[Back to Index]     [Back to 2000 Texas Case Summaries]

Wills

Disclaimer

Prior Exercise of Dominion or Control

    Badouh v. Hale, 22 S.W.3d 392 (Tex. 2000).

    Daughter signed a deed of trust and real estate lien note in favor of Attorney who had performed legal services for Daughter for which he had not been paid.  The deed of trust included a provision in which Daughter conveyed “her expectancy of ownership of the property by reason of inheritance from [Mother]” to secure the note.  Several years later, Mother died with a will which specifically devised her home to Daughter.  To prevent the home from being subject to her creditors, Daughter disclaimed her interest in Mother’s estate under Probate Code § 37A.  On a motion for summary judgment, the trial court determined that Daughter’s disclaimer was invalid and ineffective because Daughter had already exercised dominion and control over the property when she executed the deed of trust and note in favor of Attorney.  The appellate court reversed and held that Daughter’s disclaimer may be effective and thus the summary judgment had been improperly granted.  The court reasoned that Daughter could not have exercised dominion and control over the property because she was not entitled to the property until Mother’s death.

    The Supreme Court of Texas reversed.  Daughter accepted the property because she exercised dominion and control over the property by using her expectancy in the property as collateral.  Accordingly, she could not validly disclaim the property.  The court rejected the argument that Daughter could not have the status as a beneficiary under Probate Code § 37A until Mother’s death.  Section 37A’s definition of “beneficiary” is non-exclusive and thus is “broad enough to include expectants under a will.”  Badouh at 396.

    Moral:  Actions a person takes with regard to property prior to being entitled to it may be considered a sufficient exercise of dominion and control to prevent a subsequent disclaimer once title to that property vests in the person.

Wills

In Terrorem Provision

    Badouh v. Hale, 22 S.W.3d 392 (Tex. 2000).

    Son and Mother’s guardian obtained a judgment against Daughter.  The judgment was properly abstracted and recorded. Several years later, Mother died with a will specifically devising her home to Daughter.  Son applied for a turnover order requesting that any proceeds of Mother’s estate which Daughter receives be used to satisfy the judgment.  The trial court found that this action did not come within the scope of the in terrorem provision in Mother’s will which provided that all gifts to Son’s child would be revoked if Son “directly or indirectly challenges or contests this Will or any of its provisions, or attempts in any way to oppose or set aside the probate of this Will or impair or invalidate any of its provisions.”  Badouh at 397.  The appellate court agreed that Son’s actions did not trigger forfeiture.

    The Supreme Court of Texas affirmed.  The court began its analysis by recognizing that in terrorem clauses are strictly construed and that forfeiture occurs only if the acts in question come strictly within the terms of the clause.  In this case, the turnover order did not have any effect on the will.  Son was not trying to set aside the will or invalidate its provisions.  Instead, Son simply asserted that as a judgment creditor of Daughter, a beneficiary of the will, he has a right to pursue her for payment even if the source of that payment is property Daughter receives under the will.  Actually, Son’s entire case is based on the validity of the will which makes Daughter a beneficiary.

    Moral:  An in terrorem provision will not prohibit a judgment creditor from asserting rights to property to which a beneficiary is entitled under a will.