Estate planning has evolved greatly over the past century, and it continues to change with each passing year. For example, estate planning attorneys must regularly adapt client plans to changes in tax laws. Keeping up with changes to the legal field and their implications for estate planning is a task best left to the professionals.
A Texas case decided in June 2021 aptly illustrates the evolving field of estate planning. In the case, a company and individual both claimed a right to the deed to a 21.5-acre plot of land. In the end, the company prevailed because the court applied a law that is now no longer in effect.
At issue in the case was whether an attempted transfer of the land in 1995 was valid. The 1995 transfer did not involve either the individual or company involved in this case, but its ripple effects dramatically altered their rights down the line.
Community v. Separate Property in Texas
The case hinged on the distinction between community property and separate property.
In Texas, community property is property acquired by a married couple during the course of their marriage. It belongs to the “community” of the two spouses. In contrast, separate property is property that legally belongs to only one of the spouses. Separate property includes property that was owned before the marriage took place—for example, one’s jewelry. It also includes special types of property acquired during the course of the marriage, like gifts and inheritances.
Decades before this dispute, a predecessor to the land at issue had owned it as his separate property. The man apparently wanted his wife to have an interest in the property, so in 1995, he attempted to convey the land to himself and to his wife. In other words, he attempted to convert his separate property into community property through a conveyance.
Unfortunately for this couple, at the time, the Texas courts did not approve of this type of transaction. Attempts to make separate property into community property by a conveyance to oneself and one’s spouse were invalid.
Therefore, the court found that the wife did not have an interest in the property. Her attempt to convey it to someone else was subsequently invalid.
Following a complicated chain of ownership and transfers to the present time, the court determined that the company had the better claim to the land because the 1995 conveyance was invalid. It did not matter that, since that time, the law had changed. Specifically, Texas courts now permit couples to convert their separate property into community property through a conveyance to oneself and one’s spouse.
As this case illustrates, estate planning is an evolving field of law. It is responsive to changes in a variety of other areas of the law, such as property and tax. Working with an experienced estate planning law firm can prevent costly mistakes in dealing with real property and the major ramifications that may follow.
Consult A Houston Estate-Planning Lawyer Today
Whether you are just beginning the estate-planning process or you would simply like to refresh your plan to ensure it is up to date, the Houston estate planning law firm of McCulloch & Miller, PLLC focuses on these tasks. We work with clients to begin the process of estate planning and also to review and update existing plans to ensure they take full advantage of current laws and trends. Our dedicated team has decades of experience in estate planning and is standing by to provide a consultation for you today. To schedule a consultation at a time convenient for you, call 713-333-8900.