Eisen v. Capital One, 232 S.W.3d 309 (Tex. App.—Beaumont 2007, pet. denied).

Trusts

Construction

 

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.



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