Texas law provides that all provisions in a will in favor of a former spouse “must be read as if the former spouse failed to survive the testator” and are null and void. Therefore, if you get divorced and don’t change your will, you ex-wife will not inherit under your will even if you want her to inherit from you. You would have to make a new will after the divorce in order for her to inherit from you under your will. Of course, if you don’t want her to inherit under the will, the law voids all provisions for her. To be safe, you need to change your will if there is a divorce. A recent case decided by the Texas Supreme Court, In re Estate of Nash, shows how expensive litigation can result if you don’t change your will.

Nash’s Will left everything to his wife, or if she predeceased him then to his stepdaughter. Nash and his wife later divorced, but he never changed his Will. Nash died and both his ex-wife and her daughter, Nash’s step-daughter, survived him. A relative filed for probate seeking all of Nash’s property for Nash’s other heirs at law saying that the provisions in the will giving everything to his ex-wife and his ex-step-daughter were no longer valid. Since the will made no other provisions for the property, the relatives said that the property went to Nash’s heirs at law (nieces and nephews, etc.). In contesting the probate, the ex-stepdaughter said that the property belonged to her arguing that Texas law treats the divorced wife as having predeceased Nash therefore the provision that if his wife predeceased him everything would go to the step-daughter came into effect.

The Court ruled against the ex-step-daughter and in favor of the relative, holding that since the ex-step-daughter only took under the contingency that her mother predeceased Nash, the ex-step-daughter did not inherit because her mother was still alive. This is true even though the Texas statute treats the mother as having predeceased Nash!

Nash may have had a good relationship with his ex-wife and/or with his ex-step-daughter (the Court doesn’t say) but even if he didn’t change his will because he thought it would all go to them, he was mistaken. And what would have happened if he didn’t want his his ex-stepdaughter to get anything and his ex-wife would have died before him? Would his ex-stepdaughter inherit then because she survived the ex-wife? That question wasn’t answered since the ex-wife was still alive. The moral of this case is that you need to redo your will after a divorce or the courts may decide who gets your property.

Section 123.001 Of the Texas Estates Code, formerly Section 69 of the Texas Probate Code provides that after divorce the wife and all her relatives who are not relatives of the testator will be treated as if they failed to survive the testator. This makes it even more important to make sure your will is up to date in the event that you get divorced.

Exceptions:

There are situations where a divorced spouse may be entitled to something that most people would think comes from their former spouse even after a divorce. The Texas Supreme Court says that a divorced spouse will receive payments based on their former deceased spouse’s retirement from a state retirement fund when: the former spouse was part of the Teacher Retirement System; who took reduced retirement payments so that their spouse would receive a reduced portion of their benefits after they die; who then get divorced; and, who do change their beneficiary under the plan. The Court said that once the divorce is final, the spouse who wants to deny benefits to his or her former spouse is required to follow the procedure set by the Texas Retirement System and use TRS’s forms. If they don’t follow the procedure or use the proper form, the divorced spouse will receive the retirement benefits after the death of the worker. In this case, the husband had waived his right to the wife’s TRS benefits in the divorce decree. The court said that it doesn’t make any difference what the divorce decree says if the procedure is not followed and the proper forms are not used. 221 S.W.3d 622.

In a prior case, the Supreme Court had held that a spouse could waive the beneficiary designation in a divorce decree of retirement funds under ERISA. In explaining the difference between the ERISA retirement funds and the TRS retirement funds, the Court said “…but the benefits at issue in (the ERISA case) were payments under simple annuities purchased by the employee (and could be waived) and were not at all like the carefully regulated optional annuity provided by TRS involved in this case (which could only be changed by following TRS’s procedure and using their forms).” 121 S.W.3d 721.

UPDATE: A Missouri appeals court decided that a contractual will did not survive a divorce. Missouri, like Texas, has a statute that nullifies all provisions in a will in favor of a spouse if the spouses divorce. In the Missouri case, the husband and wife had a contractual will. They divorced. The husband did not change his will. He died. The ex-wife filed the contractual will for probate saying that the contract between the deceased husband and her survived the divorce. The appeals court said it did not. Even though the parties contracted to make mutual wills, the wife would be treated as if she had predeceased the husband under the statute that nullifies provisions in favor of an ex-spouse.

The quick answer is no, he can’t.  Texas has a statute that says that a devise or bequest of property in a will to the attorney who prepares or supervises the preparation of the will or to an heir or employee of the attorney is void.  This statute applies to anyone who is not related to the attorney.  The attorney can be a beneficiary of his family’s wills even if he prepares it.

