4/20/2016

Registry of the Court

TAC Probate Academy – May 2016
Cathy Horvath
Chief Deputy/Supervisor – Courts
Guadalupe County Clerk’s Office

REGISTRY OF THE COURT

• A special account for a county or district clerk in a federally
insured bank or banks selected by the commissioners court in
accordance with Chapter 117, Local Government Code (LGC).
• REGISTRY FUNDS
• “Any money deposited in court to satisfy the result of a legal
proceeding or to await the result of a legal proceeding…” AG Op.
H-183 (1973)
• “A sum of money placed in a county trust fund depository is not
owned by the county but is only held in trust for the litigant who
establishes his or her right to it.” Letter Op. 96-023 (1996)
• Funds from different cases/sources are all deposited into the same
account, and the clerk is responsible for accounting for each owner’s
share separately.

REGISTRY OF THE COURT

• Unless specified in the orders of the Court, funds deposited to the
registry of the court are not required to earn interest while in the
custody of the clerk. §117.053, LGC
• The registry of the court is a pooled account into which all funds
tendered to the clerk in relation to any number of separate court
proceedings are deposited.
• Keeping track of what part of interest earned is attributable to each
principal deposit is an accounting nightmare!
• It is better practice to establish the registry account as a non-interest
bearing account.
• If funds are required by court order to earn interest while in the
custody of the clerk, they should be deposited to a separate interest-
bearing account for a specific owner or estate. §117.053, LGC

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REGISTRY OF THE COURT

INTEREST BEARING vs NON-INTEREST BEARING
Interest Bearing Non-Interest Bearing
Tax Liability – 1099-INT issued in name No tax liability, no tax forms to issue.
and taxpayer ID number of clerk; clerk
must obtain name & taxpayer ID of each
owner of funds in Registry to issue
1099-INT for interest earned on each
owner’s share.

Interest on distribution – clerk must No interest to calculate on disbursement.

calculate share of interest on amount to
be disbursed.

Administrative fee – clerk must calculate Administrative fee - clerk will deduct 5% of
interest on amount disbursed to share of disbursement, up to $50 – no
deduct 10% of interest earned. interest on which to calculate deduction.

NON-INTEREST BEARING IS EASIER TO MANAGE!!!

REGISTRY OF THE COURT

• SEPARATE ACCOUNTS aka INVESTMENT ACCOUNTS
• A separate account is for a specific owner and is most often established as
an interest-bearing account.
• THE REGISTRY ACCOUNT SHOULD BE A GATEWAY FOR ALL FUNDS
COMING INTO OR GOING OUT OF INVESTMENT ACCOUNTS.
• The Court must order that funds be transferred from the registry account
to a separate, interest-bearing investment account for the benefit of a
specific owner. §117.053(c), LGC
• Separate accounting records must be maintained by the clerk.
• Best Practice: Open investment account in the name and taxpayer ID or
Social Security number of the owner, so that tax on interest earned is
reported on owner name and taxpayer ID.
• Example: “Jane Doe, a Minor, by Mary Smith, Any County Clerk, Custodian”.

REGISTRY OF THE COURT

• CUSTODIAN vs TRUSTEE –
What is the role of the Clerk?
• “A clerk shall act only in a custodial capacity in relation to a
registry fund, a special account, or a separate account. A clerk
is not a trustee for the beneficial owner and does not assume the
duties, obligations, or liabilities of a trustee for a beneficial
owner.” §117.0521, LGC
• Do NOT style any registry or investment account as a trust
account – must be a CUSTODIAL account!

