Nonprobate and Probate Dispositions of Community Property

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NONPROBATE AND PROBATE DISPOSITIONS OF COMMUNITY PROPERTY Thomas M. Featherston, Jr. Mills Cox Professor of Law Baylor University School of Law Waco, Texas South Texas College of Law Houston, Texas September 23-24, 2010 ©Copyright 2010, Thomas M. Featherston, Jr., All Rights Reserved. M Nonprobate and Probate Dispositions of Community Property M-i TABLE OF CONTENTS I. INTRODUCTION. 1 A. Community Property. 1 B. Texas Two-Step.. 1 C. Post 1987 Law. 1 D. Street v. Skipper.. 1 E. Haas v. Voight. 2 F. Holmes v. Beatty. 2 II. NONPROBATE DISPOSITIONS BETWEEN SPOUSES. 3 A. Inter Vivos Gift. 3 B. Partition. 3 C. Income Agreement.. 3 D. Life Insurance. 3 E. Employee Benefits and Other Retirement Accounts. 3 F. Sec. 450 of the Texas Probate Code. 3 G. C.P.W.R.O.S... 3 III. MANAGEMENT OF MARITAL PROPERTY.. 5 A. Matrimonial Property Act, 1967. 5 B. Texas Family Code. 6 C. Special Community Property.. 6 D. Presumptions. 6 E. Other Factors. 6 F. Fraud on the Community.. 6 G. Death of a Spouse. 8 H. Federal Preemption. 8 I. Illusory Transfers.. 9 J. Void Transfers. 9 K. Fraud on Creditors.. 9 IV. COMMUNITY PROPERTY IN THE REVOCABLE TRUST. 9 A. Professional Responsibility. 9 B. Creation and Funding. 9 C. Power of Revocation. 9 D. Incapacity of a Settlor. 10 E. Rights of Creditors. 10 F. Effect of Divorce. 11 G. Death of First Spouse. 11 H. Planning Considerations. 12 I. Community Property Basis. 12 J. Settlor's Homestead Protection . 12 K. Protection of Family. 12 V. MARITAL PROPERTY IN PROBATE. 13 Nonprobate and Probate Dispositions of Community Property M-ii A. Probate v. Nonprobate. 14 B. Administration of Community Property. 14 C. Intestate Death. 14 D. Testate Death. 14 E. Texas "Widow's" Election.. 15 G. Protection for Surviving Spouse. 16 VI. ADMINISTRATION OF COMMUNITY PROPERTY. 17 A. Types of Administration. 17 B. Distribution of Powers Among Personal Representative And Surviving Spouse. 18 C. Allocation of Liabilities After Death.. 18 D. Closing the Estate. 19 E. The California Approach.. 20 F. The Texas Response. 20 VII. MULTIPLE PARTY ACCOUNTS. 21 A. Chapter XI. 21 B. Marital Property Problems.. 22 C. Conclusions and Observations. 23 VIII.MARITAL PROPERTY RIGHTS IN IRREVOCABLE TRUSTS. 23 A. The Private Express Trust . 24 B. Beneficial Ownership. 24 C. Interests of the Settlor’s Spouse. 24 D. Settlor’s Retained Interest. 24 E. Interests of the Non-Settlor Beneficiary. 25 F. Spendthrift Trust. 26 G. Powers of Appointment.. 26 IX. OTHER SPOUSE'S INTEREST IN THE EMPLOYEE'S RETIREMENT PLAN. 26 A. Application of the Apportionment Rule. 26 B. Tracing the Separate Interest. 27 C. Sec. 3.007. ..

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Community Property V. the Elective Share, 72 La
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