While much attention has been given to the 2017 Probate Omnibus Bill (SB0769, now codified as Public Chapter 290), a little-known bill that also became effective on July 1 makes several important probate changes that should not be overlooked.

SB1163, which has been assigned Public Chapter 280, became effective on July 1. It contains seven sections.

Section 1 amends T.C.A. § 30-2-601(a). It requires executors to file a “status report” detailing any remaining estate issues within 15 months of undertaking administration and every year thereafter until the estate closed. This requirement applies even if accountings have been waived. In addition, the amended statute makes clear that, even if waived, the court can require detailed accountings upon the request of the residuary distributees.

Sections 2 and 6 make minor (and seemingly inconsequential) tweaks to Parts 6 and 7 of Title 30, Chapter 2. Section 2 simply adds the phrase “as required by § 30-2-707” to the penultimate clause of T.C.A. § 30-2-601(b)(1). Presumably this was included as a result of the changes made to T.C.A. § 30-2-707 by Section 7 (discussed below).

Section 6 amends T.C.A. § 30-2-701 so that the final clause reads “provided, that in the event of insolvency, the personal representative shall make and file with the court a final settlement of the estate in accordance with title 30, chapter 2, part 6.”  One is left to conclude that there was previously some confusion regarding the nature of the final settlement required for an insolvent estate.

Section 3 is directed at disgruntled beneficiaries who will not execute a receipt for their inheritance. An executor must generally procure a receipt from each beneficiary before he can close the estate. If a beneficiary refuses to sign a receipt, the executor has two options. For a beneficiary who is entitled to a fixed amount, the executor can file a copy of the cancelled check. This, of course, assumes that the beneficiary will cash the check. Beneficiaries of nominal amounts (e.g., $1) almost never do so.

The other option is to file a proposed final accounting and settlement with the court. The court then schedules a hearing on the proposal and gives notice to the beneficiaries. If the disgruntled beneficiary fails to appear at the hearing, one might assume that the court would simply accept the settlement and close the estate, but this is not always the case.

New T.C.A. § 30-2-601(b)(3) provides some finality under the second option. It is contingent upon an executor establishing to the court’s satisfaction that he has made diligent efforts to obtain a receipt. Afterward, the executor can make a motion to close the estate by giving notice of the pending settlement to the disgruntled beneficiary. The disgruntled beneficiary’s failure to appear or otherwise participate in the hearing “shall  result in a final order closing the estate.”

Sections 4 and 7 state that beneficiary receipts must now be “executed under penalty of perjury or otherwise sworn before the clerk or a notary public….” Moreover, it appears that receipts must now be on a form provided by the Tennessee Administrative Office of the Courts. A copy of the form can be found here on the TAOC’s website.

Section 5 allows the court to cite the executor to appear and settle if he fails to file the status report referred to in Section 1 above. This is in addition to the court’s power to cite the executor for failure to timely-file accountings.

Source: Public Chapter 280

Posted by Joel D. Roettger, JD, LLM, EPLS