David F. Johnson had his article entitled “Trustee Quandary: Criminal Activity By A Beneficiary With Or On Trust Property,” published in the Texas Tech Estate Planning and Community Property Law Journal in the spring of 2022.
Court Held That The Term “Spouse” In A Trust Meant The Primary Beneficiary’s Wife At The Time Of The Trust’s Execution And Not A Subsequent Wife
In Ochse v. Ochse, a mother created a trust that provided that the trustee was authorized to make distributions to her son and the son’s spouse. No. 04-20-00035-CV, 2020 Tex. App. LEXIS 8922 (Tex. App.—San Antonio November 18, 2020, no pet. history). At the time of the trust’s execution, the son was married to his first wife, but he later divorced and married his second wife. The son’s children then sued the son for breaching fiduciary duties as trustee and joined their mother, the first wife, as a necessary party. The first wife and the son then filed competing summary judgment motions on whether the first wife or the second wife was the son’s “spouse” as referenced in the trust agreement. The trial court ruled the second wife was the correct beneficiary at the time of the suit, and the first wife appealed.
Texas Courts Conflict On Whether Contingent Remainder Beneficiaries Have Standing To Assert Claims Regarding Trust Administration
Texas has recently had two opinions that seemingly take opposite views on whether a contingent remainder beneficiary has standing to sue a trustee for trust administration issue.
In In re Estate of Little, a settlor of a revocable trust withdrew trust assets and deposited them into an account with rights of survivorship with one child as the beneficiary. No. 05-18-00704-CV, 2019 Tex. App. LEXIS 7355 (Tex. App.—Dallas August 20, 2019, pet. denied). His other children, who were beneficiaries of the revocable trust, sued the non-settlor co-trustee for allowing that to happen. The trial court granted summary judgment for the co-trustee, and the beneficiaries appealed.
The court of appeals first held that the beneficiaries had standing to bring their claims. The co-trustee argued that as contingent beneficiaries of a revocable trust, the beneficiaries had no standing to complain about what the settlor chose to do with his money during his lifetime. The court of appeals disagreed with this argument:
Presentation: Trustee Quandary – Criminal Activity by a Beneficiary With or On Trust Property
David F. Johnson presented his paper “Trustee Quandary: Criminal Activity By a Beneficiary With or On Trust Property,” to the Tarrant County Probate Bar Association on March 5, 2020. The presentation dealt with a trustee managing trust assets that are being used by a beneficiary in the course of criminal