For a discussion of the Supreme Court of Texas opinion, go here.

 

Holmes v. Beatty, 233 S.W.3d 494 (Tex. App.—Houston [14th Dist.] 2007), aff'd in part, 290 S.W.3d 852 (Tex. 2009).

Other Estate Planning Matters

Multiple-Party Accounts

Right of Survivorship Not Established

 

Husband and Wife opened an account with community property which included the phrase “JT TEN” after their names. The account contract lacked an express statement of the survivorship feature as required by Probate Code § 452. Accordingly, the probate court held that the account lacked the survivorship feature and the appellate court agreed.

The court began its analysis by recognizing that the account agreement could operate as an agreement between Husband and Wife which complies with § 452 and gives the account the survivorship feature. However, the court explained that the designation “JT TEN” does not expressly provide for survivorship rights. In addition, extrinsic evidence cannot be used to prove that the account was meant to have the survivorship feature because, for example, the securities industry allegedly treats that phrase as creating survivorship rights by custom or usage of trade.

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. Extrinsic evidence cannot be used to demonstrate that the parties intended to create survivorship rights.

Other Estate Planning Matters

Multiple-Party Accounts

Right of Survivorship Established

Husband and Wife opened an account with community property. In the account contract, they marked the box next to the designation “Joint (WROS)” and following their names on the account title were the initials “JTWROS.” These abbreviations were not explained further in the contract and the contract did not contain any of the phrases listed in Probate Code § 452 which may be used to create the survivorship feature.

The appellate court held that Husband and Wife had taken sufficient steps to create the survivorship feature because these are common abbreviations for “with rights of survivorship” thereby sufficiently demonstrating their intent for the account to have survivorship rights. The court also thought it significant that they did not check the tenants in common box which would have created an account without survivorship rights.

Moral: To avoid problems, prudent practice would be to state the survivorship feature for community property by using one of the phrases in § 452.

Other Estate Planning Matters

Multiple-Party Accounts

Right of Survivorship Not Continue Once Outside of Account

The appellate court held that once stocks held by Husband and Wife in a joint account are issued out of the account before the death of either spouse, any survivorship feature which the joint account may have had does not attach to that stock.

Moral: It is important to describe with great specificity the exact community property covered so that a survivorship agreement is not subsequently deemed to cover more or less property than intended. This is especially important if the property subject to the agreement is likely to be sold or otherwise converted into another form.



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