Spiegel v. KLRU Endowment Fund, 228 S.W.3d 237 (Tex. App.—Austin 2007, pet. denied).
While Husband and Wife were in the process of divorcing, they entered
into a mediated settlement agreement which allocated community property,
accounts, life insurance, and other property. One day before the hearing
to finalize the divorce was to occur, Wife died. The trial court held
that the agreement was enforceable even though it was never incorporated
into a valid divorce decree. Husband appealed.
The appellate court affirmed. The court recognized that this issue was
one of first impression in Texas. The court held that the agreement was
“enforceable on the plain language of the statute and the public policy
underlying it, as well as the parties’ intent as expressed in the
language of the agreement.” Spiegel at 241.
Accordingly, the court determined that the agreement was sufficient to
revoke the beneficiary designations in Husband’s favor with respect to
nonprobate assets in Wife’s estate such as life insurance and retirement
plans. The court rejected Husband’s claim that the trial court lacked
jurisdiction over nonprobate assets and that the mediated settlement
agreement did not extend to beneficial interests. Recognizing a split of
authority, the court held that the better view was that the allocation
of nonprobate assets to one spouse as that spouse’s separate property
acts to revoke a beneficiary designation of the asset in favor of the
other spouse because people who are divorcing intend to revoke
beneficiary designations in favor of the soon-to-be ex-spouse unless
there is express language to the contrary.
Moral: Individuals entering to agreements to settle property matters in
a divorce action should include a clear provision addressing what is to
happen if one or both parties dies in-between the date the agreement is
signed and the divorce is final.
Testatrix’s will devised “our homestead” to Husband. However, upon
Testatrix’s death, they did not have a mutual homestead as they were in
the process of divorcing. Husband lived in a separate residence which he
had already established as his tax homestead. In addition, Husband had
agreed in a mediated settlement agreement that Testatrix would keep
their former home as her separate property. Accordingly, the trial court
held that the devise adeemed and Husband appealed.
The appellate court affirmed. The court focused on the exact terms of
the devise which did not specify a precise parcel of property. Instead,
it used the term “our homestead” and it was clear that they did not have
a mutual homestead at the time of her death. Husband had abandoned the
property prior to Testatrix’s death. Accordingly, this devise adeemed.
Moral: A person should immediately revise the person’s will upon filing
for divorce and remove provisions in favor of the soon-to-be ex-spouse
to avoid issues such as those raised in this case.