In In the Interest of Riley Family Revocable Trust, a trustee filed suit for a declaration regarding who takes in the distribution of remaining trust property. No. 13-20-00084-CV 2021 Tex. App. LEXIS 5839 (Tex. App.—Corpus Christi July 22, 2021, no pet. history). In article two, section 2.01, the Trust states:

Upon the death of both Trustors, the primary residuary beneficiaries of this Trust are the children of the Trustors, BARBARA JEAN RILEY JONES, BRENDA JUNE RILEY BRAGG, STEPHEN MARCUS RILEY, and ELAINE RILEY, and their descendants… For purposes of this Trust Agreement, the terms “issue” or “descendant” shall not include any child adopted by a grandchild of the Trustors.


Continue Reading Court Reversed Trial Court On Interpretation Of Trust Regarding Per Stirpes Versus Per Capita Distributions

The owners of a corporation may enter into shareholder agreements that address and resolve many disputes. For example, the Texas Supreme Court noted: “Shareholders of closely-held corporations may address and resolve such difficulties by entering into shareholder agreements that contain buy-sell, first refusal, or redemption provisions that reflect their mutual expectations and agreements.” Ritchie v. Rupe, 443 S.W.3d 856, 871 (Tex. 2014).
Continue Reading Shareholder Agreements Are Very Powerful In Texas: Parties Should Carefully Review Those Agreements Before Obtaining Stock In A Corporation

In JPMorgan Chase Bank, N.A. v. Campbell, a member of a limited partnership sued other partners, including a trustee of a trust, to dissolve the partnership. No. 09-20-00161-CV, 2021 Tex. App. LEXIS 5001 (Tex. App.—Beaumont June 24, 2021, no pet. history). The trustee was listed as a nominal defendant, and the trustee filed claims seeking declaratory relief regarding it not having to participate in an arbitration proceeding. The plaintiffs then filed additional claims against the trustee including breach of fiduciary duty and for modification of the trust. The trustee filed a special appearance regarding those new claims, which the trial court denied. The trustee appealed.

The court of appeals first held that the trustee did not waive its right to object to personal jurisdiction by answering the original suit and seeking declaratory relief. The court noted that “Rule 120a allows a party to file a special appearance in any severable action of a lawsuit.” Id.  The court held: “the trust modification claim is a severable action, and that JPMorgan did not waive its challenge to the trial court’s exercise of personal jurisdiction over it by appearing in and seeking declaratory relief in the underlying arbitration suit.” Id.
Continue Reading Texas Court Does Not Have Personal Jurisdiction Over A Trustee Of A Trust With Texas Timber Rights

In Lawrence v. Bailey, a son killed his parents with a sledge hammer. No. 01-19-00799-CV, 2021 Tex. App. LEXIS 4716 (Tex. App.—Houston [1st Dist.] June 15, 2021, no pet. history). The son was a named beneficiary of the father’s life insurance policy. The insurance company filed an interpleader action regarding the life insurance proceeds. The trial court awarded those to the father’s estate, and the father’s brother then filed a motion for new trial. The brother alleged that under the slayer statute, that he was entitled to the proceeds. The trial court denied the motion, and the brother appealed.

The court of appeals first held that the brother had standing to seek a declaration regarding the ownership of the insurance proceeds. The court noted that the brother argued:

Under the Texas Slayer Statute, a beneficiary of a life insurance policy or contract forfeits the beneficiary’s interest in the policy or contract if the beneficiary is a principal or an accomplice in willfully bringing about the death of the insured.” See Tex. Ins. Code. § 1103.151. He pointed out that, “[i]f there is no contingent beneficiary entitled to receive the proceeds of a life insurance policy or contract, the nearest relative of the insured is entitled to receive the proceeds.” Id. § 1103.152(c).


Continue Reading Relative Had Standing To Assert Slayer Statute And Declaration Regarding Rights To Insurance Proceeds Over Victim’s Estate

In Bird v. Carl C. Anderson, a trust beneficiary sued a defendant for usurping a trustee’s role and breaching fiduciary duties as a de facto trustee. No. 03-21-00140-CV, 2021 Tex. App. LEXIS 5036 (Tex. App.—Austin June 24, 2021, no pet. history). The plaintiff complained that the defendant “reinvested the proceeds into ‘high-risk and non-diversified investments that exposed the trusts and [their] beneficiaries to inappropriate levels of risk,’ causing the trusts to substantially diminish in value; distributed assets to himself, Jennifer, and perhaps others to the Foundation’s detriment; and had Jennifer sign all of the transactional documents in her role as trustee even though she was and is incapacitated.” Id. The defendant filed a motion to dismiss under Texas Rule of Civil Procedure 91, arguing that there was no de facto trustee status in Texas. The trial court denied the motion, found that “Texas law recognizes the legal capacity of ‘de facto trustee’ in the context of the administration of private trusts,” but certified the issue for permissive appeal.
The court of appeals declined to accept the petition for interlocutory appeal.
Continue Reading Court Discusses De Facto Trustee Status In Texas

