Matter of Estate of Baker, 627 S.W.3d 523 (Tex. App.—Waco 2021, no pet. h.).

Estate Administration

Reimbursement of Community Funds Used on Separate Property

After Husband’s death, Wife sought reimbursement for community funds used to enhance the value of Husband’s separate property. The trial court granted reimbursement and gave Wife an equitable lien on the separate property. However, the trial court refused to authorize other assets in Husband’s estate to be used to satisfy the reimbursement claim.

The appellate court agreed that Wife was entitled to reimbursement. The court rejected the argument that reimbursement was precluded because Husband’s will did not provide for reimbursement. The court explained that Family Code § 3.402 provides for reimbursement and that Wife did not waive her right in a marital agreement. The appellate court also determined that the trial court did not abuse its discretion when it determined the difference in value between Husband’s separate property with and without the improvements.

The court disagreed with the trial court’s holding that other assets of Husband’s estate could not be used to satisfy her claim. The court explained that the equitable lien is to secure the reimbursement claim under Family Code § 3.406. Thus, the reimbursement claim is a debt against the estate entitled to be paid using the statutory abatement order provided in Estates Code § 355.109. The court noted that Husband’s will neither provided for a different abatement order nor exoneration of debts on gifted property. Thus, Husband’s other property given to Wife could be used to satisfy the reimbursement claim.

Moral:  The reimbursement claim of a surviving spouse when community property is used to enhance the value of the deceased spouse’s separate property may actually end up reducing the amount of property to which the surviving spouse is entitled as a beneficiary under the deceased spouse’s will.