What is a Survivorship Agreement?
A survivorship agreement is a separate agreement between one or more people that states that if one of the parties dies, then upon their death the decedent’s property passes to the other (surviving) party or parties as if the decedent was not married at the time of death. In other words, a survivorshiip agreement effectively overrides the default rules of the intestacy statute or a disposition of community property at death provision in a will.
As a matter of law, anything owned by a husband and wife when they are married is community property. In Texas, community property is divided upon divorce or upon the death of one of the spouses, effectively making each spouse an owner of one-half of the community property. However, in Texas, you can put in place an agreement that when one of the spouses dies, that spouse’s community property passes to the surviving spouse automatically, without having to pass through a trust or a will. Surviving spouses in particular tend to like these agreements , which can pass over assets without the need to pay for both probate and a needs-based Medicaid application.
In a survivorship agreement you can not only agree to control who gets property on death, you can also agree to control who has what rights during life. For example, you can agree that you and your spouse will not act independently of each other. You can agree that one or both of you will not make a will unless the other spouse approves of it. You can agree to act in one another’s interests at all times, so that the standard for a fiduciary duty extends to your spouse as well. You can agree that property is held "as tenants in common", which means that upon your death one-half of the property will pass to your heirs under the intestacy statute if you have no will. This can be important, as discussed in the article mentioned above, where people may have children from previous marriages.
The Importance of Texas Community Property Laws
The Texas state laws regarding community property are the foundation of marital property ownership in Texas. Under community property laws, the assets that spouses earn during their marriage are treated as jointly owned by both spouses. When one spouse dies, community property can be subject to probate and the state’s intestate succession laws, meaning the decedent’s shares of community property are divided according to Texas probate laws.
Spouses in Texas can change how their property is handled at their deaths by entering into an agreement. The most common such agreement in Texas is the community property survivorship agreement. Such an agreement can be made during the marriage, and it allows spouses to select who inherits their share of assets when they die. It also allows the surviving spouse to control the decedent’s share of property after the decedent’s death—ownership automatically passes to the surviving spouse at the first spouse’s death—and the surviving spouse won’t have to go through probate.
Thanks to these community property laws, everything acquired or earned by spouses during their marriage, except for some exceptions, is considered community property. Separate property is explicitly excluded from this designation. Separate property is all property (including assets and debts) that each spouse acquired before the marriage, plus property they inherit or receive as a gift, and anything that one spouse "subsequently acquires" that is not considered community property. Under the Texas community property laws, you cannot give your share of community property away as a gift to a third party; however, spouses may devise community property by drafting a will or entering into a community property survivorship agreement.
If a married couple does not have a valid community property survivorship agreement or a valid will, the intestate succession laws take over to divide the deceased spouse’s property at death. If the deceased spouse has a will, that document controls the inheritance of the deceased spouse’s property. First on the list of distributive shares under the intestate succession law in Texas is the surviving spouse. The surviving spouse will get the entire community estate if there are no children, parents, siblings, or other relatives of their deceased spouse. If there are children or other relatives, the surviving spouse will still be entitled to a share.
Alternatively, spouses may choose to keep their property separate under a prenuptial agreement, or they may treat all property they acquire during the marriage as "separate property." However, in general, Texas spouses owe each other a fiduciary duty, and they must act in good faith when handling the property they own together. For example, the Texas courts have ruled that spouses cannot secretly give away their share of community property to third parties.
Benefits of a Survivorship Agreement
The Texas Community Property Survivorship Agreement Form is a relatively common form that often is used by married couples who wish to avoid the expense, time, and procedural complications associated with probate proceedings. The use of a Community Property Survivorship Agreement Form is essentially the same as creating a joint tenancy property owned with a right of survivorship, except the benefit is that it may be utilized with community property that can not be owned jointly. This means instead of having to go through probate proceeding, all of the deceased owner’s interest vest in the other owner at death because of the automatic transfer instead of by having to rely on the provisions set forth in a Last Will and Testament.
Under this form, a husband and wife agree that anything either one of them owns is owned by the other upon the death of the first owner. Therefore, the surviving spouse automatically acquires all property of the deceased spouse free and clear of any probate proceeding. This significantly cuts down on the costs of administration as well as avoiding the lead time involved with a will or probate document.