In Trinh v. Cent. River Healthcare Group, a brother sued his sister over the management of a PLLC. No. 03-19-00393-CV, 2021 Tex. App. LEXIS 4542 (Tex. App.—Austin June 9, 2021, no pet. history). The brother claimed that the sister promised to pay him a salary, and she did not. The court of appeals affirmed

In Austin v. Mitchell, a wife filed suit alleging her ex-husband fraudulently transferred a portion of his limited partnership interest in a family limited partnership to a trust for the benefit of his children. No. 05-19-01359-CV, 2021 Tex. App. LEXIS 4536 (Tex. App.—Dallas June 8, 2021, no pet. history). The trial court granted summary judgment for the husband and the wife appealed.
Continue Reading Wife’s Fraudulent Transfer Claim Against Husband For Transferring Business Interests To Trust Failed Due To The Statute Of Repose

In In re Estate of Stewart, siblings filed claims regarding the administration of their father’s estate. No. 04-20-00103-CV, 2021 Tex. App. LEXIS 3897 (Tex. App.—San Antonio May 19, 2021, no pet. history). Among other claims, a sister claimed that her brother breached fiduciary duties as executor by distributing real property to three of the siblings, but not to her. The brother claimed that he had the right to do so under the Estates Code. The jury found that the brother breached his fiduciary duties, but found that the sister had not been harmed. The brother appealed. The court of appeals first discussed an executor’s fiduciary duties to the estate’s beneficiaries:

“The relationship between an executor and the estate’s beneficiaries is one that gives rise to a fiduciary duty as a matter of law.” “An executor’s fiduciary duty to the estate’s beneficiaries arises from the executor’s status as trustee of the property of the estate.” “The executor thus holds the estate in trust for the benefit of those who have acquired a vested right to the decedent’s property under the will.” “The fiduciary duties owed to the beneficiaries of an estate by an independent executor include a duty of full disclosure of all material facts known to the executor that might affect the beneficiaries’ rights.” “A fiduciary also ‘owes its principal a high duty of good faith, fair dealing, honest performance, and strict accountability.’” “When an independent executor takes the oath and qualifies in that capacity, he or she assumes all duties of a fiduciary as a matter of law which, in addition to other duties, includes the duty to avoid commingling of funds.”


Continue Reading Court Holds That An Executor May Breach Duties In Making A Non-Pro Rata Distribution Of Assets

In Villareal v. Saenz, two co-owners of a limited liability company sued each other regarding conduct surrounding a business divorce. 5-20-CV-00571-OLG-RBF, 2021 U.S. Dist. LEXIS 94183 (W.D. Tex. May 18, 2021). After the parties asserted allegations against each other, they entered into a release agreement. The parties agreed that “Saenz would assign his entire interest to ZroBlack LLC to Villarreal.” After the release, Saenz refused to return certain property to the company. Villarreal sued for breach of fiduciary duty and other claims.

Saenz filed a motion to dismiss, and the district court magistrate judge recommended that the claims that arose before the release be dismissed, but recommended that the claims that arose after the release continue. Regarding Saenz’s fiduciary duties after the release agreement was executed, the court stated:
Continue Reading Business Divorce: Exiting Member of LLC May Still Owe Fiduciary Duties

In Austin Trust Co. v. Houren, beneficiaries of a trust executed a family settlement agreement with the trustee and the former trustee’s estate. No. 14-19-00387-CV, 2021 Tex. App. LEXIS 1955 (Tex. App.—Houston March 16, 2021, no pet. history). After the settlement agreement was executed, one of the parties sued the former trustee’s estate for over a $37 million debt (or due to over distributions). The estate then filed a motion for summary judgment based on the release in the settlement agreement, which the trial court granted. The court of appeals affirmed, finding that the release’s language was sufficiently broad to cover these claims:
Continue Reading Court Upheld A Release In A Family Settlement Agreement That Protected A Former Trustee’s Estate From Claims