In re White Intervivos Trusts, 248 S.W.3d 340 (Tex. App.—San Antonio 2007, no pet.).
Settlors created four irrevocable trusts naming their five
grandchildren as beneficiaries. Settlors’ two children (the parents of
the beneficiaries) were named as the trustees. Over a decade later,
trustees filed a petition to terminate these trusts claiming that
Settlors’ intent was really to provide for them, not their
grandchildren. Thus, deviation from the terms of the trusts would be
appropriate under Trust Code § 112.054. One of the settlor’s testified
that he did not understand the difference between being a beneficiary
and a trustee and thus termination of the trusts would further the
purpose of the trusts. Despite the lack of any additional evidence, the
trial court found that a mistake was made in drafting the trusts and
thus terminated the trusts. The trial court then distributed the trust
assets outright to the two trustees.
The guardian ad litem appealed on behalf of the three minor
grandchildren (the adult grandchildren did not appeal). The appellate
court reversed with regard to the minor beneficiaries. The court
explained that the trusts named the grandchildren as beneficiaries and
were expressly stated to be irrevocable. The settlor’s children were
clearly and unambiguously named as trustees, not beneficiaries. The
court explained that deviation from the terms of the trusts was not
appropriate because there was no evidence of “circumstances not known to
or anticipate by the settlor” as required by the Trust Code. The only
evidence was one trustee’s alleged confusion. The court also noted that
no one discovered this supposed mistake for almost 14 years.
Moral: The court will not order deviation to terminate an irrevocable
trust just because the settlor has “a change of heart” many years later.