Dear Mr. Premack: My father left me a rent house after he passed away. I had to go to court, and it took my lawyer several months to have the house put in my name. I’ve been married for a long time to the same wonderful man, and if I were to die I want him to get everything including the rent house. You have written about survivorship agreements as a way to avoid probate. Can my husband and I do a survivorship agreement that includes the rent house and the home we have owned for many years, together in one? R.W.

Texas has maintained a community property system since its formation. The laws have been updated and modernized through the years, and those new laws – dealing with survivorship rights and with conversion of separate property into community – can help in your situation.

Legally, an inherited item is separate property. Your husband has no ownership rights in the rent house. Conversely, an item purchased with earnings during the marriage is community property, so your home is community property. Classifying an item as separate or as community is crucial in deciding how to apply the survivorship laws.

You could create survivorship rights on an item-by-item basis. The deed to the inherited rent house could be modified so that you and your husband are shown as co-tenants, each owning a ½ interest as separate property with right of survivorship. The same thing can be done to the deed for your home.

Alternatively, you could create survivorship rights in a single agreement for a variety of assets, but only if those assets are all classified as community property. When either of you dies, all of the community assets pass to the surviving spouse based upon that single agreement. In order to group the rent house into one survivorship agreement with your home, you need to convert the rent house into community property.

Conversion of separate property into community has only been legal in Texas since the voters changed the constitution in year 2000. The Texas Family Code requires the conversion be voluntary and requires that both spouses have "fair and reasonable disclosure" of the legal effect of the conversion. The conversion must be done in writing which must include the formal legal description of the real estate being converted. It must be signed by both spouses, be notarized and be recorded with the county clerk.

Though conversion facilitates survivorship rights, there are a few reasons that some people might decide against conversion. For instance, while the rent house remains separate property it stays under your sole management and control. You make decisions about renting it out; you receive and control the rent payments. Your husband’s debts (if any) cannot be collected against the rent house. If you and your husband ever head toward divorce, he will not have a claim against the rent house. And you are free to give away, sell or devise the rent house in any way you desire (although if you leave it to your children, for instance, it is likely they would need to probate your Will to obtain ownership).

On the other hand, you have been married for many years and may not harbor any of those concerns. Converting it to community property not only allows the property to pass under a CPSA, it also has potential tax benefits: community property gets a "free step up in basis" for 100% of the rent house’s value if either spouse dies. If it remains your separate property and your husband dies, you get no stepped-up basis (so when you sell, your capital gain tax will be higher than it could have been).

If you decide to convert the property and to include it in a community property survivorship agreement, the Texas Probate Code requires additional formalities. The agreement must say that your community property "will become the property of the survivor" (or similar wording) when either spouse dies. It should give the legal description of any community real estate you own, and must be signed, be notarized and be recorded with the county clerk.