For a discussion of the Supreme Court of Texas opinion, go here.
Holmes v. Beatty, 233 S.W.3d 494 (Tex. App.—Houston [14th Dist.] 2007), aff'd in part, 290 S.W.3d 852 (Tex. 2009).
Husband and Wife opened an account with community property which
included the phrase “JT TEN” after their names. The account contract
lacked an express statement of the survivorship feature as required by
Probate Code § 452. Accordingly, the probate court held that the account
lacked the survivorship feature and the appellate court agreed.
The court began its analysis by recognizing that the account agreement
could operate as an agreement between Husband and Wife which complies
with § 452 and gives the account the survivorship feature. However, the
court explained that the designation “JT TEN” does not expressly provide
for survivorship rights. In addition, extrinsic evidence cannot be used
to prove that the account was meant to have the survivorship feature
because, for example, the securities industry allegedly treats that
phrase as creating survivorship rights by custom or usage of trade.
Moral: Survivorship agreements involving community property must comply
with Probate Code § 452, that is, they must be (1) in writing, (2)
signed by both spouses, and (3) contain express survivorship language.
Extrinsic evidence cannot be used to demonstrate that the parties
intended to create survivorship rights.
Other Estate Planning Matters
Multiple-Party Accounts
Right of Survivorship Established
Husband and Wife opened an account with community property. In the
account contract, they marked the box next to the designation “Joint
(WROS)” and following their names on the account title were the initials
“JTWROS.” These abbreviations were not explained further in the contract
and the contract did not contain any of the phrases listed in Probate
Code § 452 which may be used to create the survivorship feature.
The appellate court held that Husband and Wife had taken sufficient
steps to create the survivorship feature because these are common
abbreviations for “with rights of survivorship” thereby sufficiently
demonstrating their intent for the account to have survivorship rights.
The court also thought it significant that they did not check the
tenants in common box which would have created an account without
survivorship rights.
Moral: To avoid problems, prudent practice would be to state the
survivorship feature for community property by using one of the phrases
in § 452.
Other Estate Planning Matters
Multiple-Party Accounts
Right of Survivorship Not Continue Once Outside of Account
The appellate court held that once stocks held by Husband and Wife in a
joint account are issued out of the account before the death of either
spouse, any survivorship feature which the joint account may have had
does not attach to that stock.
Moral: It is important to describe with great specificity the exact
community property covered so that a survivorship agreement is not
subsequently deemed to cover more or less property than intended. This
is especially important if the property subject to the agreement is
likely to be sold or otherwise converted into another form.