EXAMINING PROBATE: Closing Requirements

EXAMINING PROBATE: Closing Requirements 2015 Texas Land Title Institute Paul McNutt Jr. Executive Vice President/General Counsel Title Resources Guaranty Company Dallas, TX

INSTRUCTOR PROFILE PAUL MCNUTT, JR. Company: Industry Background: Executive Vice President and General Counsel Title Resources Guaranty Company 8111 LBJ Freeway, Suite 1200 Dallas, Texas 75251 45 years in the title industry, 25 years with Title Resources Educational Background: B.B.A., University of Texas - 1963 L.L.B., University of Texas - 1966 Dale Carnegie, Effective Speaking and Human Relations, 1989 Teaching Experience: Speaker, Texas Land Title Institute 2000 Optimizing Policy Coverages 2002 Illegal Subdivisions: Not Just a Platting Issue 2003 Powers of Attorney: How and When to Use 2004 Closing the Construction Project 2005 Maximizing Your Premium Dollar 2006 Commitments and Binders 2007 Access: Physical vs. Legal 2008 Frequently Asked Questions Resulting from Rule Changes 2009 The Title Objection Letter-a Panel Discussion 2010 RESPA Reform: Top 10 Things to Know 2011 What Does the Schedule B Tax Exception Really Mean? 2012 What Title Insurance Does Not Cover 2013 Marital Rights Panel Discussion: Top Underwriting Questions 2014 Minerals Examination and Commitment Issues, T-19 Changes Speaker, State Bar of Texas Advanced Real Estate Course 2005 Premium Saving Tricks-Strategies 2011 The Title Objection Letter: Guidelines and Solutions 2012 What Title Companies Won t Insure Speaker, Texas Society of Professional Surveyors Annual Convention 2014 Texas Boundary Law and Modern Title Company Practice Awards: Peggy Hayes Teaching Excellence Award, 2000 From the Texas Land Title Association Professional Excellence Award, 2014 From the Texas Land Title Association Title Person of the Year Award, 2015 From the Texas Land Title Association Industry Associations: State Bar of Texas Dallas Bar Association Texas Land Title Association - Director 2000/2001 Texas Real Estate Commission Certified Instructor Legal Update MCE and Ethics MCE Legal Update I & II

Page 1 of 5 EXAMINING PROBATE: CLOSING REQUIREMENTS Paul McNutt, Jr., Executive Vice President/General Counsel Title Resources Guaranty Company, Dallas, Texas With the Ancillary Probate of a Foreign Will, there are three methods provided by the Estates Code for bringing a foreign will to Texas for probate: 1) Ancillary Probate under Chapter 501.001 2) Original Probate of a Foreign Will 3) Recordation of Foreign Will as a Muniment of Title Ancillary Probate under Chapter 501.001 - Sec. 501.001 provides that a written will of a testator who was not domiciled in this state at the time of death may be admitted to probate at any time in this state if (1) The will would affect any property in this state; and (2) Proof is presented that the will stands probated or otherwise established in any state of the United States or a foreign nation. When this method is used, the Application states the probate is requested on the basis of authenticated copies from the foreign proceedings, and no notice or hearing is required. If the original probate was in a jurisdiction other than that of the testator s domicile, a more detailed application must be filed and personal notices must be given. The County Clerk files the authenticated copies of the will and order admitting it probate in the other jurisdiction. Also, in case property is located in more than one county in Texas, under Sec. 256.201 certified copies of the first Texas foreign documents are required to be filed in the County Clerk s Real Property Records of any other county where property is located. Original Probate of a Foreign Will - Under Chapter 502, the will of a non-domiciliary of Texas may be admitted to probate in the same manner as the will of a Texas Domiciliary. This is the only method allowed if the will was not probated out of state, and has been sometimes used even where the will was probated in another jurisdiction. Sec. 502.001(a) provides it applies to a testator who dies domiciled outside of this state; and (1) on probate, may operate on any property in this state; and (2) is valid under the laws of this state. (3) (b) a court may grant probate of a will in the same manner as the court grants the probate of other wills under this title if the will: (4) has not been rejected from probate or establishment in the jurisdiction in which the testator died domiciled; or (5) has been rejected from probate or establishment in the jurisdiction in which the testator died domiciled solely for a cause that is not ground for rejection of a will of a testator who died domiciled in this state. (6) (c) A court may delay passing on an application for probate of a foreign will pending the result of probate or establishment, or a contest of probate or establishment, in the jurisdiction in which the testator died domiciled. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAUL MCNUTT, JR. TITLE RESOUCES GUARANTY COMPANY

