Hardy v. Robinson, 170 S.W.3d 777 (Tex. App.—Waco 2005, no pet.).
Principal signed a statutory durable power of attorney. In the
“special instructions” section, he explained that he wanted certain
litigation in which he was involved to continue with the proceeds held
in trust for his sons. Principal died within hours of signing the power
of attorney. The trial court held that this language was sufficient to
create a trust.
The appellate court reversed. The court first examined the document and
found that it was a statutory durable power of attorney under Probate
Code § 482. Consequently, under long-standing Texas law, it must be
strictly construed. Principal’s special instructions acted to grant
Agent powers he might not otherwise have had the right to exercise. The
language did not act to create a trust.
The court also held that Principal did not create an oral trust.
Although an oral trust of personal property is enforceable under
Property Code § 112.004, there was no evidence that the trust was
funded, that is, that Principal actually transferred his rights in the
lawsuit to Agent as a trustee. The court also explained that the only
evidence of trust intent was the special instructions in the power of
attorney which granted Agent the power to create a trust but did not
itself create a trust.
Moral: A person desiring to create a trust must make certain to take all
necessary steps.