Estate of Sloan, 496 S.W.3d 299 (Tex. App.—Fort Worth 2016, pet. denied).

Estate Administration

Impact of Survivor's Homestead on Property Value

 

Husband and Wife established a homestead on property that was Wife’s separate property. Upon Wife’s death, Husband was appointed as the independent executor of Wife’s will which gave him the right to purchase property in Wife’s estate at fair market value which he later did by conveying his interest in $222,000 of property in Wife’s estate. After Husband’s death, an attempt was made to show the Husband had violated his fiduciary duty by purchasing the property for less than its fair market value. The trial court agreed finding that Husband’s homestead interest had no effect on the fair market value of the property.

 

On appeal, the court reversed. The explained that Husband’s right as a surviving spouse to occupy the homestead for the rest of his life (unless he abandons the property) under Tex. Const. art. XVI, § 52, reduces the amount a willing seller would pay for the remainder interest “left over” after the Husband’s homestead right which is akin to a life estate.

 

Note that the court did not need to determine the amount of the decrease in value because the parties agreed that if Husband’s homestead right lowered the value of the property, then Husband’s estate was not liable.

 

Moral:  A surviving spouse’s homestead right reduces the fair market value of the homestead property



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