Eisen v. Capital One, 232 S.W.3d 309 (Tex. App.—Beaumont 2007, pet. denied).
Current Beneficiary of a testamentary trust sought a summary judgment
that she had the right to remove the trustee under a provision of the
will which gave “the beneficiary” that right. Remainder Beneficiaries
claimed that she would need their joinder or consent to exercise this
right. The trial court agreed and Current Beneficiary appealed.
The appellate court reversed. The court carefully examined the trust and
determined that the trust was created for Current Beneficiary (the
settlor’s spouse) and not for Remainder Beneficiaries (his children).
The trustee has the ability to use all trust property, both income and
principal, for Current Beneficiary’s benefit. The court explained that
definitions of the term “beneficiary” in the Trust Code which would
clearly include Remainder Beneficiaries are inapplicable for two
reasons. First, the definitions apply to the term as used in the Trust
Code, not in a trust and second, the statute did not exist when the
settlor executed his will and thus he could not have intended the Code’s
definition to apply. The court also pointed to the exact use of the
phase “the beneficiary” in the trustee removal provision which
contemplates that there is only one beneficiary with the removal
authority.
Moral: Trusts must be carefully drafted so that when a beneficiary is
given a power, it is clear whether both current and remainder, or just
current, beneficiaries are referenced.
Note: A dissenting justice believed that under the Trust Code definition
of beneficiary in § 111.004(2), (6), and the general rule that singular
includes plural and plural includes singular, all beneficiaries must
consent to remove the trustee.