Imagine you are appointed as the executor for a family member or loved one and, as part of the probate process, you discover that the decedent transferred their primary asset to another party during their lifetime. Also imagine that they did so when they were of sound mind and it appears that they did so freely and not with duress. What rights do you have to the property? The court recently addressed this situation in Estate of Allison, 09-16-00066-CV (Tex. App.–Beaumont 2017).
Facts and Procedural History
Allison’s husband died and then she died. During her lifetime, she had executed a deed to transfer two parcels of land to a corporation owned by her son. It appears that the intent of the transfer was to put the property beyond the IRS’s reach. The transfer was structured as a sale with seller financing, but the mother continued to use one of the tracts as a farm.
When Allison died, her will appointed her youngest daughter as the independent administrator. The daughter commenced probate and then filed an inventory showing that the estate owned the two parcels of real estate. The daughter filed a motion in the probate proceeding to have the son transfer the parcels to the estate so they could be sold. The court found that the estate was the intended transferee and that the estate was the owner of the property and ordered the property be transferred to the estate to be sold. The son appealed the decision.
Time Period for Contesting a Transfer
The county court, which was the trial level court, found that the estate was the intended transferee. This would require evidence that Allison did not know that she wasn’t the owner of the corporation the properties were transferred to. According to the appeals court, the trial court record did not include evidence of this.
The appeals court focused on the time period for bringing suit in Texas. There is a time period for contesting property transfers. This time period can be extended in the case of fraud, undue influence, or incapacity of the owner, which were not an issue in this case.
Generally, Texas law provides a four year period for contesting property transferred by deed. This means that any interested party has four years from the date the deed is filed to bring suit to contest the transfer. This is true even in the probate context, where the executor does not discover the transfer until after the four year period. Texas probate law does not allow otherwise expired claims to be revived due to the probate.
In this case, the property was deeded in 1992. The decedent died in 2014. The executor did not discover the transfer until 2015 or thereafter. Thus, the decedent would have had to bring suit by 1996, which she did not do. Thus, the appeals court reversed the trial court’s order.
The lesson here is that Texas law and the courts try to uphold the intent of the property owner. If the evidence shows that the property owner intended to transfer property and did so of their free will, the transfer should be respected. This is one of the conversations that should be had with would-be executors when the will is being executed. Had the executor been given an inventory or overview of the probate assets at that time, it may have headed off this ligation and the family discord that it probably caused.
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