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REGISTRY OF THE COURT

• Clerk’s Responsibility & Liability
• A county or district clerk who receives and will have custody of money for
more than three days must deposit the money into the registry of the court.
§117.052, LGC
• A county or district clerk is not responsible for a loss of registry funds
resulting from the failure or negligence of a depository. §117.081, LGC
• If registry funds that have been deposited to the county
depository are lost for any reason, including a loss due to
the insolvency of the depository, the county is liable to the
owner for replacement of the funds that were lost.
§117.083, LGC

REGISTRY OF THE COURT

• Clerk’s Responsibility & Liability
• A county or district clerk is liable for loss of registry funds resulting
from the clerk’s official misconduct, negligence, or misappropriation
of the funds, and is responsible for keeping the registry funds safe
until deposited to the registry account. §117.081, LGC
• The clerk is responsible for determining when unclaimed registry
funds are subject to transfer to the state comptroller as abandoned
property under Chapters 72, 73 and 75 of the Property Code.
§117.002, LGC

• Accurate and detailed record keeping and transparency are

essential to good registry management.

REGISTRY OF THE COURT

• Disbursements & Administrative Expenses
• Unless otherwise provided by statute or rule, each withdrawal
from registry funds, including cash bail bond refunds, requires a
written order of the Court. §117.053, LGC
• Exceptions:
• Appeal bonds paid without order on receipt of mandate or
dismissal. §117.053(b), LGC
• Probate funds to custodians of minors/incapacitated persons
without a guardian, after posting bond for double the amount
of money withdrawn. §1355.103, Estates Code

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REGISTRY OF THE COURT

• Disbursements & Administrative Expenses
• Read the judgment/order before issuing payment!
The devil is in the details…
• Request proof of identification at time of disbursement, preferably
government issued photo ID.
• If funds were invested for a minor, require a certified copy of their birth
certificate as proof that they have reached the age of 18; make a copy
for the Court, attached to application, and return the original certified
copy to the owner.
• Include the case style and number in the memo section of the check.
• Have payee sign a disbursement acknowledgement receipt for your
records. (Form samples included in handout)
• Proceed cautiously, and carefully inspect and review all documentation
before releasing funds – the time for correction is before they walk out the
door!

REGISTRY OF THE COURT

• Disbursements & Administrative Expenses
• Deduction of Administrative Expenses:
• NOT OPTIONAL – must be deducted on every disbursement
from every account, no matter how small.
• Interest bearing accounts, including registry of the court if
applicable – 10% of interest earned. §117.054, LGC
• Non-interest bearing accounts, including registry of the court if
applicable – 5% of disbursement, up to $50. §117.055, LGC
• Cashier the payment of the administrative fee and provide a
receipt to the owner of the funds from which the fee was
deducted; also keep a copy of the receipt and check for
registry records.

REGISTRY OF THE COURT

• Disbursements & Administrative Expenses
• ADMINISTRATIVE EXPENSES:
• INTEREST BEARING ACCOUNTS – 10% of interest earned, no
maximum
• Section 117.054, Local Government Code
• Must be deducted at time of withdrawal.
• If administrative fees are deducted on withdrawals made prior to final
distribution, deduct administrative fee based on 10% of interest
earned from date of last administrative fee deduction.
• When final distribution is made, deduct administrative fee based on
10% of interest earned SINCE THE LAST DEDUCTION.

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REGISTRY OF THE COURT

• Disbursements & Administrative Expenses
• ADMINISTRATIVE EXPENSES:
• NON-INTEREST BEARING ACCOUNTS – 5% of disbursement, up
to $50.00.
• Section 117.055, Local Government Code
• Must be deducted at time of withdrawal.
• Do not deduct administrative fee from court ordered payment of
expenses, i.e., attorney fees, creditors, etc. – deduct applicable
fees from remaining case registry balance.
• If insufficient funds are remaining to pay expenses AND clerk
administrative fee, bring to the judge’s attention – order may be
amended or court may authorize deduction of administrative fee
from disbursements.

REGISTRY OF THE COURT

• Investing Principals -
• The “Prudent Person” rule – clerk must handle registry funds as a
prudent person would manage their own finances.
• Loss of principal is not an option!
• If registry funds are lost for any reason, the county is liable to
the rightful owner of the funds for the full amount due the owner.
• Management Principals (in order of importance):
• SAFETY
• LIQUIDITY
• YIELD

REGISTRY OF THE COURT

• Authorized Investments –
• The clerk shall transfer any registry funds into a separate
account when directed to by a written order of the court of
proper jurisdiction or when required under Sec. 1355.051,
Estates Code.
• Interest-bearing deposits in a financial institution doing business in this
state that is insured by the Federal Deposit Insurance Corporation (FDIC)
• United States treasury bills
• Eligible interlocal investment pools that meet the requirements of the
Public Funds Investment Act, Chap. 2256, Government Code
• No-load money market mutual funds that are regulated by the Securities
and Exchange commission, have a dollar weighted average stated
maturity of 90 days or less, and include in their investment objectives the
maintenance of a stable net asset value of $1 for each share.