Page 2 of 5 Recordation of Foreign Will as a Muniment of Title - Under Chapter 503, simply file authenticated copies of the probate from the foreign jurisdiction in the Real Property Records of the County where Texas property is located. Authentication is provided by Sec. 501.002(c) as follows: File a copy of the foreign will and the order, or decree by which the will was admitted to probate or otherwise established. The copy must: (1) be attested by and with the original signature of the court clerk or other official who has custody of the will or who is in charge of probate records; (2) include a certificate with the original signature of the judge or presiding magistrate of the court stating that the attestation is in proper form; and (3) have the court seal affixed, if a court seal exists. Allowing Probate of Foreign Will and Letters Testamentary after Four Years Period - Probating a Will under Sec. 256.003, which required probate of a will in Texas within four years of the testators death unless it is shown by proof that the applicant for the probate of the will was not in default in failing to present the will for probate on or before the fourth anniversary of the testator s death, was amended, effective September 1, 2015, to allow probate of a foreign will in Texas, after four years, under Section 501.001, and, issuance of Letters Testamentary, also past four years, if a foreign will is brought to Texas after probate under Sec. 501.001. Section 501.006(a) was amended, adding (3) below: (1) to allow the executor that has qualified in the foreign jurisdiction in which the will was previously admitted; (2) is not disqualified from serving that capacity in this state; and (3) If the will is admitted to ancillary probate in this state after the fourth anniversary of the testator s death, the executor continues to serve in that capacity in the jurisdiction in which the will was previously admitted to probate or otherwise established. Guardianships for Nonresident Wards - Chapter 1252 Provides for both resident guardians of nonresident wards and for nonresident guardians of nonresident wards. Sec. 1252.001 Allows the appointment of a resident of the state for a nonresident ward, if the ward owns property in this state, in the same manner allowed for resident wards. The venue is in the county in which the principal estate of the nonresident incapacitated person is located. Sec. 1252.051 (a) A nonresident may be appointed and qualified as guardian or co-guardian of a nonresident ward s estate located in this state in the same manner as a resident if: (1) a court of competent jurisdiction where the ward lives appointed the guardian; (2) the nonresident is qualified as a guardian in the foreign jurisdiction; and (3) the nonresident files in the county in which all or part of the nonresident ward s estate is located a complete transcript of the proceedings from the records of the court in which the nonresident applicant was appointed. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAUL MCNUTT, JR. TITLE RESOUCES GUARANTY COMPANY

Page 3 of 5 Sec. 1252.052 Appointment: Issuance of Letters of Guardianship: (1) If a nonresident meets the requirements of 1252.051, without necessity of notice or citation, the court may enter order appointing. (2) After the nonresident applicant qualifies in the manner required of resident guardians, and files with the court a power of attorney appointing a resident agent to accept service of process in all actions or proceedings with respect to the estate, the clerk shall issue letters. Sec. 1054.201(a) and (b) are amended to read as follows: (1) An attorney for an applicant for guardianship and a court appointed attorney in a guardianship proceeding, including an attorney ad litem, 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 or the state bar s designee. (2) The State Bar of Texas shall require four hours of credit for certification under this subchapter including one hour on alternatives to guardianship and supports and services available to proposed wards. (3) The new requirement for an attorney for an applicant for guardianship to have been certified, after completing the newly required four hour certification course, to represent the person seeking to be a guardian, will require that you are careful, in insuring any sale by a guardian, that the guardian is represented by a qualified attorney. An application from an attorney that has formerly been representing the guardian may have to now be performed by a different, newly certified attorney, as all attorneys are now covered, not just court appointed or attorneys ad litem, and the certification requirement has been increased to four hours from three hours, with the additional hour on alternatives to guardianship and supports and services available to proposed wards having just been added. Legislative changes in 2015 to Guardianships - Sec. 1001.001(b)(4)(C) In creating a guardianship that gives a guardian limited authority over an incapacitated person, the court shall design the guardianship to encourage the development or maintenance of maximum self-reliance and independence in the incapacitated person,(c) including by presuming that the incapacitated person retains capacity to make personal decisions regarding residence. Title requirements for guardianship sales of the home of the ward will now include a determination, either in the order appointing the guardian, or in the order giving authority of the guardian to sell the property, that this power of choosing a residence of the ward was determined to be removed from the ward upon a court finding of fact. The Uniform Disclaimer of Property Interests Act - The Texas Legislature created a new Chapter 240 of the Property Code to bring together from former sections of the Estate Code and Trust Code a new Texas version of the Uniform Disclaimer of Property Interests Act. Texas departed from the federal tax law that required disclaimers be done in nine months to avoid gift tax under the Internal Revenue Code Sec. 2518. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAUL MCNUTT, JR. TITLE RESOUCES GUARANTY COMPANY

