David F. Johnson co-presented with Zachary S. Davis from Stoel Rives LLP, in Portland, Oregon, on “Limitation of Liability Clauses in Business Contracts: Limiting Potential Damages and Avoiding Pitfalls” on January 31, 2023, for national CLE provider Strafford. This CLE webinar was intended to guide business counsel and owners to draft and negotiate appropriate limitation
New Texas Bill Would Provide Qualified Release Relief To Trustees Who Deliver Adequate Accountings Without A Timely Objection By The Beneficiary
A recent bill (H.B. 1552) has been submitted that would provide a trustee release relief for transactions described in an accounting where a beneficiary fails to timely object to the accounting and there is no fraud, intentional misrepresentation, or material omission. A similar bill was introduced in 2021, but the Legislature did not pass it. The new bill provides:…
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Court Affirmed Summary Judgment For A Financial Advisor Due To The Dead Man’s Rule Arising From Claim That He Failed To Change A Beneficiary Designation
In Donnelly v. Donnelly, a widow sued her deceased husband’s son for failing to change the beneficiary designation on the husband’s IRA to name her. No. 14-21-00592-CV, 2022 Tex. App. LEXIS 7615 (Tex. App.—Houston October 13, 2022, no pet. history). The IRA account had the husband’s three sons listed as beneficiaries. The widow alleged that the husband told his son, who was his financial advisor, to change the beneficiary designation, and the son said that he had done so. After the husband died, the widow discovered that the beneficiary designation had not been changed and sued for breach of fiduciary duty. The trial court granted the son a summary judgment, and the widow appealed.…
Continue Reading Court Affirmed Summary Judgment For A Financial Advisor Due To The Dead Man’s Rule Arising From Claim That He Failed To Change A Beneficiary Designation
Court Holds That Trustee Who Engaged In Self-Interested Transactions Did Not Have Standing To Challenge Guardianship Proceeding Involving The Beneficiary
In In re Guardianship of Margol, a mother named her son as her power of attorney agent and as a trustee of a trust in which she was a beneficiary. No. 05-21-00255-CV, 2022 Tex. App. LEXIS 4119 (Tex. App.—Dallas June 16, 2022, no pet. history). A daughter filed an application to name a guardian of her mother’s person and estate. The son opposed that application and filed one of his own. The trial court granted the guardianship of the mother’s estate, but not person, and also found that the son had an adverse interest and did not have standing. The son appealed. The court of appeals held as follows:…
Continue Reading Court Holds That Trustee Who Engaged In Self-Interested Transactions Did Not Have Standing To Challenge Guardianship Proceeding Involving The Beneficiary
Enforcement Of Will/Trust Provisions Giving The Fiduciary The Power To Construe The Document
It is common for wills or trusts to provide that the fiduciary has the right to construe the document. For example, a provision may state that the fiduciary shall resolve any question regarding the construction, interpretation, or operation of the will/trust or any matter involving the administration of the estate/trust or any rights of any…
Webinar Series: Financial Services – Advising Trustees Who Manage Closely-Held Business Interests
Settlors often place some or all of the ownership in a closely-held business in a trust. A trustee managing a trust with an interest in a closely held business has difficult management issues to address and this often raises disputes. This presentation will address: (1) considerations in placing closely-held business interests in trusts, (2) considerations…
Suing Attorneys In Texas For Participating in Fiduciary Breaches
It is not uncommon for an attorney to execute all or part of his or her client’s wishes, which may be in breach of a fiduciary duty owed by the client to a third party. The third party can certainly sue the client for breaching fiduciary duties. But can the third party also sue the attorney for participating in the client’s actions?
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Corporate Trustee’s Statements May Suffice For A Statutory Accounting
Trust beneficiaries often request a corporate trustee to prepare a statutory accounting. The Texas Trust Code in Section 113.151 provides that a beneficiary may request a written statement of accounts. Tex. Prop. Code 113.151. Regarding what information needs to be contained in a written statement of accounts, parties and the courts must first look to the terms of the trust. Tex. Prop. Code § 111.0035(b). As one commentator provides: “The settlor may specify in the terms of the trust instrument what must be contained in an accounting by the trustee. When the trust instrument is silent concerning the contents of an accounting, the Trust Code provides a list of items that must be included in every accounting.” 4 Texas Probate, Estate and Trust Administration § 81.63. A trustee and a court should give deference to the trust document and follow its requirements (whether more stringent or less stringent than a statutes require).
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A Limitation-Of-Liability Clause May Or May Not Be Enforceable For Breach Of Fiduciary Duty Claims
Parties often add limitation-of-liability clauses to their agreements. These types of clauses can purport to limit a party’s claims or damages or both. Damage-limitation clauses can take many different forms. For example, such a clause may forbid the recovery of consequential or loss profits damages. Cont’l Holdings, Ltd. v. Leahy, 132 S.W.3d 471, 475-76 (Tex. App.—Eastland 2003, no pet.). Further, a contractual provision setting an upper limit on the amount recoverable is a limitation of liability provision. Arthur’s Garage, Inc. v. Racal-Chubb Sec. Sys., 997 S.W.2d 803, 810 (Tex. App.—Dallas 1999, no pet.); Fox Elec. Co. v. Tone Guard Sec., Inc., 861 S.W.2d 79, 83 (Tex. App.—Fort Worth 1993, no writ). If a plaintiff brings suit, the terms of the contract determine the relative positions of the parties and control the level of liability of either party. Federated Dept. Stores, Inc. v. Houston Lighting & Power Co., 646 S.W.2d 509, 511 (Tex. App.—Houston [1st Dist.] 1982, no writ).
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Texas Legislature Extends The Rule Against Perpetuities To 300 Years For Trusts
The Texas Legislatures recently passed a bill that takes effect on September 1, 2021 that extends the rule against perpetuities to 300 years for trusts. The Legislature forwarded the bill (HB 654) to the governor on May 20, 2021, but he has not yet signed the bill into law. But unless he vetoes the bill, it will become law after ten days.
The Texas Constitution prohibits perpetuities: “Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed . . . .” Tex. Const. art. I, § 26. A perpetuity is a restriction on the power of alienation that lasts longer than a prescribed period. ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 866-67 (Tex. 2018). The rule against perpetuities “should be a check on vain, capricious action by wealthy empire builders. But it should not be a constantly present threat to reasonable dispositions which slightly overstep a technical line.” Rekdahl v. Long, Tex., 417 S.W.2d 387 (1967) (Steakley, J., dissenting) (citing W. B. Leach & O. Tudor, The Rule Against Perpetuities § 24.11 at 43 (1957)).
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