The last year has brought important updates and clarifications to Texas case law, as well as the implementation of a new investment opportunity for minors.
Case Law Regarding Intent
In the recent case of Powell v. Smith, the court answered questions over the effect of wording in a will when its handwritten nature raised issues of the testator’s (author’s) intent.
When a handwritten will stated that the property would be divided and disposed of as the “family sees fit,” the debate became about whether that wording sufficed to make the decedent’s brother and sister explicit beneficiaries of the will.
The court found the phrase “as the family sees fit” not sufficient to indicate the decedent wished to give any part of his estate to all members of his family. In support of this decision, the court pointed to multiple instances of the will making explicit distributions of his estate to his son. For example, “After expenses, all remaining funds go to my Son.” In contrast, neither the brother nor the sister were explicitly named as inheriting any part of the estate. So the wording of “as the family sees fit” was not sufficient to explicitly turn them into beneficiaries. Instead, it simply asked the family to determine how the remaining property would be distributed. Even though the decedent’s siblings could take property based on however the family saw fit, this is different than the will stating outright that the siblings were entitled to the decedent’s property.
Many clients suggest we draft documents for them with wording similar to this and we avoid it for this risk. Now we have case law more on the point to help us educate clients and use a real life scenario as a cautionary tale.
Another case concerning a handwritten will, McMurphy v. Moran, concerned the effect of the plain language of the instrument when the will mentions an ability for the author’s spouse to buy out his children’s interest in one of two businesses.
When the author of the will passed, the children argued that the surviving spouse was only allowed to purchase the 1% that the decedent left in one business. The trial court stated that the wording of the will (specifically the phrase “buy out”) meant the surviving spouse had the option to buy all membership interest in all businesses.
However, the appellate court disagreed and said the handwritten will was clear and the only interest that was able to be transferred would be the interest in the first business. Since the handwritten will’s plain language only mentioned the first business, this prevented any interest outside of that 1% to be passed to the surviving spouse. As a result, the surviving spouse only received the testator’s 1% of the mentioned business.
Overall, the takeaway is that, especially short of any ambiguity, the court will read the will to only dispose of property that is plainly stated.
When a testator handwrites his or her will, courts determine the intent through other parts of the will and the plain language of the instrument. If a testator has certain property they wish to distribute to certain family members or if they wish to ensure certain business interests pass to the correct person, it is critical to have an estate planning attorney to ensure the language of the instrument reflects those wishes and to avoid costly lawsuits.
Case Law Regarding Family Relationship
A Texas court in Estate of Matlock ruled on the viability of DNA testing when determining succession without a will and limitations on who can contest a will.
Evidence of paternity can be integral to determining succession where there is no will. The Texas Family Code has stated that a 99% chance of paternity, coupled with a paternity index of 100 to 1 is required as evidence that an individual could be the father of a child. However, in this case, when the DNA testing concluded a 97.98% chance of paternity and a paternity index of 49 to 1, the trial court still found “clear and convincing evidence” that the children were children of the decedent. The DNA evidence was given more strength with witness testimony that the decedent and the children in question had a parent-child relationship.
In the probate context, even when the probability of paternity is below the Family Code’s required 99%, a DNA test can still be great evidence for paternity as long as there is other supporting evidence.
On the other hand, evidence of a close bond and the desire to adopt a child does not equate to adoption that is sufficient to create standing. In Estate of Schwab, the court decided a step-grandchild, Carmen, could not contest the will because there was insufficient evidence to prove that the child of the decedent, James, actually adopted the individual who wanted to contest the will. The decedent, mother of James, listed Carmen as granddaughter in her husband’s obituary. Carmen changed her last name to James’ last name but James never formally adopted Carmen as her biological father did not consent to an adoption, nor did he give up his parental rights. The close bond between the decedent and Carmen, seeking to contest the will, and between James and Carmen did not equate to an adoption. There must be evidence to show an agreement, rather than just a desire, by the alleged parent for the child to be considered adopted by estoppel.