In a recent case, an attorney had a woman working in his office that was an independent contractor.  She was not an employee of the attorney.  She was a paralegal but she just did occasional work for the attorney.  She also did occasional work for other attorneys who shared office space with the attorney who drafted the will.  The will made her a beneficiary and also appointed her as the executor of the will.

A sister of the testator contested the provisions of the will leaving part of the estate to the paralegal.  The court agreed with the sister and ordered the paralegal to return all of the property that she had received to the heirs of the testator.  The court also ordered the paralegal to pay the attorney fees of the sister.

The paralegal appealed claiming that the statute did not apply to her since she was not an employee.  The appeals court denied her appeal and held that the gift to the paralegal was void.  Jones v Krown.

In a Texas case decided in 2005, a man had an account at a financial institution.  He originally opened the account as a joint account with right of survivorship with his daughter.  That means that he and his daughter were joint owners and when the first one died, the account would belong to the survivor without passing through the estate of the one to die.

The man and his daughter later changed the account for tax purposes.  They made the account the sole account of the man.  When the man became ill, he wanted to change the account back to a joint account with right of survivorship with his daughter.  He contacted the institution.  He told them what he wanted to do.  The representative told the man that he would prepare the paper work and that someone could pick it up.  Once the man signed the paperwork, it should be returned to the institution.  The daughter picked up the documents, the man signed them then the daughter took them back to the representative.  The representative had left for the day so the daughter left them with his secretary.  Some of the documents made it to the right place but some did not.  The daughter started writing checks on the account which the institution processed.  The institution issued statements showing the account as a joint account with right of survivorship listing the man and his daughter.

Several weeks after her father’s death, the daughter asked the institution to close the account and open a new one in her name only.  At that time, the institution said that it could not find all of the paperwork and froze the account.  It then filed suit telling the court that it did not know who owned the money.  It added all of the man’s children as parties to the suit.  Because the paperwork could not be found, the daughter entered into a settlement with her five siblings splitting the money equally.

The daughter sued the financial institution for the difference between the money that she would have gotten had they properly changed the account to a joint account with right of survivorship and the money that she actually received, i.e. 1/6th of the account.  After hearing all of the evidence, the jury agreed with the daughter and entered a verdict against the financial institution.  The appeals court upheld the verdict.

You should always confirm that your financial institution has your account set up the right way.  However, if you do everything that you are told to do and they don’t get the paperwork in the proper place, they might be liable for any loss by you. A fiduciary responsibility in Texas exist so that the law imposes the highest form of civil obligation on the fiduciary.

In Ditta v Conte, a Texas Supreme Court court case in June 2009, the Court decided the issue of what statute of limitations applies when someone attempts to remove a trustee.

The father and mother created a trust. The survivor of the two was the primary beneficiary of the trust.  The son and daughter of the father and mother were the remainder beneficiaries. The father died. The wife and the two children became co-trustees of the trust. Thereafter, the mother was declared mentally incapacitated and Ditta was appointed guardian of her estate. The son managed the trust on a day to day basis. A dispute developed between the two children and many suits were filed. It was discovered that both the son and daughter were using the trust funds to pay personal expenses. The trial court removed the son as a trustee.  Thereafter, the court appointed a third person as temporary trustee and suspended the daughter as a trustee. An accounting showed many irregularities.

Ditta then asked the court to remove the daughter as a trustee and appoint a new trustee.  The court removed the daughter and appointed a bank as trustee. The daughter appealed on the basis that the four year statute of limitations applied. She said that the things that she did in violation of the trust occurred more than four years before Ditta asked for her removal and were barred by limitations.

The Texas Supreme Court said that removal of a trustee was not like the recovery of damages which would be barred by limitations.  The removal was not subject to limitations since the trustee was a fiduciary.  “…even if the probate court’s removal of (the daughter) had been based solely on a conclusion that she committed a discrete breach of fiduciary duty, we conclude that the court’s discretion to remove a trustee for such a breach is not subject to a statutory limitations period running from a specified period after the breach. Instead, the removal decision turns on the special status of the trustee as a fiduciary and the ongoing relationship between trustee and beneficiary, not on any particular or discrete act of the trustee.”

Once a fiduciary commits some breach of his duties, he can be removed even if the breach happened long ago.

Note: This case deals with ongoing actions by the trustee, not a specific action by the trustee. When the complaint is about a specific act, the four year statute of limitation applies. I have written about that here.