In Fetter v. Brown, a beneficiary sued a trustee for breach of duty, and trial court awarded the beneficiary over $1.3 million in actual damages and $.7 million in punitive damages. No. 10-13-00392-CV, 2014 Tex. App. LEXIS 11209 (Tex. App.—Waco October 9, 2014, pet. denied). The court of appeals held that the damages should have been awarded to the successor trustee and not to the beneficiaries. The court also held that the damages should not have been decreased by the trustee’s percentage (50%) in the trust as a beneficiary—that would be done when the trust terminates.
INTERESTING NOTE: Although beneficiaries have standing to assert claims regarding a breach of fiduciary duty regarding a trust, the beneficiaries may not actually recover damages for same—those damages may have to go back to the trust. The successor trustee would then have the discretion to distribute funds under the trust instrument’s guidelines. This fact may dissuade beneficiaries and their attorneys from bringing claims or may be used as leverage in attempting to settle those claims.