Estate of Hearn v. Hearn, 101 S.W.3d 657 (Tex. App.—Houston [1st Dist.] 2003, pet. denied).
Husband and Wife executed reciprocal wills leaving personal and
household effects to the survivor with the residuary passing to an inter
vivos trust. After Husband died, Husband’s Children from a prior
marriage asserted that Husband and Wife had executed contractual wills
which would require Wife to fund the trust with her property immediately
upon Husband’s death. The trial court granted Wife’s motion for a
summary judgment that she was under no obligation to fund the trust with
her property. Children appealed.
The appellate court affirmed. The court began its analysis by examining
Probate Code § 59A which requires a contractual will to be established
by the provisions of the will stating both that a contract exists and
the material provisions of the contract. Accordingly, the court refused
to consider any extrinsic evidence in determining whether Wife’s will
was contractual. (In dicta, however, the court did examine the terms of
the trust and concluded that this evidence would not have changed the
court’s holding even if it could have been considered.)
The court studied the will and determined that it was contractual in
nature. The will expressly stated that it was contractual, referenced §
59A, and stated the material terms of the contract, that is, that each
spouse will maintain a will that directs the executor of the first
spouse to die to make a qualified terminable interest property (QTIP)
election for property passing into the trust. The contract did not
require Wife to maintain her will or transfer her property to the trust
upon Husband’s death. Instead, the contract was fully performed when
Husband died and his residuary estate passed to the trust for which the
executor made the QTIP election.
Moral: The terms of a contractual will should be clearly stated in the
will because courts are reluctant to imply additional terms.
Estate of Hearn v. Hearn, 101 S.W.3d 657 (Tex. App.—Houston [1st Dist.] 2003, pet. denied).
Husband and Wife executed reciprocal wills leaving personal and
household effects to the survivor with the residuary passing to an inter
vivos trust. After Husband died, Husband’s Children from a prior
marriage unsuccessfully claimed that Husband and Wife had executed
contractual wills which would require Wife to fund the trust with her
property upon Husband’s death. Children then urged the court to reform
the trust to reflect Husband’s alleged intent. The court refused to
reform the trust.
The court began its analysis by identifying the two elements which
Children must satisfy before the court would reform the trust. First,
there must have been an agreement between Husband and Wife. Second,
there must have been a mutual mistake in reducing that agreement to
writing. (The court expressed no opinion as to whether a unilateral
mistake would support reformation of a trust.) Wife successfully negated
these elements by showing that she had never agreed to place her
property in the trust upon Husband’s death. The court examined a letter
from the attorney who drafted the wills and trust and concluded that it
did not even raise a fact issue with regard to whether Wife had agreed
to fund the trust with her property when Husband died.
Moral: A person attempting to reform a trust must have solid evidence
that an agreement exists and that there was a mistake in reducing that
agreement to writing.