Page 4 of 5 This was based in part on the change Congress made to increase the estate and gift tax exemption from $1 million to $5 million in 2012, which adjusted annually for inflation is now $5.43 million in 2015. With such a large exemption, tax motivations for disclaiming largely ended. The new rules de-couple from the federal disclaimer rules for gift taxes. The nine month requirement is eliminated. A disclaimer may be made at any time before the interest has been accepted. Under Property Code Sec. 240.151(b)(1), a disclaimer is barred if the disclaimant accepts the interest sought to be disclaimed by: (A) taking possession of the interest; or (B) exercising dominion and control over the interest. However, if the motive for the disclaimer is in fact to avoid gift taxes, the disclaimer must be made under the nine month IRS required rule. Documentation of the disclaimer has been greatly simplified by only requiring delivery of the notice in person, by mail, by fax, or by any other method likely to result in receipt. If delivery is by certified mail, return receipt requested, delivery is deemed to have occurred on the date of mailing regardless of receipt. The interest can be disclaimed by rules whether passed by will intestacy, testamentary or inter vivos trust, beneficiary designation in a non-probate transfer, right of survivorship, or pursuant to a power of appointment. The restriction, under a 2013 statute, not allowing disclaimer by a person that has a child support lien, is maintained by a 2015 change, but no longer requires every disclaimer to state there is no child support lien. Fiduciary s Power to Disclaim - Fiduciaries may disclaim (1) powers granted to the fiduciary, (2) interests in property, or (3) powers over property otherwise passing to a trust for the benefit of a ward, estate or beneficiary. Court approval is required for disclaimers by a dependent administrator, guardian or trustee of a court-created trust, or if the disclaimer would cause property to pass to the disclaiming fiduciary individually. A trustee may not disclaim property that would become trust property without either obtaining court approval or giving notice to the affected beneficiaries. (Estates Code 1301; Property Code Sec. 142.005) Secondary Disclaimer by Parent - A natural guardian of a minor who has no court-appointed guardian may disclaim (without court order) property that would pass to the minor only by virtue of another disclaimer, as long as the disclaimed property would not pass to the natural guardian. Uniform Gift to Minors Act - permitted transfers by fiduciary: Section 141.007 allows a fiduciary to transfer to a UTMA custodianship up to $25,000, up from only $10,000. Section 141.008 increased the amount a minor s obligor may transfer to a UTMA custodianship from $15,000 to $25,000. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAUL MCNUTT, JR. TITLE RESOUCES GUARANTY COMPANY

Page 5 of 5 Uniform Real Property Transfer on Death Act- Texas version (TOD): New Chapter 114 of the Texas Property Code adopts a Texas version of the Act. It allows the owner of real property to designate in a deed the beneficiary to receive title to the property on the owner s death, without probate. The TOD does not affect the transferor s ownership rights, and the owner retains the power to transfer or encumber the property or revoke the deed. The TOD may not be created using a power of attorney, and must be filed in the Real Property Records of the County of the property before the death of the transferor. Wills may be reformed for mistake under new Subchapter J Judicial Modification or Reformation of Wills. Sec. 255.451 of the Estate Code, effective September 1, 2015, provides: Circumstances Under Which Will May be Modified or Reformed: (a) On the petition of a personal representative, a court may order that the terms of the will be modified or reformed, that the personal representative may be directed or permitted to perform acts that are not authorized or that are prohibited by the terms of the will, or that the personal representative be prohibited from performing acts that are required by the terms of the will, if: (1) Modification of administrative, non-dispositive terms of the will in necessary or appropriate to prevent waste or impairment of the estate s administration; (2) The order is necessary or appropriate to achieve the testator s tax objectives or to qualify a distribute for governmental benefits and is not contrary to the testator s intent; or (3) The order is necessary to correct a scrivener s error in the terms of the will, even if unambiguous, to conform with the testator s intent. Sec. 255.453 Retroactive Effect, The court may direct that an order described by this subsection has retroactive effect. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAUL MCNUTT, JR. TITLE RESOUCES GUARANTY COMPANY

