Resolutions to the Probate Homestead Conundrum
Under Texas law, a surviving spouse has the right to reside in the marital home until the surviving spouse either abandons the home or dies. But this so-called “probate homestead” right does not extinguish the ownership interests of remaindermen (co-owners, heirs, or beneficiaries) under the decedent’s will.
The responsibilities of the homestead claimant (the surviving spouse) include paying ad valorem property taxes, costs of maintenance and repair, and interest on any existing encumbrances (e.g., a mortgage), avoiding “waste” and preserving the property, and funding any permanent improvements on the property. The homestead claimant is also entitled to all fruits, rents, and revenues derived from the property. The remaindermen must maintain insurance on the property and pay the principal on any existing encumbrances, such as mortgage principal. Texas law permits the surviving spouse to sell the homestead and use the proceeds to acquire a new homestead with the same rights and obligations as before.
These dynamics can strain a relationship, particularly between a stepparent and stepchildren. To lessen the strain, Texas law does not permit remaindermen to force a partition of a probate homestead. A common resolution to this conundrum is for one party to buy out the other party’s interest in the home, if both sides are willing.
Assuming the surviving spouse is the personal representative of the decedent’s estate, another option is for the surviving spouse to request authority from the court to purchase the home from the estate. Under Texas law, a personal representative of an estate may purchase estate property if the court determines that the sale is in the estate’s best interest.
If the home needs to be sold to satisfy debt associated with the property or the decedent’s estate, the personal representative can offer to purchase the property for an amount that would satisfy the debts or by assuming the debt associated with the property itself. Some factors weighing in favor of the purchase of the property by the personal representative include, but are not limited to, co-ownership of the property by the estate and the surviving spouse, as well as probate homestead rights. Both factors can greatly diminish the marketability of the property to a third-party buyer. The court is likely to find that a purchase of the property by the personal representative is in the estate’s best interest if the proposed purchase is the only viable option for settling the debts of the estate.
The lawyers in our firm have successfully assisted individuals in negotiating a buyout of either the homestead claimant or remainderman’s interests in the property; selling the probate homestead and using the proceeds to acquire a new homestead; and obtaining court authority for the purchase of estate property by a personal representative. Should you find yourself in a probate homestead conundrum, the attorneys at Farrow-Gillespie Heath Witter are here to help you navigate a resolution.
Jessica Dunne is a senior associate attorney at Farrow-Gillespie Heath Witter LLP. Jessica has substantial experience in probate, guardianship, and trust litigation, with a special interest in adoptions. Jessica graduated cum laude from Baylor Law School in 2011 where she was the recipient of the Presidential Scholarship.
Spencer Turner is an associate attorney at Farrow-Gillespie Heath Witter LLP. Since obtaining his license to practice law in 2016, Spencer has focused his legal efforts primarily in the trust and estates arena. He has been featured as a speaker on various aspects of the probate process at several seminars hosted by the National Business Institute. Spencer is a graduate from Baylor Law School.