Set Aside Exempt Property
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Transcript of Set Aside Exempt Property
Set AsideExempt Property
1. Homestead
Two types of possible protections:
Against being reached to pay the claims of most creditors.
Ability of surviving spouse and minor children to occupy the homestead.
1. Homestead
What is it? The home you own in which you live▪ Renters do not have homestead rights.
Size▪ Rural = 200 acres (family), 100 acres
(non-family)▪ Can be separate parcels
▪ Urban = 10 acres▪ Must be contiguous parcels
1. Homestead
How big is it?
Rural = 200 acres (family), 100 acres (non-family)▪ Can be separate parcels
Urban = 10 acres▪ Must be contiguous parcels
1. Homestead
How much is it worth?
No limit on value!
1. Homestead
Creditor protection upon death PC § 270 EC § 102.004
Condition = must be survived by either:▪ Surviving Spouse, or▪ Minor child
1. Homestead
Creditor protection upon death General Rule = homestead cannot
be used to pay most of the decedent’s creditors:▪ Credit cards▪ Utilities▪ Tort claims▪ Contract claims▪ Student loans▪ Article 9 creditors
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead▪ Property taxes on homestead
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead▪ Property taxes on homestead▪ Improvements on homestead
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead▪ Property taxes on homestead▪ Improvements on homestead▪ Owelty of partition upon divorce
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead▪ Property taxes on homestead▪ Improvements on homestead▪ Owelty of partition upon divorce▪ Federal tax lien (e.g., unpaid income
taxes)
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on
homestead▪ Property taxes on homestead▪ Improvements on homestead▪ Owelty of partition upon divorce▪ Federal tax lien (e.g., unpaid income
taxes)▪ Refinancing of above liens
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on homestead▪ Property taxes on homestead▪ Improvements on homestead▪ Owelty of partition upon divorce▪ Federal tax lien (e.g., unpaid income
taxes)▪ Refinancing of above liens▪ Certain home equity loans
1. Homestead
Creditor protection upon death Exceptions = homestead may be
reached to pay these creditors:▪ Purchase money mortgage on homestead▪ Property taxes on homestead▪ Improvements on homestead▪ Owelty of partition upon divorce▪ Federal tax lien (e.g., unpaid income taxes)▪ Refinancing of above liens▪ Certain home equity loans▪ Certain reverse mortgages
1. Homestead
Occupancy right of surviving spouse Until abandonment or death,
whichever comes first. Can live in homestead with a new
partner! Duties similar to those of a life tenant▪ Pay property taxes▪ Maintain home▪ Pay interest on mortgage
1. Homestead
Occupancy right of minor child Until reach age 18. Duties similar to those of a life
tenant.
1. Homestead
Title to homestead Passes under will or to heirs
regardless of who has the special occupancy right.
2. Exempt personal propertyPersons entitled:
Surviving spouse Minor children Unmarried adult children living at
home Adult incapacitated children
2. Exempt personal propertyMaximum exempt value
$60,000 [if no family, while alive, $30,000]
2. Exempt personal property
Property exempt under Prop. Code § 42.002: Home furnishings and heirlooms Food Clothes Jewelry (not to exceed 25%) 2 firearms Sporting equipment Car or motorcycle for each family member Specified animals (12 cows, 120 birds, 2 horses,
pets) Life insurance surrender value Current wages Many others
2. Exempt personal property
If Estate is Insolvent PC § 279 EC § 353.153
The exempt property claimants take title to the property free and clear of creditors, heirs, and beneficiaries.
2. Exempt personal property
If Estate is Solvent PC § 278 EC § 353.152
The exempt property passes to the heirs and beneficiaries (not the exempt property claimants).
3. Allowances in Lieu of Exempt Property
Homestead PC § 273 = $15,000 EC § 353.053 = $45,000 as of 1/1/14
Exempt personal property PC § 273 = $5,000 EC § 353.053 = $30,000 as of 1/1/14
4. Family Allowance Entitled Individuals
PC § 286 EC § 353.101
1. Surviving spouse 2. Minor children 3. Disabled children but, as of 1/1/14, only if
decedent was actually caring for the child.
No allowance for adult child who still lives at home.
4. Family Allowance
Condition Entitled individuals cannot have
property of their own adequate for support.
4. Family Allowance
Amount Amount needed to support entitled
individuals for one year after the decedent’s death.
Thus, depends on the facts.
4. Family Allowance
Amount Amount received does not reduce
intestate share or gift under the will. Not treated as advancement or
satisfaction. Treated as a debt of the estate which
has significant priority.
4. Family Allowance
In re Estate of Rhea, 257 S.W.3d 787 (Tex. App. – Fort Worth 2008, no pet.).