In re Brunson
498 B.R. 160
| Bankr. W.D. Tex. | 2013Background
- Debtors Jerry Don and Tamara Brunson filed Chapter 7 and claimed a Texas homestead exemption in their residence at 6704 Kings Point West, Austin, which was deeded to Ms. Brunson but subject to her father Elton Muzny’s life estate.
- The deed (gift deed recorded 2009) reserved to Mr. Muzny “the full possession, benefit and use” for life; the Brunsons live there rent-free and could be excluded by Mr. Muzny at any time.
- Ms. Brunson holds a remainder (future fee simple) interest that will vest upon Mr. Muzny’s death; she currently occupies the house but has no present right to exclusive possession.
- The Chapter 7 Trustee objected to the claimed exemption of the future remainder interest, arguing it is not exemptible under Texas homestead law and remains property of the estate.
- Debtors argued their present possessory occupancy (and intent/arrangement to care for Mr. Muzny) merges with the future fee simple interest so the future interest should be exempt.
- The bankruptcy court held a hearing, considered briefs and authority, and concluded the future interest could not be exempted and granted the Trustee’s objection.
Issues
| Issue | Brunson (Debtors) Argument | Trustee Argument | Held |
|---|---|---|---|
| Whether a future remainder (fee) interest subject to another’s life estate can be exempted as a Texas homestead | Present occupancy (tenancy/possession) merges with future remainder so the future fee is protected by homestead dating back to occupancy | Future remainder is a non-possessory interest and cannot be exempted; a gap exists because life tenant can exclude occupants | Future remainder is not exempt; Trustee’s objection granted |
| Whether a non-fee present possessory interest (tenancy at will or license) suffices to protect a future interest | The Debtors’ present occupancy (even unwritten, rent-free) supports exemption of the future interest | Present occupancy is limited/terminable and cannot immunize the future remainder from creditors | Present occupancy, being non-exclusive and terminable, does not merge to protect the future remainder |
| Whether family/caretaker relationship converts the arrangement into a unified family homestead that would protect the future interest | Caring for the life tenant and moral obligation creates a family unit so homestead can extend to future interest | No evidence of dependency or sufficient family-unity facts; legal reservation of life estate defeats merger | No family-homestead exception found on this record; insufficient evidence to apply such an exception |
| Whether Eskew (allowing exemption) or recent district cases control | Eskew supports exemption where life tenant did not claim homestead and debtor had sole possession | Prior authority and more recent decisions (and Texas precedents) require denial when life tenant claims homestead or retains exclusion rights | Court distinguishes Eskew and follows line of Texas cases denying remainder exemption when life tenant retains possession and homestead claim |
Key Cases Cited
- Laster v. First Huntsville Props., 826 S.W.2d 125 (Tex. 1991) (homestead protection requires a present possessory interest; dicta on merger of present and future interests when not subject to another’s homestead)
- Resolution Trust Corp. v. Olivarez, 29 F.3d 201 (5th Cir. 1994) (tenancy at will can support limited homestead rights but cannot exceed owner’s title)
- Perry v. Dearing (In re Perry), 345 F.3d 303 (5th Cir. 2003) (homestead rights are liberally construed; tenant’s homestead depends on owner’s will and is insubstantial against owner’s rights)
- W.R. Thompson & Sons Lumber Co. v. Clifton, 124 S.W.2d 106 (Tex. 1939) (partitioning co-owners’ interests where claimants held present undivided interests supports continuity of homestead when title exists)
- Hampton v. Gilliland, 56 S.W. 572 (Tex. Civ. App. 1900) (remainder holder living by permission of life tenant cannot claim homestead until remainder becomes possessory)
- In re Eskew, 233 B.R. 708 (Bankr. W.D. Tex. 1998) (allowed exemption of future interest where debtor had sole possession and life tenant did not claim homestead; distinguished by court)