In estate planning, it is best to clearly define children and descendants and the testator’s intent so that potentially complex family dynamics can be addressed.
Jurisdiction, Businesses, and Tax Implications
The courts have also made decisions concerning the jurisdiction of business courts when it comes to the Trust Code and how taxes are decided against a limited partnership created to transfer assets from a decedent.
When a trust beneficiary brought actions against businesses for making self-serving investments in their own businesses using trust property, the actions were first brought in a statutory probate court. One of the defendants removed the case to the Texas Business Court, reasoning that the action brought against them involved the “affairs” of the corporations. (Barrett v. Barrett).
However, the case was sent back to probate court because, unless all of the parties and the Business Court agree, any actions concerning the trust code belong in probate court who has original and exclusive jurisdiction over probate proceedings.
Another issue decided by the court was how creating a limited partnership affected the Estate’s taxes. In Estate of Fields v. Commissioner, as the decedent’s health rapidly declined due to Alzheimer’s disease, her agent formed a limited partnership. The agent then transferred 17 million dollars into the partnership. The decedent passed not too long after the final transfer into the partnership was completed.
Afterwards, the tax return of the Estate valued the estate to 6 million dollars less than reality. The IRS gave the partnership a 20% penalty based on lack of accuracy when the Estate was reported. In response, the Estate tried to show that the transfer of the assets served a non-tax purpose such as protecting against elder abuse and streamlining asset management. None of the reasons satisfied the court, leading to the assumption that if there are transfers into a limited partnership, there must be objective evidence of a substantial non-tax purpose.
Ultimately, the lesson here is the importance of a real business purpose for non-tax reasons.
Trump Accounts
Signed into law on July 4, 2025, Trump Accounts are now available to the public. These accounts function similarly to an IRA and are intended to give minors a jump start on investing. Though Trump accounts can be open for any child under age 18, one of the incentives for opening an account is for children born between 2025 through 2028 and who have Social Security numbers receive $1,000 of funding from the government to start up their account. As of October 1, 2026, automatic enrollment has been completed by the U.S. Treasury for eligible children but a parent or guardian must still claim the account for contributions. Philanthropists have come forward, from Michael and Susan Dell to Nicki Minaj, to add funds to certain minors’ Trump accounts with other particular qualifications. Employers can also contribute up to $2,500 per year per employee to accounts and many companies have made their intentions to do so publicly, including Citi and Uber. Many states have also committed to providing these accounts for foster children in their respective jurisdictions. The accounts have many specific rules and requirements including various contribution limits; they must be invested in funds that are primarily invested in United States equities and have low cost ratios. Importantly, income tax consequences should be considered when reviewing these accounts. After much confusion about whether contributions qualify as immediate gifts (like contributions to frequently compared 529 accounts do), Revenue Procedure 2026-25 attempted to address this issue and contributions should be eligible as part of your annual exclusion gift. Another income tax consequence to consider is that the distributions are not tax free. Generally, no distributions are allowed while the child is a minor. As soon as the child turns 18, the account becomes an IRA. At that point certain distributions are allowed for qualified expenses (such as education or a first home purchase) without penalty, but they are taxed at ordinary income rates. Distributions of funds contributed by individuals are not taxed. Further, additional distributions that are not qualified expenses can be made but they will be subject to a penalty if taken earlier than age 59 and a half. So, these accounts aim to give minors opportunities to invest early and maybe even gain some financial literacy. However, once the individual attains age 18, the decision to make distributions and for what purpose is in the discretion of the 18 year old who then has full access to manage and use the funds for his or her goals.
Just like the law, the circumstances of your life, assets, and family dynamics are regularly evolving. Exploring these cases and opportunities should be considered as you periodically review your estate planning.
ABOUT THE AUTHOR: Kevin Horner is Counsel at Rapp & Krock, PC in the Probate, Estate Planning, Elder Law, and Trusts group.
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