When it comes to property, the old adage “you can’t take it with you” is true, but you can try to dictate who gets it when you die.
This is where estate planning comes in, and the distinction between community and separate property in Texas is a critical consideration in probate cases. The interplay between community property and probate laws can create confusion and lead to probate disputes.
The Bean v. Bean, No. 05-21-00286-CV (Tex. App. Dec. 13, 2022) case highlights the importance of keeping records to indicate whether property is intended to be community or separate property and the role that prenuptial agreements can play in estate planning.
Facts & Procedural History
This case involves moon rocks and related items owned by Alan Lavern Bean, an American astronaut. Mr. Bean was one of the few to land on the moon.
Mr. Bean entered into a pre-nuptial agreement with his wife in 1982. The pre-nup provided that his space rocks and related items were his separate property. Mr. Bean also prepared a will. The will contained very specific directions as to how his moon rocks and related items were to be handled. It also specified that these items were his property.
When he died, the probate court appointed Mr. Bean’s child from a prior marriage and his surviving spouse as co-executors. This was provided for in the will.
The surviving spouse and her counsel decided that some of the items were community property, as the decedent did not get legal title to the items until Congress passed a law saying that the astronauts could keep these types of artifacts. Congress didn’t make this change until after the decedent executed the prenup and married his second wife.
The decedent’s child filed a declaratory judgment action and then summary judgment asserting that some of the moon rocks and items were the decedent’s separate property.
Community vs. Separate Property
In Texas, community property is the property that is acquired during the marriage by either spouse, regardless of who earned or purchased it. This includes income, real estate, investments, and other assets acquired during the marriage.
On the other hand, separate property in Texas refers to property that is owned by a spouse before the marriage or property that was acquired during the marriage through inheritance or gifts.
Community vs. separate property matters not only in the context of divorce but also in the event of death. When someone dies, their assets are typically distributed according to their will or, if they do not have a will, according to the state’s intestacy laws.
There is a will in this case, so state intestacy laws didn’t apply. If they did, when there is a child from outside of the marriage, the surviving spouse generally inherits all of the community property, while the separate property is distributed between the spouse and child.
The will in this case proposed something similar, which is why there was a dispute in this case.
The Role of the Pre-Nuptial Agreement in Probates
A prenup, or a prenuptial agreement, is a legal agreement between spouses that outlines how property will be divided in the event of divorce or separation. A prenup can specify which property is considered community property and which is separate property. It can also outline how the community property will be divided in case of a divorce or separation.
A prenuptial agreement, or prenup, can have an impact on the distribution of community and separate property when someone dies in Texas. A prenup can override these default rules and specify how community and separate property will be distributed upon the death of one spouse.
For example, a prenup can provide that community property will be distributed to the surviving spouse and separate property will be distributed to the deceased spouse’s heirs, regardless of what the law would otherwise provide. Alternatively, a prenup can specify that certain assets, such as a family business or a piece of real estate, will remain separate property even if they would otherwise be considered community property.
Property Owned by the Decedent
In this case, the surviving spouse argued that the moon rocks and related items were community property because (1) they were “Government-owned” items that NASA instructed Alan to return, and (2) Alan did not obtain title to the items until Congress passed HR 4158 in 2012, which was during the marriage.
The surviving spouse noted that the decedent possessed these items, but she argued that he did not own them.
The court noted that separate property is:
“the property owned or claimed by the spouse before marriage” and includes property acquired by the spouse during marriage by gift, devise, or descent. Tex. Fam. Code § 3.001 (emphasis added); Tex. Const. art. XVI, § 15 (“All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse . . . .”) (emphasis added).
Thus, ownership isn’t required. A claim or assertion to own the property before marriage is all that is required. The court went on to note that the documents and record were clear that the decedent asserted that he owned these items before and during the marriage. This was even evidenced by the language he used in his will. Based on this, the court concluded that the moon rocks and related items were the decedent’s separate property.
This case shows the interplay between community vs. separate property and the probate rules. The probate court will usually accept the decedent’s characterization of separate property in construing the terms of his or her will. This case makes it clear that when there is a dispute or question as to ownership of property, records should be kept to indicate whether the property is intended to be community or separate property.
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