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

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

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

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

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?
Continue Reading Suing Attorneys In Texas For Participating in Fiduciary Breaches

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).
Continue Reading Corporate Trustee’s Statements May Suffice For A Statutory Accounting

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).
Continue Reading A Limitation-Of-Liability Clause May Or May Not Be Enforceable For Breach Of Fiduciary Duty Claims

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)).
Continue Reading Texas Legislature Extends The Rule Against Perpetuities To 300 Years For Trusts

In In re Silver State Holdings, in a bankruptcy proceeding a trustee of a limited liability company sued its former manager for breach of fiduciary duty and another entity for conspiracy to breach fiduciary duty arising out of a sale of property owned by the company. No. 19-41579-MXM 26 LLC, ADVERSARY NO. 19-4043-MXM 7901, 2020 Bankr. LEXIS 3531 (N.D. Tex. Bankr. December 17, 2020).
Continue Reading Bankruptcy Court Discussed The Fiduciary Duties Owed To A Limited Liability Company And Its Creditors By Its Manager

In Ec & Sm Guerra v. Phila. Indem. Ins. Co., an insured sued its property insurer for breach of fiduciary duty and other claims arising from the insurer’s denying a claim for wind damage and disagreeing with an appraiser’s report. SA-20-CV-00660-XR, 2020 U.S. Dist. LEXIS 196735 (W.D. Tex. October 21, 2020). The insurer filed a motion to dismiss, which the court granted.
Continue Reading Court Holds That Insurers Do Not Generally Owe Fiduciary Duties To Insureds