In Lemus v. Aguilar, relatives fought over ownership of a decedent’s home.  No. 04-14-00609-CV, 2016 Tex. App. LEXIS 2685 (Tex. App.—San Antonio Mar. 16, 2016, no pet. h.).  Elvira, the deceased, lived in her home for over 20 years with her boyfriend, Garza.  Elvira and Garza were named managing conservators of her daughter Annette’s three children.  In March 2005, Elvira and Garza signed a document titled “Will from Johnny Montoya Garza and Elvira G. Aguilar.”  The “will” stated that “we agree that the house be evenly divided by [Annette’s children] and that nothing be done without the authorization of [Annette’s children].”  The document was handwritten by Garza and signed by both Garza and Elvira.  In late 2005, Elvira started showing signs of dementia and was diagnosed with Alzheimer’s disease.  By November 2008, Elvira’s condition had deteriorated – she required constant care and eventually had to be placed in a nursing home.  In January 2009, Irma, Elvira’s other daughter, came to visit and took Elvira from the nursing home to sign a “warranty deed” that conveyed the home to Irma and her husband.  Elvira died in July 2011, and six months later, Garza filed a trespass to try title suit, which Annette’s children joined.  Following a bench trial, the trial court determined that the March 2005 “will” was a gift deed that validly transferred title to the residence to Annette’s children, subject to a life estate to Garza, and further found that Elvira lacked mental capacity to execute the warranty deed in January 2009.

The court of appeals reversed in part and affirmed in part.  The court first held that the March 2005 will was neither a valid will nor a valid gift deed.  It was not a valid will under section 251.051 of the Estates Code because it was not attested to by two witnesses.  Moreover, it was a not a valid holographic will because it was handwritten by Garza, not Elvira.  Section 251.052 of the Estates Code applies to handwritten wills and requires that it be “handwritten entirely by the testator.”  Id. (citing Tex. Estates Code Ann. § 251.052).  The court next examined the requirements for a valid gift deed.  In addition to the requirements that a deed be in writing and signed by the conveyor under section 5.021 of the Texas Property Code, a gift deed of real property also requires the document set forth: (1) the intent of the grantor, (2) the delivery of the property to the grantee, and (3) the gift to be accepted by the grantee. Id. at *9-10.  The key issue was the intent of Elvira as the donor when the deed was executed.  The court held that the March 2005 “will” was not a valid gift deed because it lacked a “present donative intent” by Elvira to provide an immediate and unconditional divestment of her interests.  Accordingly, the March 2005 will was not a will or a gift deed and was not operative in any regard.

The court affirmed the trial court’s findings that Elvira lacked mental capacity to transfer the property to Irma under the January 2009 warranty deed.  The law presumes that a person possesses the requisite mental capacity at the time of executing a conveyance deed.  Courts will consider circumstantial evidence concerning capacity prior to or subsequent to the time of the conveyance, evaluating: (1) the conduct of the party in question, (2) circumstances tending to produce a particular mental condition, and (3) prior or subsequent existence of a mental condition from which a party’s capacity or incapacity at the time in question may be inferred.  The court stated that the record was replete with evidence from medical records and numerous witnesses that Elvira suffered from advanced Alzheimer’s disease and could not understand the nature or the effect of transferring ownership of the property.  Id. at *14-15.  The court remanded for further findings on whether an award of fees to Garza and Annette’s children would be equitable and just under Declaratory Judgments Act.  Id. at *20-21.

INTERESTING NOTE:  The court did not identify the applicable standard for capacity to execute a deed.  However, the authors note that historically courts have held that less mental capacity is required to enable a testator to make a will than for him to make a contract or deed.  See, e.g., Burk v. Mata, 529 S.W.2d 591 (Tex. Civ. App.—San Antonio 1975, writ ref’d n.r.e.); Smith v. Welch, 285 S.W.2d 823 (Tex. Civ. App.—Texarkana 1955, writ ref’d n.r.e.); Rudersdorf v. Bowers, 112 S.W.2d 784 (Tex. Civ. App.—Galveston 1938, writ dism’d).  One recent case held that the legal standards for determining the existence of mental capacity for the purposes of executing a will or deed are substantially the same as the standards for mental capacity to execute a contract.  In the Estate of Minton, No. 13-12-00026-CV, 2014 Tex. App. LEXIS 1061 (Tex. App.—Corpus Christi, January 30, 2014, pet. denied) (the court of appeals affirmed a jury’s finding that the decedent did not have mental competence to execute a POD agreement with the bank naming a non-family member as a beneficiary ); see also Bach v. Hudson, 596 S.W.2d 673 (Tex. Civ. App.—Corpus Christi 1980, no writ).  Mental capacity, or lack thereof, may be shown by circumstantial evidence, including: (1) a person’s outward conduct, manifesting an inward and causing condition; (2) any pre-existing external circumstances tending to produce a special mental condition; and (3) the prior or subsequent existence of a mental condition from which a person’s mental capacity (or incapacity) at the time in question may be inferred.  Rodriguez v. Garcia, 519 S.W.2d 908, 911 (Tex. Civ. App.—Corpus Christi 1975, writ ref’d n.r.e.).

The effect of the court of appeals’ opinion is that title to the home was not solely transferred to Annette’s children.  The property left in her estate would presumably be divided under the laws of intestacy.  This case is a perfect example of why individuals should retain attorneys for even simple estate planning needs.  The individuals intended to leave their house to their grandchildren, but that intent was not fulfilled due to their failure to follow basic legal requirements.