Section 401.310 - Payment of Prize Payments Upon Death of Prize Winner(a) The personal representative of the estate of a deceased prize winner entitled to payment of lottery prize installment payments pursuant to the State Lottery Act §466.406(b), may petition the executive director to pay the net present value all of the remaining lottery prize installment payments, not previously assigned, in a lump sum payment to the estate. For this rule, "prize winner" means an individual who claimed the prize as an individual and not as a representative of a legal entity and does not include a legal entity. The personal representative of the estate must present with the petition to the executive director an order from the proper Probate Court in compliance with the requirements set out in part (b), below. (1) The net present value lump sum payment to be distributed shall represent the lesser of the commission's book value or fair market value of that portion of the unassigned future installment payments that are to be paid to the estate, less any applicable taxes or other offsets required by the State Lottery Act, Texas Government Code Chapter 466. The commission's book value is the daily recalculated amortized cost of investments under the interest method. The fair market value is the value of investments at any point in time as determined by the market place.(2) The valuation of the securities at the lower of the commission's book value or fair market value and the determination of the net present value of the remaining unassigned installment payments shall be at the sole determination and discretion of the executive director.(3) The securities and/or cash representing the future lottery prize installment payments held for the deceased prize winner, not previously assigned, shall be distributed to the estate of the deceased prize winner by payment into the registry of the proper Probate Court upon confirmation by the executive director of the Probate Court's order's compliance with part (b) below.(b) The commission shall require an order from the proper Probate Court, in order to facilitate the payment of the remaining unassigned lottery prize installment payments. The commission shall require the order of the Probate Court to include, at a minimum, the following language and findings: (1) Language approving the form and substance of the order by all representatives of the estate of the deceased prize winner, whether such representatives are executors or administrators and by all beneficiaries and/or heirs known and existing at the time the order is signed by the Probate Judge;(2) Language indicating that an attorney ad litem was appointed by the court to represent and investigate the interests of any unknown heirs, beneficiaries or claimants to the estate, and a finding by the court, after full consideration of the attorney ad litem's report documenting the investigation and findings, that the payment of the remaining unassigned lottery prize installment payments is appropriate based on the attorney ad litem's findings;(3) Language providing for indemnification and holding the commission harmless by all representatives of the estate of the deceased prize winner from any and all liability of the estate of the deceased prize winner for federal estate and state inheritance taxes, or other tax liability, and including any offsets or deductions required by the State Lottery Act, and from any claim known or unknown, existing now or arising in the future, that may be made by a third party as a result of the lump sum payment of the net present value of the remaining unassigned lottery prize installment payments;(4) Language providing that, upon payment of the net present value of the remaining unassigned lottery prize installment payments, the commission has satisfied in full its obligations to the estate of the deceased prize winner, including the representatives, beneficiaries, heirs, and any claimants to the estate, and shall be released from any further liability to either the estate of the deceased prize winner or to the beneficiaries, heirs, or claimants to the estate, whether known or unknown; further, a proposed indemnification and release, approved by the commission and representatives of the estate, will be submitted for approval by the Probate Court prior to entry of the Probate Court's order and will be fully executed by all representatives and beneficiaries or heirs of the estate prior to distribution of the lump sum payment into the registry of the Probate Court;(5) Language requiring the commission to pay the lump sum payment into the registry of the court within 30 days after the securities are liquidated, such liquidation being required by signed order of the Probate Court. In the event there is a delay of time between the sale of the securities and the payment into the registry of the court, any interest earned during this period of time shall be kept by the State of Texas;(6) Language providing that the Probate Court found by competent evidence that the payment of the remaining net present value of the unassigned lottery prize installment payments is necessary to pay the estate or inheritance tax burden imposed on the estate by federal and/or state taxing authorities; and(7) Based upon the facts and circumstances of the underlying probate matter, the commission may require additional language or findings to be set forth in the judicial order.16 Tex. Admin. Code § 401.310
The provisions of this §401.310 adopted to be effective March 11, 1997, 22 TexReg 2353; amended to be effective November 29, 2001, 26 TexReg 9589; amended to be effective September 13, 2007, 32 TexReg 6147