Dear Mr. Premack: A few weeks ago, you wrote about transferring ownership of community property to a surviving spouse without going through probate. You said that a special survivorship agreement could be used to handle title to the house. My situation involves bank accounts and stocks. Is there a way to transfer them to my wife without her having to do a probate when I die? – SC

The exact same law – Chapter XI, Part 3 of the Texas Probate Code - applies to any type of community property, whether it is your homestead real estate or whether it is an investment. The basics are these: there must be a signed written agreement between the spouses which describes the items of community property and which includes words like "with right of survivorship".

When using the law to pass title to an account or to a stock, then the bank or the transfer agent must have actual knowledge of the agreement’s existence. That knowledge is typically imparted through use of forms provided by the bank or transfer agent which are maintained as business records by them. You sign an account agreement with many standard terms dictated by the institution, and can include instructions about survivorship rights.

The account contract is signed by the accountholders and complies with the legal requirements of Chapter XI, Part 3 of the Probate Code. No courtroom probate is necessary for the survivor to claim ownership.

There is, however, an unexpected legal complication with individually held stock certificates. When owned by two spouses jointly, a stock certificate typically states both names on its face along with an abbreviation indicating the style of ownership like "Jt Ten" or "Ten Com". On the back of the certificate, those abbreviations are defined: "Jt Ten = as joint tenants with right of survivorship" or "Ten Com = as Tenants in Common".

It is logical to conclude that a stock certificate with both names and "Jt Ten" creates a right of survivorship. That is what it says. Unfortunately, that is not the legal outcome. A new case (Beatty v. Holmes, decided by the 14^th Court of Appeals about two months ago) announced that the wording on those certificates does not create a right of survivorship.

In the Beatty case, two sides of a family were competing for several million dollars worth of investments. Thomas and Kathryn had each been married before, and each had children from those earlier marriages. They had brokerage accounts and individual stock certificates, all set up with right of survivorship to each other. Kathryn died first, and Thomas died a year later.

Kathryn’s son argued that the survivorship rights were invalid, so her share of the property would pass to him under Kathryn’s Will. Thomas’s son argued the survivorship rights were proper, that his father received full ownership, and that upon his father’s death he got ownership through his father’s Will.

The court ruled the brokerage accounts survived to Thomas because the account agreements were signed by both spouses. The individual stocks, however, were not signed so did not meet the legal requirements of Chapter XI, Part 3. Kathryn’s share of the individual stocks passed under her Will. Without signatures from both spouses, there is no right of survivorship in community property.

What should you do for individual stock certificates to allow them to pass by right of survivorship to your spouse? It is unlikely that the securities industry will accommodate Texas law by issuing certificates with a signable survivorship agreement printed on the certificate’s face. You could 1) prepare and sign a community property survivorship agreement identifying the stocks, or 2) give up the certificates by depositing them into a brokerage account owned by both spouses under a written, signed agreement with the financial institution.