trustee breach of duty

In Pense v. Bennett, the ward in a guardianship proceeding sued to invalidate the sale of real property from a trust created for his benefit to an affiliate of the trustee. No. 06-20-00030-CV, 2020 Tex. App. LEXIS 8002 (Tex. App.—Texarkana October 8, 2020, no pet.). The trial court granted summary judgment for the trustee, held that the sale was effective, but expressly refused to rule on a breach of fiduciary duty claim based on the transaction as it was pending in another proceeding. The ward appealed.

The court of appeals explained how the guardian had sought and obtained court approval for the creation of a management trust and the transfer of real property from the guardianship estate to the new trust. The trustee of that trust had the express authority to sell trust property:

Article VIII of the Trust Instrument lists the powers of the trustee. And, “[w]here the language of the trust instrument is unambiguous and expresses the intentions of the maker, the trustee’s powers are conferred by the instrument and neither the court nor the trustee can add or take away such power.” As pertinent here, the Trust Instrument authorized the trustee to: “[P]artition, exchange, release, convey or assign any right, title or interest of the trust in any real estate or personal property owned by the trust”; “[S]ell, exchange, alter, mortgage, pledge or otherwise dispose of trust property”; “[E]xecute and deliver any deeds, conveyances, assignments, leases, contracts, stock or security transfer powers, or any other written instrument of any character appropriate to any of the powers or duties herein conferred on the Trustee”; and “[H]old title to investments in the name of the Trustee or a nominee.”

In addition to these powers specified in the Trust Instrument, the Texas Trust Code authorizes “a trustee [to] exercise any powers . . . that are necessary or appropriate to carry out the purpose of the trust.” Those powers include the power to “contract to sell, sell and convey, or grant an option to sell real or personal property at public auction or private sale for cash or for credit or for part cash and part credit, with or without security.”


Continue Reading Court Holds That A Trustee Had The Power To Sell Trust Property To An Affiliate, Though Such An Act May Be In Breach Of A Duty

In Benge v. Thomas, a settlor created a trust and appointed her daughter, Missi, as the trustee. No. 13-18-00619-CV, 2020 Tex. App. LEXIS 6888 (Tex. App.—Corpus Christi August 27, 2020, no pet.). The trust owned an interest in a limited partnership that contained mineral interests. Missi’s daughter, Benge, was a beneficiary of the trust. Benge sued Missi for various claims of breach of fiduciary duty arising from the operation of the limited partnership and other issues. The trial court granted summary judgment for Missi, and Benge appealed.

The court of appeals first addressed Benge’s claim that Missi breached her fiduciary duty to the trust by allowing the limited partnership’ general partner to make objectionable transactions. Benge claimed that Missi breached her fiduciary duty in her capacity as trustee because she should have prevented the general partner from making the transactions. The court disagreed:

AFT Property as general partner had the authority to make these decisions. The evidence establishes as a matter of law that the 2012 Trust as a limited partner had no decision-making rights regarding AFT Minerals’ assets. Benge’s complaints all involve alleged damages to AFT Minerals and not to Benge herself. Thus, AFT Minerals would have had to bring these claims and not Missi in her capacity as trustee or Benge as a remainder beneficiary. See Hall v. Douglas, 380 S.W.3d 860, 873 (Tex. App.—Dallas 2012, no pet.) (“[C]laims for “a diminution in value of partnership interests or a share of partnership income” may be asserted only by the partnership itself.”); see also Adam v. Harris, 564 S.W.2d 152, 156-57 (Tex. App.—Houston [14th Dist.] 1978, writ ref’d n.r.e.) (“A clear line exists between actions of a trustee and those of an officer of a corporation owned wholly or in part by the trust, even where the same person ‘wears both hats.’”).


Continue Reading Court Addresses Claims Against A Trustee Arising From The Management Of A Limited Partnership Interest

In re Estate of Bryant, a couple set up three trusts for their three children, Bill, Leslie, and Jane. No. 07-18-00429-CV, 2020 Tex. App. LEXIS 2131 (Tex. App.—Amarillo March 11, 2020, no pet. history). After the couple had both passed away, their son Bill assumed the role of trustee of three trusts: Irrevocable Trust,