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Are Bank Accounts Personal Property In Texas?

Bank accounts are considered personal property under Texas law.  The February 6, 2020 Texas Appeals Court, in In Re Estate of Hunt v. Vargas, dealt with the question of whether bank accounts are personal property under the terms of the decedent’s will and Texas law.  This case involved the plain reading of the Texas Estates Code, and interpreting the language of Decedent’s will.

The Facts of the Case

Debra E. Hunt left a will giving a large share of her personal property to her life partner, Arabia Vargas.  The will stated:

Section 1. I hereby make the following specific bequests:

  1. I give all of my family photos, furnishings and mementos inherited from our grandparents or our parents to Tracy Eileen Mitchell;
  2. I give all of my remaining household and personal property to Arabia Vargas.

Section 2. I hereby give all of the remainder of the property, wherever located, which I may own at the time of my death as follows[:]

Fifty percent (50%) to Tracy Eileen Mitchell and her issue, per stirpes and not per capita; and Fifty percent (50%) to Lina Schmidt Hollis and Andrea Wendy Vasquez, and each of their issue, per stirpes and not per capita.

Hunt’s estate included:

  • Around $230,000 in various bank accounts;
  • More than $24,000 in household furnishings and miscellaneous items;
  • Two motor vehicles worth $34,000 combined
  • About $3,500 in stocks; and
  • A home in Galveston County valued at $374,000.

Tracy Eileen Mitchell, Decedent’s sister, and one of the other remainder beneficiaries, disputed the bequest to Vargas in Texas probate court.  They argued that the bequest to Vargas was limited to household items and tangible personal property, and that the intangible property, including the money in the bank accounts, passed under the residuary clause.  Vargas argued that the bequest to Vargas included the bank accounts.

On summary judgment the Texas probate court sided with Vargas, declaring that decedent had bequeathed all personal property to Vargas other than the specific items bequeathed to Mitchell.

Each party argued that the will was unambiguous.

How Is An Unambiguous Will Interpreted In Texas?

The Texas Appeals Court summarized the law regarding interpretation of a will when the terms of the will are unambiguous, stating:

The testator’s intent, as expressed in the will’s terms, is controlling.  We therefore must scrutinize the words used by the testator rather than trying to intuit what she may have intended to write.  We must interpret the will as a whole, neither adding nor subtracting from its terms.  We cannot rely on extrinsic evidence of intent to reinterpret an unambiguous will’s terms.  Similarly, when a will is unambiguous, we must enforce its terms as written and cannot reinterpret them based on interpretive aids or canons of construction. Citations omitted.

 In addition, words are given their plain, ordinary meaning unless the will shows that the testator used them in another sense.

What Is Personal Property In Texas?

The term “personal property” includes everything other than real property that is subject to ownership.  “Personal property” is defined in the Texas Estates Code, § 22.028, which states:

“Personal property” includes an interest in:

(1)  goods;

(2)  money;

(3)  a chose in action;

(4)  an evidence of debt; and

(5)  a real chattel.

Because personal property has a settled legal meaning, “a court ordinarily need not look beyond these words to ascertain a testator’s intent if she uses them.”

Are Bank Accounts Personal Property In Texas?

Yes, under the legal definition of personal property, bank accounts are considered personal property under Texas law.  So, what was the fight about in this case?  Will interpretation, which we have written about here.

The Plain Language of An Unambiguous Texas Will Controls

Mitchell made several unsuccessful arguments on appeal in an attempt to claim the bank accounts.

First, Mitchell urged that by referring to “household and personal property,” Decedent limited the bequest to Vargas to items that were material and physical like household goods.  Everything else, like bank accounts, was supposed to pass through the residuary to Mitchell.  The Texas appeals court rejected this argument.   Decedent used the word “all” before “personal property.”  Thus, to limit the “personal property” to material items would be to ignore the word “all.”

Mitchell also relied on the principle of “ejusdem generis,” a canon of construction where “if words of a specific meaning are followed by general words, the general words are interpreted to mean only the class or category framed by the specific words.”   However, canons of construction are only used if an ambiguity exists.  Here, the will was not ambiguous.  Nothing changed the fact that the bank accounts were included in the phrase “personal property” under the will and Texas law.

What Is The Purpose Of A Residuary Clause Under Texas Law?

The purpose of a residuary clause is to prevent partial intestacy under Texas Law.  Mitchell argued that the residuary clause in this case was intended to limit the bequest to Vargas to tangible personal property.

The Texas Appeals Court found that Mitchell and Vargas misinterpreted the purpose of a residuary clause.  Residuary clauses exist in significant part to avoid partial intestacy.  “That a residuary clause like Hunt’s is broad enough to dispose of both personal and real property does not, therefore, mean it actually must dispose of both to realize her intent.”

An unambiguous will in Texas is interpreted as a matter of law.  Here, Decedent’s will was not ambiguous.  “Personal property” meant all personal property not disposed of in other paragraphs of the will and included the decedent’s bank accounts under Texas Law.

 

 

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Find Your Texas Probate Star

San Antonio

Gilbert Vara, Jr.

Austin

Kyle Robbins

Houston

Grace P. Shoemakers

Dallas

Steven S. Boss

Williamson County

Lorenza Cigarroa

Grayson County

Jacob Pelley