Errors in Completing Legal Form Result in Appellate Court Reversal

Texas law allows a husband and wife to convert any or all separate property owned by one spouse into community property owned by both. This is often used to provide a right of survivorship after one spouse dies. However, a recent case shows that converting property is no simple matter and the importance of seeking legal counsel for these types of transactions.

The Court of Appeals of Texas, Dallas, recently reversed and remanded a lower court’s judgment enforcing a signed document granting such a right of survivorship based on certain key elements of the agreement that changed the property deemed community property. This particular case illustrates the need for careful attention when dealing with estate matters.

In this case, regarding the estate of Olen F. Cunningham, Mr. Cunningham, months before dying in 1985, had one of his second wife’s sons and his brother use a “fill-in-the-blank” form entitled “Agreement to Establish Right of Survivorship to Community Property between Spouses.” The supposed intent was to convert several tracts of land he had inherited – along with his house built during his first marriage and other property – into community property so that his second wife, Helena, would own it upon his demise (and, likewise, the property would be his if he survived Helena).

When the County Court at Law No. 2, Kaufman County, received the document after Olen’s death in 2008, the court signed an order approving Helena’s “Application for Adjudication of Agreement between Spouses Creating as Right of Survivorship in Community Property.” According to the appellate court ruling, the county court failed to provide notification to other parties, among them the surviving children of Olen’s first marriage.

After learning of the order months after the court order, one of Olen’s sons, Elbert, filed a bill of review with the court, alleging that the court had erred in approving the application. Elbert argued that Olen’s separate property had not been properly converted to community property. A trial court disagreed and denied the bill of review.

According to the appellate court ruling, while probate law provides for the conversion of separate property to community property, there are specific requirements which were not met in this case:

The property being converted must be specifically stated in the agreement, and the agreement must provide “that the property is being converted to the spouses’ community property.”

Further, each spouse must receive “fair and reasonable disclosure” of how such a conversion legally effects each spouse.

The form that Olen’s family used did not specify any property other than the original home and the 5 acres on which it sits; it made no mention of other land tracts Olen had inherited, nor did it mention any personal property he owned separately. Furthermore, the language of the form did not specifically convert ownership of any property into community property; the form merely stated that “all community property of Husband and Wife … shall pass to the surviving spouse …”

In addition, the appellate court held that Helena – according to her testimony – did not receive any counsel or information on how such a conveyance affected her legally.

While store-bought legal forms may be useful in some cases, this ruling illustrates only one measure of the complexity of estate law. The intent of good Mr. Cunningham may have been to leave his land holdings to his second wife after he passed, but in executing a fill-in-the-blank form without adequate legal counsel, the county court upon review of the case, may leave Helena with nothing that Olen owned separately and may direct the property to others not intended by Olen.

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