Estate Administration

Settlement Agreements

Ferguson v. Ferguson, 111 S.W.3d 589 (Tex. App.—Fort Worth 2003, pet. denied).


Husband devised to Wife the marital home which was Husband’s separate property. Controversy arose regarding the classification of other assets as Husband’s community property or separate property. The parties reached a settlement in which Wife received a sum of money in exchange for giving up all other claims against Husband’s estate. Thereafter, the executor demanded that Wife leave the marital home asserting that she had agreed to relinquish all claims to Husband’s property. The trial court found that the settlement agreement covered the marital home and ordered Wife to vacate.

The appellate court carefully reviewed the settlement agreement and held as a matter of law that the agreement did not impact the devise of the marital home to Wife, especially since there had never been any prior controversy regarding Wife’s ownership of the home under the terms of the will. In dicta, the court indicated that even if the marital home had been covered by the agreement, Wife would still have her constitutional and statutory homestead rights to use and occupy the property because there was no evidence that she intended to waive those rights.

Moral: Settlement agreements need to be properly structured and reviewed. The agreement should be drafted so that it is neither underinclusive nor overbroad.



In Terrorem Provision

Ferguson v. Ferguson, 111 S.W.3d 589 (Tex. App.—Fort Worth 2003, pet. denied).


Testator’s will contained an in terrorem provision. Two beneficiaries claimed that each other violated the provision when they took various actions, that is, filing a complaint against the executor’s inventory, appraisement, and list of claims and filing a petition for a declaratory judgment. Both the trial and appellate courts held that the actions of these beneficiaries did not violate the in terrorem clause.

Neither action was intended to challenge Testator’s dispositive plan. Instead, one action was to ascertain whether the inventory properly distinguished between Testator’s community and separate property and the other was to interpret the terms of a settlement agreement.

Moral: In terrorem clauses will not be effective to eliminate all litigation regarding a testator’s estate. Instead, they are designed to protect the testator’s disposition plan.