Holmes v. Beatty, 290 S.W.3d 852 (Tex. 2009).
Husband and Wife held investment accounts with the designation “JT
TEN.” The spouses signed the agreement but did not indicate whether the
account had, or did not have, the survivorship feature. The appellate
court held that these accounts did not have the survivorship feature
because they did not include an express statement of the survivorship
feature as required by Probate Code § 452.
In a significant departure from established Texas law, the court
determined that holding community property as joint tenants
automatically includes the survivorship feature and that the designation
“JT TEN” is an acceptable abbreviation. In so deciding, the court relied
on the common law under which joint tenancies carried with them the
survivorship feature. However, the court disregarded long-established
Texas law which requires that the survivorship be expressly stated. See
Probate Code § 46(a) (survivorship in separate or individual property
cannot be inferred from the mere fact that the property is held in joint
ownership); Probate Code § 452 (requiring community property
survivorship agreements to contain an express statement of the
survivorship feature); Stauffer v. Henderson, 801 S.W.2d 858 (Tex. 1990)
(holding that extrinsic evidence cannot be used to show a right of
survivorship for joint bank accounts between non-spouses).
The court bases its conclusion on the allegedly “weaker” language of
Probate Code § 452 which does not require the survivorship language to
be stated in “substantially” the same manner as provided in the statute
as does Probate Code § 439. The court explains that “[p]recedent, trade
usage, and seminal treatises make clear that joint tenancies carry
rights of survivorship.”
Moral: Community property held as joint tenants automatically has the
survivorship feature even if that feature is not expressly stated or
intended by the spouses.
Husband and Wife owned stocks which clearly stated that the spouses
were holding them as joint tenants with rights of survivorship. However,
the spouses did not sign the certificates. The appellate court held that
their failure to sign the certificates resulted in a valid community
property survivorship agreement not being created because Probate Code §
452 requires the agreement to be signed by both spouses.
The Texas Supreme Court reversed. The court explained that the accounts
from which the stocks were issued were held as joint tenants and had the
survivorship feature. The only way for the spouses to terminate the
survivorship feature was through a subsequent written agreement or to
dispose of the assets. Probate Code § 455. The mere fact that the stock
was issued out of the account in certificate form did not act as a
disposition of the property covered by the agreement.
Note that the court rejected the argument that Probate Code § 450
applied to the certificates. The court pointed to Probate Code § 46(b)
which states that survivorship agreements in community property are
governed by Part 3 of Chapter XI. Because § 450 is not in this Part, it
is inapplicable to community property survivorship agreements.
Moral: Merely changing the form in which community property with
survivorship rights is held is not sufficient to revoke the survivorship
agreement.