Examining Probate: Closing Requirements Paul McNutt, Jr., Title Resources Guaranty Company, Dallas 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS I. Ancillary Probate of Foreign Will Three methods are provided by the Estates Code for bringing a Foreign Will to Texas for probate. Ancillary Probate under Chapter 501.001 Original Probate of a Foreign Will Recordation of Foreign Will as a Muniment of Title 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 2 1

ANCILLARY PROBATE UNDER CHAPTER 501.001 Ancillary Probate under Chapter 501.001 Sec. 501.001 provides that a written will of a testator who was not domiciled in this state at the time of death may be admitted to probate at any time in this state if: 1) The will would affect any property in this state; and 2) Proof is presented that the will stands probated or otherwise established in any state of the United States or a foreign nation. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 3 ANCILLARY PROBATE UNDER CHAPTER 501.001 When this method is used the Application states the probate is requested on the basis of authenticated copies from the foreign proceedings, and no notice or hearing is required. If the original probate was in a jurisdiction other than that of the testator s domicile, a more detailed application must be filed and personal notices must be given. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 4 2

ANCILLARY PROBATE UNDER CHAPTER 501.001 The County Clerk files the authenticated copies of the will and order admitting it probate in the other jurisdiction. Also, in case property is located in more than one county in Texas, Under Sec. 256.201 certified copies of the first Texas foreign documents are required to be filed in the County Clerk s Real Property Records of any other county where property is located. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 5 ORIGINAL PROBATE OF A FOREIGN WILL Original Probate of a Foreign Will Under Chapter 502 the will of a non domiciliary of Texas can be admitted to probate in the same manner as the will of a Texas domiciliary. This is the only method allowed if the will was not probated out of state, and has been sometimes used even where the will was probated in another jurisdiction. Sec. 502.001 (a) provides it applies to a testator who dies domiciled outside of this state; and 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 6 3

ORIGINAL PROBATE OF A FOREIGN WILL Original Probate of a Foreign Will continued (1) on probate, may operate on any property in this state; and (2) is valid under the laws of this state. (3) (b) a court may grant probate of a will in the same manner as the court grants the probate of other wills under this title if the will: (4) (1) has not been rejected from probate or establishment in the jurisdiction in which the testator died domiciled; or (5) (2) has been rejected from probate or establishment in the jurisdiction in which the testator died domiciled solely for a cause that is not ground for rejection of a will of a testator who died domiciled in this state. (6) (c) A court may delay passing on an application for probate of a foreign will pending the result of probate or establishment, or a contest of probate or establishment, in the jurisdiction in which the testator died domiciled. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 7 RECORDATION OF FOREIGN WILL AS A MUNIMENT OF TITLE Recordation of Foreign Will as a Muniment of Title Under Chapter 503, simply filing authenticated copies of the probate from the foreign jurisdiction in the Real Property Records of the County where Texas property is located. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 8 4

RECORDATION OF FOREIGN WILL AS A MUNIMENT OF TITLE Authentication is provided by Sec. 501.002(c) as follows: File a copy of the foreign will and the order or decree by which the will was admitted to probate or otherwise established. The copy must: 1) be attested by and with the original signature of the court clerk or other official who has custody of the will or who is in charge of probate records; 2) include a certificate with the original signature of the judge or presiding magistrate of the court stating that the attestation is in proper form; and 3) have the court seal affixed, if a court seal exists. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 9 FOREIGN WILL AND LETTERS TESTAMENTARY Allowing Probate of Foreign Will and Letters Testamentary after Four Years Period for Probating Will under Sec. 256.003, which required probate of a will in Texas within four years of the testators death unless it is shown by proof that the applicant for the probate of the will was not in default in failing to present the will for probate on or before the fourth anniversary of the testator s death, was amended, effective September 1, 2015, to allow probate of a foreign will in Texas, after four years, under Section 501.001. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 10 5