A community property survivorship agreement may be particularly helpful in the following situations:
Having a survivorship agreement in place with a spouse can be a significant asset to a well-designed estate plan. This agreement is even useful to help couples circumvent potential probate proceedings in some cases.
How to Fill Out a Texas Survivorship Agreement Form
Creating a Texas Community Property Survivorship Agreement Form is relatively simple because you’re essentially combining two documents into one. You’re creating a will, which is the primary document, and a community property survivorship agreement, which is a supplemental.
Basically, what you want to do is tell your spouse that when you die they’re going to receive all your property, all of your community property, everything, period, full stop. And that if they die first, you get everything.
Now, it’s vital from a drafting perspective to be extremely clear about what the property is that will go to your spouse or what property they will be leaving you. The key thing is that you need to be specific. So, for example, if your primary residence is a townhome or a condo in Austin, you need to be specific about that . Now, you don’t have to list your television set or your iPad or any of your gifts to yourself to celebrate the fact that you went to law school and became a lawyer. What we’re talking about are more significant assets, such as retirement plans, bank accounts, and other things that really someone needs to inherit in order for the property to pass.
The primary reason for creating a community property agreement is that when both you and your spouse pass away, all of the property that you jointly own as community property will pass to your children without having to go through the court process of probate. It’s a much cleaner way to pass on your property because the cost associated with passing property this way is minimal.
Creating these forms just takes a little forethought about what you want to have happen at your passing. Listing is the best way to document what property you own, how you own it, and how it should be transferred to your spouse or your children.
Common Questions About Survivorship Agreements
Frequently Asked Questions About Survivorship Agreements
Does a community property with right of survivorship agreement pass my property outside of a Will?
No. A Will governs separate property. A community property with right of survivorship agreement does not have to go through probate and does not have to be disposed of in a Will because title to the property passes to the surviving spouse by operation of law.
I understood that all property that is community property is owned equally by both spouses. Why do I need to sign a community property with right of survivorship agreement to pass that property?
It is true that Texas law gives each spouse an undivided one-half interest in all community property subject to divestment by a valid written instrument signed by both spouses. The reality is that real estate owned by both spouses as community property is frequently subject to the jurisdiction of a foreign court or owned exclusively by one party, and without the right of divestment, the surviving spouse may not be able to retitle the property in his or her name only. When spouses title property as community property with right of survivorship, the surviving spouse will own the property at the time of death and will be able to retitle the property in his or her name without having to go through a probate proceeding or have the signatures of any other parties.
Could I still dispose of my property in my Will even if it is community property with right of survivorship?
No. The effect of a community property with right of survivorship agreement is to pass the property to the surviving spouse at the time of death of the other spouse. The parties cannot agree that the disposition of the property by disposition will occur at a future date or on a contingency. Therefore, the property must pass at the time the other spouse dies.
Aren’t these just for married people or same sex couples?
No. This same principles can apply to persons that are not married partners or persons in an informal marriage that own property together.
Legal Help and Resources
The Texas Community Property Survivorship Agreement Form, while a powerful tool for estate planning and asset division, can be complex and difficult to understand without the help of a legal professional. Navigating issues related to community property, rights of survivorship, and intestate succession are all areas where an experienced attorney can provide much-needed clarity and direction.
For those looking to set up a survivorship agreement with their spouse, or who are in the unfortunate position of needing to administer the estate of a deceased spouse, it is essential to consult with a qualified estate attorney. A legal professional can not only draw up or review the necessary documents but also provide vital advice on how to handle the various issues that may arise in dealing with community property and spousal rights.
When choosing an attorney , it is important to find someone who specializes in estate planning and may already be familiar with the Texas Community Property Survivorship Agreement Form. In addition to looking for online reviews and testimonials, it can be helpful to make contact with previous clients to ensure that the attorney in question has the knowledge and dedication to meet your needs and expectations.
In addition to seeking legal assistance, there are a number of legal resources available online that can help answer common questions about community property and survivorship agreements. The State Bar of Texas has an array of carefully-researched legal articles covering estate planning issues. Local bar associations are also excellent sources for legal information, and many offer free or low-cost lawyer referral services.