Jefferson State Bank v. Lenk, 323 S.W.3d 146 (Tex. 2010).

Estate Administration

Recovery for Unauthorized Bank Transactions


After Decedent’s death in 2000, Fake Administrator presented Bank with fraudulent letters of administration and over the next few months, withdrew most of Decedent’s funds from the account. In 2003, the court appointed Real Administratrix. In February 2004, Real Administratrix learned about Decedent’s account at Bank but did not contact Bank until June 2005 when she demanded that Bank recredit the account for the funds Fake Administrator withdrew. Bank refused pointing to Business and Commerce Code § 4.406 which provides a one year repose period to make claims which had been reduced to 60 days by contract. Real Administratrix, however, claimed that the period did not begin to run until Bank made the bank statements available. The appellate court held that Bank’s sending statements to Fake Administrator and holding the statements at Bank’s office were insufficient to satisfy its duty and thus Real Administratrix could recover. Bank appealed.

The Texas Supreme Court reversed. The court held that in the context of deceased customers, “(1) a bank satisfies its burden by retaining account statements for retrieval by the estate administrator, and (2) the repose period begins to run once an administrator is appointed.” Thus, since Real Administratrix waited until over two years after her appointment to demand that Bank recredit the account, her demand came too late and thus was barred. The court explained that after a customer’s death, the bank cannot send statements to the customer and thus retaining the statements is appropriate. Once a personal representative is appointed, the time period begins to run as the personal representative now has the right to all of the decedent’s business records and papers under Probate Code § 37.

Moral: A personal representative must examine bank account statements immediately after being appointed or else risk that the repose period will run barring a recovery for unauthorized withdrawals from the decedent’s accounts.

Warning: The repose period can run before the personal representative obtains knowledge of the account. Thus, the personal representative must take prompt action to locate all of the decedent’s accounts. The decedent’s most recent income tax returns may be helpful in determining the existence of the accounts.