You can't transfer more than you own
These words seem self evident. However, in See v. Hennigar, Wash. App. 2009, the concept wasn’t so clear. In that case, a widow received a life estate in a farm from her late husband who died in 1984. A life estate is a form of property ownership that lasts for a set period of time, in this case the remaining lifetime of the widow. Under the husband’s Will, she had the power to sell, mortgage or convert the property. She remarried in 1989 and later executed a community property agreement, also referred to as a “CPA,” with her new husband. A community property agreement is a form of “Will substitute” that passes property directly to the surviving spouse and not pursuant to a Will, Trust or by operation of law.
After the widow’s death in 2007, both her new husband and the remaining beneficiaries of her first husband claimed title to the farm – her second husband under the community property agreement and the beneficiaries of her first husband under his Will. The trial court found in favor of the new husband on the basis that entering into the CPA had the effect of a sale of the farm from the widow as her separate property to her and her new husband as community property. Under the CPA, the widow’s community interest passed to her new husband when she died. However, the Washington State Court of Appeals reversed. The court stated, “[I]t is axiomatic that a person cannot convey a greater interest in real estate than she owns . . . [the deceased] simply could not transfer to the community a greater interest than she held.” The widow, owning a life estate, did not possess the farm in “fee simple.” Fee simple is generally viewed as absolute ownership of property with no time limit on ownership. Therefore, she could only transfer an estate that lasted for the duration of her lifetime. When her life ended, so did the estate she owned. A person cannot transform an estate for a limited period of time into an unlimited fee simple estate merely by signing a community property agreement (at least under these circumstances). The appellate court, in reversing the trial court, awarded the property to the beneficiaries of the widow’s first husband. This certainly seems to be the right result and meets with the well settled law that you can pass title only to what you own.
