In Tolar v. Tolar, a husband and wife executed a trust in 2006 that named them as trustees and their children and husband’s children from a previous marriage as beneficiaries. No. 12-14-00228-CV, 2015 Tex. App. LEXIS 5119 (Tex. App.—Tyler May 20, 2015, no pet. hist). The trust had an exhibit listing assets being transferred into the trust, and it listed real estate in Louisiana without any property description. The husband died, and his child from a previous marriage sued the wife (stepmother) for breach of fiduciary duty for not transferring the Louisiana real property into the trust. The trial court granted summary judgment for the wife stating that she had no duty to execute deeds to convey any real property to the trust.
The court of appeals stated: “The trustee shall administer the trust in good faith according to its terms and the Texas Trust Code.” Id. “The powers conferred upon the trustee in the trust instrument must be strictly followed.” Id. “High fiduciary standards are imposed upon trustees, who must handle trust property solely for the beneficiaries’ benefit.” Id.
The son alleged that the wife and husband intended to transfer the real estate into the trust and that she had a duty to do so. The court of appeals held that the wife’s duties arose from the wording of the trust instrument. Further, there was nothing in the trust instrument requiring the wife to correct flaws in the attempted initial conveyance. Moreover, there was nothing in the trust directing the wife to convey the Louisiana real property, or any property she owned, to the trust. The court held that the wife, who was a trustee and settlor, had no duty to finish the funding of the trust and affirmed judgment for wife.
INTERESTING NOTE: This case is very interesting for what it does not say. The court seems to imply that if the trust document required the trustee to correct initial conveyances or otherwise finish funding the trust, that maybe there would be a duty to do so. Accordingly, parties who are drafting trust documents may want to add that type of language to create duties and add protections that a joint estate plan will be fulfilled when one spouse dies.