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Dyer v. Eckols - 808 S.W.2d 531 (Tex. App. 1991)

Rule:

Because disclaimed property passes as if the beneficiary predeceased the testator, the beneficiary never possesses the property. By direction of the legislature, acceptance of the inheritance occurs only if the person making such disclaimer has previously taken possession or exercised dominion and control of such property in the capacity of beneficiary. Tex. Prob. Code Ann. § 37A(f) (Supp. 1991). 

Facts:

Appellant, Roland Edward Dyer, alleged that appellees conspired to defraud him of the ability to satisfy a default judgment of $ 1.08 million rendered against appellee Sara M. Croom after Croom's car crashed into an automobile driven by Dyer's mother, causing Mrs. Dyer to burn to death. Prior to being served with citation of the damage suit, Croom, although insolvent, attempted to disclaim a gift of $ 200,000 which she was to inherit under the will of her recently deceased uncle. By summary judgment, the trial court held as a matter of law that (1) the beneficiary of an estate can defeat a creditor's claim by executing a disclaimer under § 37A of the Texas Probate Code, and (2) Croom's disclaimer was not a "transfer" prohibited by the Texas version of the Uniform Fraudulent Transfer Act, TEX. BUS. & COM. CODE ANN. § 24.005(a)(1) (Vernon 1987). Appellant also alleged "a separate, actionable tort" of conspiracy for which he sought to recover punitive and exemplary damages. Because the trial court's judgment was expressly limited to the disclaimer/fraudulent transfer issue, we dismissed the appeal as interlocutory. Subsequently, upon agreement of the parties, the trial court severed the cause of action concerning conspiracy and common law fraud, thereby making the summary judgment an appealable final judgment.

Issue:

Can the beneficiary of a will effectively disclaim her inheritance pursuant to § 37A of the Texas Probate Code although disclaiming would defeat the rights of a judgment creditor?

Answer:

Yes

Conclusion:

The court held that, although Texas law provided that legal title vests in estate beneficiaries immediately upon death of the donor, Tex. Prob. Code Ann. § 37A (1987) provided that a disclaimer was also effective upon the death of the decedent. Absent an express statutory provision to the contrary and because appellee could not transfer something that she did not have, the "relation back" doctrine prevented appellee's disclaimer from being treated as a transfer under fraudulent transfer acts. Thus, the court affirmed.

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