a narrow exception to the principles discussed in the previous paragraph in allowing the heirs—instead of the personal representative—to assert claims of an estate. While we applaud the creativity of lawyers using this rule, its use is almost never appropriate.
First, lawyers who use Rule 151 must state that no estate administration is pending and none is necessary. If a single creditor exists, an estate administration is probably necessary; if an estate has two or more creditors, necessity of administration always exists. Does your deceased party have any medical bills? Funeral expenses? Credit cards? Phone bills? Utilities? A mortgage? You get the picture. And even if no creditors exist, the Estates Code broadly defines necessity of administration. In short, lack of necessity is a longshot.
Second, lawyers who invoke the Rule 151 exception must claim to represent all of the deceased’s heirs. We frequently see common-law spouses, children born outside marriage, and children adopted-by-estoppel crash the heirship party. If those parties show up during your Rule 151 proceeding, then you made a misrepresentation to the court. And if those parties show up after you settle your case, expect a claim for their portion of the estate settlement, including fee forfeiture.
Get Your Fees Approved… or Else
Personal injury lawyers often present engagement agreements that suggest their client is the personal representative of an estate when no probate proceeding exists. In these situations, no such client exists.
A lawyer must take three steps in order to actually represent an estate or incapacitated person. First, a probate court must appoint a personal representative of the estate. Second, a probate court must approve the engagement of counsel in dependent administrations, which include all guardianships and most intestate proceedings. Finally, the probate court must specifically approve any contingent fee in excess of 1/3 of the estate’s recovery. Failure to follow any of these steps may result in a frustrating amount of lost time, effort, and money for your practice.
Respect the Estate at Settlement
Probate issues are particularly important to settlement. Only a properly appointed personal representative can settle on behalf of the estate. In dependent administrations, the probate court must approve the settlement. If your plaintiff or defendant settles or releases estate claims with or on behalf of an unauthorized party, the consequences can be devastating.
A defendant who settles estate claims with a plaintiff who merely claims to represent the estate is exposed to additional claims. When the actual personal representative is appointed, the defendant will have a worthless release.
Plaintiffs who release estate claims without authority also incur great risk. When the authorized personal representative properly brings claims, the defendant will run to the original plaintiff with an indemnity agreement in hand.
Please note that most of the issues above apply to incapacitated persons as well as deceased persons.
Price L. Johnson is the president of The Johnson Firm and a past chair of the Tort & Insurance Practice Section. He can be reached at email@example.com. Matthew Bourque is an attorney at The Johnson Firm. He can be reached at firstname.lastname@example.org.