This column first appeared in the San Antonio Express News and other Hearst Newspapers on August 20, 2019.
Dear Mr. Premack: My wife and I have purchased our first house. We don’t have any children yet. When we asked the lady at the Title Company at closing what happens to the house if one of us dies, she said that is not something they consider. She explained briefly that we are co-owners, and since we are married the house is our community property. We didn’t think that we would need Wills, but maybe that is the only way to protect each other. Even at our stage in life, should we have Wills, at least to take care of the house and mortgage? – EV and WV
There are several key milestones that many people encounter. Graduation. First job. Marriage. House. Children. Saving for their college and retirement, etc. Depending on the circumstances, the earlier in that evolution that you make a Will the better you will be covered.
A Will is, of course, meant to declare who inherits from you and who closes out your financial affairs should you die. Buying a house means that you have a substantial asset and a substantial debt that, if you die, must pass to someone else. State law does provide a default list of who will receive your property, but 1) the list may not include those who you would select, and 2) the legal process in which they must engage can be complex and expensive. Having a Will clarifies and simplifies.
Owning a house can be a trigger for probate when you die. That is, your Will may have to be taken before a Judge for a transfer of ownership to be approved. In Texas, probate of a proper, lawyer written Will is often very straight-forward. When you hear bad things about probate, you are often hearing about situations where there was no Will or where the Will was done in a faulty manner.
Avoiding probate is a worthwhile goal which requires additional forethought, planning, and action on your part. As the Title Company closer explained, the typical home deed in Texas does not include any type of probate avoidance planning. Fundamentally, there are two approaches you can use to avoid probate: 1) a Living Trust to own the house, or 2) a Community Property Survivorship Agreement (CPSA) to pass title to your spouse should you die, backed up by Wills naming alternate heirs in case both of you die together.
Living Trusts can work very well but won’t be the focus here. Go to www.Premack.com where I have archived past columns about Trusts.
Community Property Survivorship Agreements have been part of Texas law since 1987. For some years they were not well known, and there were only a few court cases supporting them. Now, the courts and Title Companies are familiar with them as a probate avoidance technique. Your experienced Estate Planning attorney can advise you and prepare one for you, with Wills, if appropriate.
A recent appeals court case is a great illustration. Jimmy and Beatrice Lovell owned a house and got what they thought was a Will from an internet site. It said they intended to leave everything to each other. When Beatrice died, Jimmy probated the Will which was contested by her son and rejected by the court because it did not fulfill statutory requirements. Jimmy’s lawyer then asked the court to approve the document as a CPSA. The court decided the document did meet the minimum statutory requirements to be a CPSA and issued an order that Jimmy owned the house. The appeals court agreed and upheld the trial court’s decision.
You don’t want the prolonged and expensive court battle Jimmy had to endure. His outcome was positive, but he had to fight to get there. Instead, see an experienced Estate Planning attorney to prepare both a valid Will for each of you and to possibly prepare a CPSA to cover your house. Proper pre-planning is better for you, your survivors, and saves everyone time and money.
Paul Premack is a San Antonio Certified Elder Law Attorney, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.Premack.com.