Survivorship accounts: Holmes v. Beatty expressly overturned
(This is one of a series of posts about 2011 legislation.)
Holmes v. Beatty, 290 S.W.3d 852 (Tex. 2009), caused shockwaves in the probate and estate planning community for two reasons:
First, and most importantly, the Supreme Court relaxed the standards for creating rights of survivorship with respect to community property, holding that a "joint tenancy" or " JT TEN" designation on an account is sufficient to create rights of survivorship in community property under Section 452 of the Texas Probate Code.
Second, the Supreme Court held that stock certificates issued from a community property with right of survivorship brokerage account continue to be survivorship property even though the the certificates themselves do not meet the requirements for survivorship agreements.
SB 1198 overturns Holmes on the first of these points. It adds this sentence to Section 452: "A survivorship agreement will not be inferred from the mere fact that the account is a joint account or that the account is designated JT TEN, Joint Tenancy, joint, or other similar abbreviation." Parallel language is added to Section 439, which governs non-community property multi-party accounts. SB 1198 specifically states that the bill is intended to overturn the ruling of the Texas Supreme Court in Holmes v. Beatty.
These changes were intended to bring Section 452 – regarding community property with right of survivorship accounts – in line with Section 439 and the principles established by the Texas Supreme Court in Stauffer v. Henderson,801 S.W.2d 858 (Tex. 1990). Those principles apply to community property with right of survivorship accounts notwithstanding the slight differences in language between Sections 439 and 452.
The bill is silent on the other significant holding in Holmes, so stock certificates issued out of community property with right of survivorship accounts may continue to be survivorship property, at least to the extent described in Holmes.
Sections affected: Probate Code Sections 439 and 452.