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Family Settlement Agreements

What are Family Settlement Agreements in Probate law?

Family settlement agreements are useful in many situations involving the probate of a loved one’s estate. These are used when there is a dispute about the distribution of property to heirs or when the family agrees the distribution should be different than what the will states. Sometimes courts will have the family enter into these settlement agreements rather than having a trial to sort the disagreements.

In what circumstances would a family settlement agreement be beneficial?

Family settlement agreements can be entered in situations when there is a will or when there is no will. When there is a will and the people who take under the will agree the distributions should be different, contrary to what the will says, they can enter into a family settlement agreement. Or if there is no will, the rightful heirs under the intestate laws of Texas, can enter into an agreement to distribute the property differently than what the laws of intestacy require.

One of the more popular uses of family settlement agreements are in situations where someone is contesting the will in court. That is, the will has been filed for probate and an heir is saying the will is not valid. Courts favor this option more because it costs less and the family can all come to an agreeable arrangement.

Terms of the family settlement agreement

For the agreement to be valid, the family settlement agreement must be different than what the loved one’s will stated. The agreement must be based off of a will that is considered valid in Texas. In our earlier blog post we discuss what qualifies as a valid will in Texas.

When the family settlement agreement is entered the Texas laws of contracts will apply. The short version of contract law is that in the agreement there must be an offer, acceptance, consideration (property of some sort in this case), and mutual assent (agreement).

Once entered, it is not required by Texas law that the court approves the agreement. But there can be situations when obtaining court approval is helpful, especially in situations involving title transfer of property.

Enforcing the family settlement agreement

Anyone named in the family settlement agreement can seek to have it enforced. As mentioned earlier, the agreement is bound by Texas contract law, so if the “contract” is under a breach, any person to the agreement can sue for breach of contract. Reasons can be, but are not limited to, that the agreement was made as a mutual mistake of fact, the terms were made through fraud, or if the attorney who made the agreement did not have the authority to do so.

If you find yourself in a mess of a will contest or your family agrees the distribution of your loved one’s estate should be done differently, now that he or she has passed, give our firm a call and let us see if a family settlement agreement is something you may need!

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