FOREIGN WILL AND LETTERS TESTAMENTARY And, issuance of Letters Testamentary, also past four years, if a foreign will is brought to Texas after probate under Sec. 501.001. Section 501.006 (a) was amended, adding (3) below, to allow the executor that (1) has qualified in the foreign jurisdiction in which the will was previously admitted; (2) is not disqualified from serving that capacity in this state; and (3) if the will is admitted to ancillary probate in this state after the fourth anniversary of the testator s death, the executor continues to serve in that capacity in the jurisdiction in which the will was previously admitted to probate or otherwise established. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 11 FOREIGN WILL AND LETTERS TESTAMENTARY By this method executors serving in foreign jurisdictions may then continue serving even though appointed in Texas after four years from the death of the testator. Therefore, in allowing a foreign executor to act after ancillary probate in Texas, both the probate in the original jurisdiction, and the Texas ancillary probate, must be examined to be certain the executor continues to be allowed to act in both places before insuring title. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 12 6

GUARDIANSHIPS FOR NONRESIDENT WARDS II. Guardianships for Nonresident Wards Chapter 1252 Provides for both resident guardians of nonresident wards and for nonresident guardians of nonresident wards. Sec. 1252.001 Allows appointment of a resident of the state for a nonresident ward, if the ward owns property in this state, in the same manner allowed for resident wards. The venue is in the county in which the principal estate of the nonresident incapacitated person is located. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 13 GUARDIANSHIPS FOR NONRESIDENT WARDS Sec. 1252.051 (a) A nonresident may be appointed and qualified as guardian or co guardian of a nonresident ward s estate located in this state in the same manner as a resident if: 1) a court of competent jurisdiction where the ward lives appointed the guardian; 2) the nonresident is qualified as a guardian in the foreign jurisdiction; and 3) the nonresident files in the county in which all or part of the nonresident ward s estate is located a complete transcript of the proceedings from the records of the court in which the nonresident applicant was appointed. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 14 7

GUARDIANSHIPS FOR NONRESIDENT WARDS Sec. 1252.052 Appointment: Issuance of Letters of Guardianship a) If a nonresident meets the requirements of 1252.051, without necessity of notice or citation, the court may enter order appointing. b) After the nonresident applicant qualifies in the manner required of resident guardians, and files with the court a power of attorney appointing a resident agent to accept service of process in all actions or proceedings with respect to the estate, the clerk shall issue letters. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 15 GUARDIANSHIPS FOR NONRESIDENT WARDS Sec. 1054.201(a) and (b) are amended to read as follows: a) An attorney for an applicant for guardianship and a court appointed attorney in a guardianship proceeding, including an attorney ad litem, 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 or the state bar s designee. b) The State Bar of Texas shall require four hours of credit for certification under this subchapter including one hour on alternatives to guardianship and supports and services available to proposed wards. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 16 8

GUARDIANSHIPS FOR NONRESIDENT WARDS Sec. 1054.201(a) and (b) are amended to read as follows: c) The new requirement for an attorney for an applicant for guardianship to have been certified, after completing the newly required four hour certification course, to represent the person seeking to be a guardian, will require you, in insuring any sale by a guardian, to determine that the guardian is represented by a qualified attorney. An application from an attorney that has formerly been representing the guardian may have to now be performed by a different, newly certified attorney, as all attorneys are now covered, not just court appointed or attorneys ad litem, and the certification has been increased to four hours from three hours, with the additional hour on alternatives to guardianship and supports and services available to proposed wards having just been added. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 17 III. Legislative changes in 2015 to Guardianships Sec. 1001.001(b)(4)(C) In creating a guardianship that gives a guardian limited authority over an incapacitated person, the court shall design the guardianship to encourage the development or maintenance of maximum self reliance and independence in the incapacitated person,(c) including by presuming that the incapacitated person retains capacity to make personal decisions regarding residence. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 18 9

Title requirements for guardianship sales of the home of the ward will now include a determination, either In the order appointing the guardian, or the order giving authority of the guardian to sell the property, that this power of choosing a residence of the ward was determined to be removed from the ward upon a court finding of fact. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 19 The Uniform Disclaimer of Property Interests Act The Texas Legislature created a new Chapter 240 of the Property Code to bring together from former sections of the Estates Code and Trust Code a new Texas version of the Uniform Disclaimer of Property Interests Act. Texas left the federal tax law that required disclaimers be done in nine months to avoid gift tax under the Internal Revenue Code Sec. 2518. This was based in part on the change Congress made to increase the estate and gift tax exemption from $1 million to $5 million in 2012, which adjusted annually for inflation is now $5.43 million in 2015. With such a large exemption, tax motivations for disclaiming largely ended. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 20 10

