Estate Administration

Self-Dealing by Personal Representative

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.