American Finance & Inv. Co. v. Herrera, 20 S.W.3d 829 (Tex. App.—El Paso 2000, no pet.).
Beneficiary of a will in her capacity as the
independent executor deeded estate property to herself in satisfaction
of a specific devise. Beneficiary then mortgaged the property and later
defaulted on the loan. Mortgagee foreclosed on the property and bought
it at a sheriff’s sale. Mortgagee subsequently sold the property to
Purchaser. Meanwhile, the court removed Beneficiary as the executor and
appointed Successor Executor. Successor Executor convinced the probate
court to set aside the Beneficiary’s deed and have the property returned
to the estate. The basis of the court’s holding was that the
Beneficiary’s deed violated Probate Code § 352 which prohibits a
personal representative from purchasing estate property unless the will
or a court first authorizes the sale. Purchaser appealed.
The appellate court reversed. Beneficiary was not a purchaser of the
property. Instead, she was the named recipient of this property and
title vested in her the moment the testatrix died under Probate Code §
37, subject to the payment of debts. The estate owed no debts and thus
the deed from Beneficiary as the executor to Beneficiary as an
individual did not result from a purchase and accordingly did not
violate § 352. The court also indicated that Purchaser was protected by
the good faith purchaser provisions of Probate Code § 188.
Moral: A beneficiary who is also the personal representative does not
breach a fiduciary duty when dealing with property left to the
beneficiary in the will.