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REGISTRY OF THE COURT

• Documentation, Accounting and Reports
• DOCUMENT EVERYTHING!!
• Record in case file – REDACT ACCOUNT NUMBERS
• Copy of initial deposit, including check
• Registry deposit receipt
• Copies of all disbursements, including acknowledgment receipts
• Keep separate registry files for confidential records –
• Some information is confidential by law – Chap. 552, Government Code, or
federal law
• Bank statements
• Beneficiary demographics and contact information, i.e., addresses,
phone numbers, etc.
• Social Security numbers
• Driver’s license numbers

REGISTRY OF THE COURT

• Documentation, Accounting and Reports
• SEPARATION OF DUTIES & AUDITING PRINCIPALS –
• Require two signatures on registry checks
• One person to prepare checks, two others to sign checks, and another to
perform accounting duties including monthly reconciliation
• ACCOUNTING
• Registry and investment accounts must be balanced and reconciled
monthly.
• Use case management financial tools to enter all transactions.
• If case management does not offer financial tools, consider using
QuickBooks TM, Excel TM, or other accounting software – check with your
auditor to see what works best.
• Create a list or spreadsheet of all investment accounts for tracking
maturity dates if investing in time deposits such as CDs, treasury bills –
create pop-up calendar reminders if possible.

REGISTRY OF THE COURT

• Documentation, Accounting and Reports
• REPORTING
• Clerk shall annually make a written report to the court no later than
March 1 of the status of an investment made by the county clerk under
§1355.051, Estates Code. §1355.052, Estates Code
• Report must include:
• The amount of the original investment or the value of the investment at the last
annual report, whichever is later;
• Any increase, dividend, or income from the investment since the last annual
report;
• The total amount of the investment and all increases, dividends, or income at
the date of the report; and
• The name of the depository or the type of investment.
• It is good practice to keep the Court informed of all court ordered
investments.

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REGISTRY OF THE COURT

• Special Statutory Requirements
• COUNTIES WITH 190,000+ POPULATION – §117.058, LGC
• Clerk must make report under oath to the county auditor of all registry funds
received and disbursed and remaining balances at the time of the report, in
form and frequency prescribed by the county auditor.
• County auditor establishes procedure for issuance of disbursement checks.
• COUNTIES WITH 1.3 MILLION+ POPULATION (aka Harris Co.) –
Chap. 117, Subchapter E, LGC
• Special provisions in relation to advertisement, contract and qualification process
for selection of depository by commissioners court.
• Disbursements made only under court order EXCEPT that a clerk may make a
payment without court order for unpaid court costs from a cash bond deposited in
connection with an appeal after the appellate court mandate is issued if the costs
remain unpaid for 45 days after issuance of the mandate.
• Electronic transfer permitted if beneficiary submits a written request and the clerk
gives written approval, and the county auditor countersigns the approval; clerk
may charge a reasonable fee for electronic transfer.

REGISTRY OF THE COURT

REGISTRY OF THE COURT RESOURCES
• Registry Statutes
• Local Government Code, Chapter 117
• Property Code, §142.004
• Estates Code, Chapter 1355
• Unclaimed Property Statutes
• Property Code, Title 6, Chapters 72 through 76
• http://www.statutes.legis.state.tx.us/
• Administrative Code, Title 34, Part 1, Chapter 13
• http://info.sos.state.tx.us/pls/pub/readtac$ext.viewtac

Questions?
Cathy Horvath
830-303-4188 Ext. 1324
Email: cathy.horvath@co.guadalupe.tx.us

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