The Uniform Disclaimer of Property Interests Act The new rules de couple from the federal disclaimer rules for gift taxes. The nine month requirement is eliminated. A disclaimer may be made at any time before the interest has been accepted. Under Property Code Sec. 240.151(b)(1), a disclaimer is barred if the disclaimant accepts the interest sought to be disclaimed by: (A) taking possession of the interest; or (B) exercising dominion and control over the interest. However, if the motive for the disclaimer is in fact to avoid gift taxes, the disclaimer must be made under the nine month IRS required rule. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 21 The Uniform Disclaimer of Property Interests Act Documentation of the disclaimer has been greatly simplified by only requiring delivery of the notice in person, by mail, by fax, or by any other method likely to result in receipt. If delivery is by certified mail, return receipt requested, delivery is deemed to have occurred on the date of mailing regardless of receipt. The interest can be disclaimed by rules whether passed by will intestacy, testamentary or inter vivos trust, beneficiary designation in a non-probate transfer, right of survivorship, or pursuant to a power of appointment. The restriction, under a 2013 statute, not allowing disclaimer by a person that has a child support lien, is maintained by a 2015 change, but no longer requires every disclaimer to state there is no child support lien. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 22 11

The Uniform Disclaimer of Property Interests Act Fiduciary s power to disclaim: Fiduciaries may disclaim (1) powers granted to the fiduciary, (2) interests in property, or (3) powers over property otherwise passing to a trust for the benefit of a ward, estate or beneficiary. Court approval is required for disclaimers by a dependent administrator, guardian or trustee of a court created trust. (Estates Code 1301; Property Code Sec. 142.005), or if the disclaimer would cause property to pass to the disclaiming fiduciary individually. A trustee may not disclaim property that would become trust property without either obtaining court approval or giving notice to the affected beneficiaries. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 23 The Uniform Disclaimer of Property Interests Act Secondary disclaimer by parent: A natural guardian of a minor who has no court appointed guardian may disclaim (without court order) property that would pass to the minor only by virtue of another disclaimer, as long as the disclaimed property would not pass to the natural guardian. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 24 12

The Uniform Disclaimer of Property Interests Act Uniform Gift to Minors Act permitted transfers by fiduciary: Section 141.007 allows a fiduciary to transfer to a UTMA custodianship up to $25,000, up from only $10,000. Section 141.008 provides the fiduciary may transfer to the minor s obligor to a UTMA custodianship was increased from $15,000 to $25,000. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 25 The Uniform Disclaimer of Property Interests Act Uniform Real Property Transfer on Death Act Texas version (TOD) New Chapter 114 of the Texas Property Code adopts a Texas version of the Act. It allows the owner of real property to designate in a deed the beneficiary to receive title to the property on the owner s death, without probate. The TOD does not affect the transferor s ownership rights, and the owner retains the power to transfer or encumber the property or revoke the deed. The TOD may not be created using a power of attorney, and must be filed in the Real Property Records of the County of the property before the death of the transferor. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 26 13

The Uniform Disclaimer of Property Interests Act Wills may be reformed for mistake under new Subchapter J Judicial Modification or Reformation of Wills: Sec. 255.451 of the Estate Code, effective September 1, 2015, provides: Circumstances Under Which Will May be Modified or Reformed: (a) On the petition of a personal representative, a court may order that the terms of the will be modified or reformed, that the personal representative may be directed or permitted to perform acts that are not authorized or that are prohibited by the terms of the will, or that the personal representative be prohibited from performing acts that are required by the terms of the will, if: 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 27 The Uniform Disclaimer of Property Interests Act Sec. 255.451 of the Estates Code, effective September 1, 2015 continued: 1) Modification of administrative, non dispositive terms of the will is necessary or appropriate to prevent waste or impairment of the estate s administration; 2) The order is necessary or appropriate to achieve the testator s tax objectives or to qualify a distributee for governmental benefits and is not contrary to the testator s intent; or 3) The order is necessary to correct a scrivener's error in the terms of the will, even if unambiguous, to conform with the testator s intent. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 28 14

The Uniform Disclaimer of Property Interests Act Sec. 255.453 Retroactive Effect: The court may direct that an order described by this subsection has retroactive effect. 2015 TEXAS LAND TITLE INSTITUTE EXAMINING PROBATE: CLOSING REQUIREMENTS PAGE 29 Examining Probate: Closing Requirements Paul McNutt, Jr., Title Resources Guaranty Company, Dallas 2015 TEXAS LAND TITLE INSTITUTE 15