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Performing Annual Accounts in Guardianships or Management Trusts

By Mark Caldwell March 4, 2019


Mark R. Caldwell and the late Edward L. Rice

More and more frequently, Texas courts are creating dual guardianships or management trusts, where one or more third parties act as guardian or trustee for: (1) spouses who are both incompetent; or (2) for one incompetent spouse, while the other spouse is unable to serve as community administrator. Often, the spouses have had a lengthy marriage and have managed the bulk of their marital property as “joint management community property” through joint accounts or jointly titled assets. Texas Estates Code §§ 1301.053. 1353.003, 1353.004, and 1353.005 effectively bifurcate the marital estate in this instance, as a guardianship estate can have only one ward and a court-created management trust can only have one beneficiary. 1 Sections 1353.003 to 1353.005 create exclusive rights to possess and administer separate sole management community property estates. 2

The Texas Estates Code, though, is clear. Where one spouse is incompetent and subject to either a community administration or a guardianship of the estate, assets are divided, but no partition of the marital community property occurs. 3 Because the marital estate remains intact, but divided and subject to liability for necessaries, it is important to understand the general legal principles of community property to properly access resources the guardian does not control, avoid unnecessary damage to existing estate plans, and properly prepare inventories and annual accounts in the guardianship estate(s} or management trust(s).

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Mark R. Caldwell routinely represents executors, guardians, and beneficiaries in complex estate, trust, and guardianship litigation. He has also represented fiduciaries in all phases of estate, trust, and guardianship administration. Mark is passionate about holding those who exploit others accountable and defending those who have been wrongfully accused of doing so. Mark enjoys the investigatory aspects of estate and trust litigation, including reviewing and analyzing medical, financial, and suspicious property records and transactions. Mark is committed to developing and maintaining strong, personal relationships with his clients. He endeavors to offer smart, pragmatic and cost-effective legal advice. Mark believes that the strongest winning position is one that is simple, direct, and understandable.