Texas is a community property state. The word community in community property refers to the marital community; the marriage between you and your spouse. If you are not married, you do not have any community property. You only have separate property.
Community property is all property acquired during the marriage except property acquired by inheritance or by gift. Community property does not include property that you owned before the marriage or property that you acquire during the marriage by inheritance or by gift.
All property is presumed to be community property. If someone claims that certain property is their separate property, they have the burden of proof to prove that it is separate and not community. If they don’t meet that burden, the property is community property no matter how or when it was acquired. Proving real estate is separate property is easy. Proving that money is separate property is not as easy.
Contested probate issues involving community property include but are not limited to: how and when property was acquired; whether income from separate property is community property; whether separate property has been so comingled with community property that it has become community property; and, whether community funds have been used to increase the value of separate property to such an extent that the community is entitled to be reimbursed.
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Today’s word is abatement.
Estate property is liable for debts and expenses of administration. How are these paid? Do all of the beneficiaries share this burden equally?
Texas, like most states, specifies a way that the property abates. The Executor or Administrator is to follow these guidelines:
- If the testator has specified a particular way that the Executor or Administrator is to pay these expenses, that direction must be followed. If the testator did not specify how to pay these expenses, the following property will be used in the following order;
- Property not disposed of by the will. If that is not sufficient to pay the expenses, then;
- Personal property of the residuary estate. The residuary estate is the catch-all bequest in a will such as “All the rest and residue of my personal property, I leave to my wife.” Then;
- Real property of the residuary estate. Then;
- General bequests of personal property. “I give my son 100 Shares of Exxon.” Then;
- General devises of real property. “I give my daughter one of my houses in Houston.” Then;
- Specific bequests of personal property. “I give my son my 100 share of Exxon.” This is similar to #5 but notice the difference. Then, lastly;
- Specific devises of real property. “I give my daughter my house at 124 Main Street, in Houston.” This is similar to #6 but notice the difference.
Some of the legal issues that arise from abatement involve the Executor or Administrator making choices that do not follow the statute. The Executor or Administrator may reduce everybody’s share on a percentage basis rather than following the statutory formula. He might also use one person’s share to pay all of the expenses even though someone else’s property should have been used first.
The word for today is “ademption.” If a testator makes a will and leaves specific property to someone and then later sells or otherwise disposes of the property, the law says that the gift is “adeemed.” In other words, the person to whom it was given doesn’t get anything.
Ademption applies to specific gifts such as “I give my nephew my 10,000 shares of Exxon stock.” If the testator sells the shares before he dies or if he gives them away, then the person to whom he gave them in the will gets nothing. That’s assuming that the only thing the person was due under the will was the 10,000 shares of stock.
Some of the legal issues surrounding the question of ademption are:
- What if the testator sells the property but the proceeds from the sale can be easily traced? Does the person to whom the property was given in the will get the proceeds?
- What if the property changes form such as a gift of “my 10,000 shares of Mobil Oil” where Mobil Oil is taken over by Exxon before the testator’s death and the shares are now 5,000 shares of Exxon?
- What if the testator becomes incapacitated and his guardian or someone who has a power of attorney disposes of the property?
- What if the testator has 20,000 shares of Exxon and before he dies he gives you 10,000 shares? Do you get anything under the will? What if he gives you 10,000 shares and sends a letter saying that these shares are your part of his estate?
Contested Probate issues include much more than just will contest. Many times there is no problem with the will but the way the will is administered by the Administrator or Executor is the issue. If you are being deprived of your inheritance, please visit TexasInheritance.Com and let us help you.
UPDATE: In a recent case, the wife left her husband “our homestead.” At the time of her death, a divorce was pending, although not final. The parties were living separately. They had agreed in a mediated settlement that wife would receive the house in the divorce. The court ruled that the husband did not get “our homestead” because the gift had adeemed. It no longer existed since the parties were living separately.
UPDATE: In a recent case, the testator gave his house to a beneficiary. Before he died, the testator entered into a contract to sell the house. He died before the closing. The court held that the gift to the beneficiary adeemed since the testator no longer owned the home. The court ruled that once he signed the contract to sell it, he just owned the rights under the contract, not the home. Therefore, the gift of the home to the beneficiary adeemed.