In re Estate of LaValle, 218 S.W.3d 834 (Tex. App.—Beaumont 2007, pet. denied).


Purchase-Money Resulting Trust


Both the trial and appellate courts agreed that Decedent made an irrevocable inter vivos gift to Son and that a purchase-money resulting trust did not arise. Widow asserted that Decedent placed title in Son’s name only to avoid claims which could have been made by Decedent’s prior spouse. When the transferee is the child of the person who purchased the property, a rebuttable presumption arises that the transfer was a gift. Despite evidence tending to rebut the presumption that Decedent had donative intent, the court explained that “it is not abuse of discretion to deny the remedy if the transfer was made for the purpose of defrauding creditors.” LaValle at 836. Although Decedent’s prior spouse (the defrauded creditor) may have been able to claim successfully that a PMRT existed, the parties to the transfer (or their successors in interest) lack the ability to set aside the transfer.

Moral: Property transfers should not be made to defraud a spouse or creditors.