Trust can Limit In-Law Influence

San Antonio Express-News August 14, 2007 Trust Can Limit In-Law Influence copyright 2007, Paul Premack
Dear Mr. Premack: My husband and I have been married for 21 years and are in our early 60’s. Neither of us makes much money and we have not been able to save. His mother and siblings are doing well financially. She is planning to give my husband money to purchase a house, but is talking about some kind of a trust so the deed would be in only my husband's name. His family does not want me to inherit any of the “family” assets. I have been the major earner, supporting my husband since his health is poor. We have no children. I am concerned about being homeless if he dies. Under Texas law do I have any rights to any of my husband's assets or to this house? – C.T. You do have clear and distinct rights; they just may not be for what you were hoping. Under the Texas marital property system, any earnings and assets either you or your husband acquired in the last 21 years are owned 50-50 as community property. You are entitled to keep your half of the community property, and your husband gets to decide what happens to his half. Ideally he would elect to create a Will that names you as his heir, but he could also choose to leave his share of the community property to anyone else. If he fails to make a Will or other legally binding plans, then the state’s laws of intestacy give you the right to receive his share of the community property. This house his mother may fund is in a different category. Texas law says that any item a spouse receives by way of gift is that spouse’s separate property. If she writes your husband a check, and he turns around and uses it to pay for a house, that house is his sole and separate property. In that case, if he divorces you, you have no claim to the house. If he dies, ownership of the separate property house is entirely left to his discretion: in his Will, he can leave it to you or he can give it back to his family. If he dies without a Will, the law gives you half ownership and his mother owns the other half. However, you would also have a homestead occupancy right, so she would not be able to displace you from the home even though she owns part of it. His mother may not allow you even those rights. She is talking about a trust because her family does not want you to receive ownership of “their assets” when your husband dies. Instead of writing your husband a check, his mother could create a trust, gift the money to the trust, allow it to buy a house with the money, and then allow her son (and, incidentally, his wife) to reside there. If she does that, she has not even given him a gift that we can label as his separate property. He would simply be a tenant, occupying a house owned by a trust his mother established. The trust would be controlled by his mother (she dictates its primary purpose) and would be managed by whoever she appoints (perhaps one of her other children). Your rights would be tied solely to the benefit that your husband’s mother wanted to provide to him: a place to live while he is alive. If he divorces you, you have no claim to this house. If he dies, you have no claim to this house. The trust, as owner, could instruct you to vacate the premises at whim, and you would have no homestead rights and no legal standing to remain there. What you did get is a free place to live for some years, which may give you the opportunity to create some savings of your own for your future needs.
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Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney. You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.