Issues from ineffective or contradictory estate plan

This column first appeared in the San Antonio Express News and other Texas Hearst Newspapers on August 24, 2018.

Dear Mr. Premack: I am in my second marriage. My husband’s his first wife died years ago with a probated Will leaving the house to him. He has grown children, all married. We remodeled the home together and after we were married two years signed and recorded a Gift Deed giving me an undivided 50% interest in the house. He also made a Will that says I can live the house for my lifetime but when I die the house will transfer to his children. I see a conflict between the Will and the Deed. Does his Will make my 50% interest disappear? Does the Will or the Gift Deed govern when he dies? If the house was sold, would the whole price go into his estate? Additionally, my husband and I also signed a Revocable Transfer on Death Deed. But the attorney did not file it until the day after my husband died. My probate attorney thinks the TOD Deed wasn’t effective and that the Will and Gift Deed are the key documents now. – FJ

You have already hired legal counsel (your probate attorney). You should ask these questions of your attorney and rely on the advice your attorney shares with you. I can use your situation as an example for other readers, but since your short letter cannot tell me all the details you have shared with your probate attorney you should rely on that attorney for a specific legal answer.

For my other readers: fundamentally, her husband owned his home 100% after the probate of his first wife. He then signed a Gift Deed transferring 50% to wife number two. When the Gift Deed was signed and recorded, wife number two received 50% undivided interest as her separate property.

Her husband also made a Will in which he said she can live in the house for life, but it goes to his children when she dies. In a Will, a person can only dispose of that which the person owns. Her husband owned (after the Gift Deed) his 50% undivided separate property interest in the house. In his Will he can only dispose of his 50% share; he cannot direct her 50% share. Further, his statement that she can live in the house for life can be interpreted in two ways. Either 1) he was referring to her statutory homestead occupancy right, or 2) he was actually giving her a life estate in his 50% share of the house.

In any event, the Will must bow to the Gift Deed. She owns her 50% share, and her husband’s Will cannot dispose of her 50% share. The house cannot be sold without her voluntary consent. If it is sold, then she gets no less than the value of her 50%, while the value of his 50% goes into his estate to be distributed according to the terms of his Will.

She mentions a Revocable Transfer of Death (TOD) Deed. The Texas Estates Code was modified in 2015 to allow TOD Deeds, and they have proven to be somewhat problematic. For instance, the law does not allow an Agent under a Durable Power of Attorney to sign a TOD Deed for the owner. Also, a perfectly written, signed, and notarized TOD Deed must, by law, be recorded before the date of the transferor’s death; if not timely recorded, the TOD Deed is void. If married people sign a TOD Deed and later get divorced, and the court revokes the deed as part of the divorce, the TOD Deed still passes title unless the court order is recorded before the date of the transferor’s death. TOD Deeds should never be used without the advice of an experienced Elder Law Attorney.

In her situation, the TOD Deed was not recorded prior to her husband’s date of death and is consequently ineffective. Her probate attorney is correct that the Will and Gift Deed are now the key documents. All other readers: if you are in a second marriage, be sure to consult with a qualified Elder Law Attorney about your legal plans, be sure you have a thorough marital property agreement, and be sure your legal rights will be honored by your spouse’s first family.

Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.

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