Beatty v. Holmes, 233 S.W.3d 475 (Tex. App.—Houston [14th Dist.] 2007), aff'd in part, 290 S.W.3d 852 (Tex. 2009).
Husband and Wife opened a joint account containing community
property. Accordingly, compliance with Probate Code § 452 is required to
create the survivorship feature. The account contract indicated that the
spouses held the account “JT TEN.” The account contract had two
provisions, one with clear survivorship language and the other with pay
on death language, along with instructions to strike out whichever
provision was inapplicable. Neither provision was marked out. The trial
court held that the account had survivorship rights and the appellate
court reversed.
The court explained that the letters “JT TEN” by themselves without
either provision being marked out was insufficient. The “JT TEN”
indication merely showed an intent of Husband and Wife to hold as joint
tenants but did not address the survivorship feature. Under Probate Code
§ 452, clear survivorship language is required. By not striking out the
inapplicable provision in the contract, the spouses failed to indicate
clearly their intent. It was not enough that they did not fill-in the
P.O.D. provision; they needed to affirmatively select the survivorship
provision. The court concluded that it was impossible to ascertain their
intent with sufficient certainty to create the survivorship feature.
Moral: The estate planner should carefully question each client about
the existence of multiple-party accounts and determine if they were
created correctly by personally inspecting the account contract.
Husband and Wife held community property securities with the
indication “JT TEN.” On the back of the certificates, this phrase was
explained as meaning “joint tenancy with right of survivorship and not
as tenancy in common.” Husband and Wife did not sign the certificates.
The probate court held that this was sufficient to create the
survivorship feature. The appellate court reversed.
After discussing the complex procedural background of the case, the
court concluded that the only ground upon which the probate court could
have granted a summary judgment that the securities had the survivorship
feature was under Probate Code § 450. The court held that since the
securities were community property, the survivorship feature must be
created under Probate Code § 452. This section requires that both
spouses sign the survivorship agreement. Because Husband and Wife did
not sign such an agreement, the securities lacked the survivorship
feature despite the language contained on the certificates. The court
rejected the argument that because § 450 lacks a signature requirement,
that the certificates had the survivorship feature.
The court recognized that this issue, that is, the interplay between §
452 (signatures required) and § 450 (no signatures required) had not
been previously addressed by a Texas court. The court explained that
when § 450 was enacted in 1979, spouses could not yet hold community
property in survivorship form; that was not allowed until the passage of
a constitutional amendment in 1987. Thus, the Legislature could not have
intended § 450 to provide a method for spouses to use to create
survivorship rights in community property. Section 450 authorizes “pay
on death” type provisions, not the creation of survivorship rights in
community property.
Moral: Survivorship agreements involving community property must comply
with Probate Code § 452, that is, they must be (1) in writing, (2)
signed by both spouses, and (3) contain express survivorship language. A
mere indication of the survivorship feature on a stock certificate is
insufficient.