Alpert v. Riley, 274 S.W.3d 277 (Tex. App.—Houston [1st Dist.] 2008, pet. denied).



Successor Trustees


A dispute arose as to whether a successor trustee was properly appointed under a trust provision allowing the current trustee to appoint a successor trustee or whether the default trustee provided for in the trust was the trustee. The appellate court examined the evidence and determined that fact questions existed and thus the trial court’s grant of a summary judgment was improper.

With regard to another trust in the same case, the court determined that the alleged successor trustee did not properly accept the position because the trustee did not execute “an acknowledged acceptance of the trusteeship” as required by the trust. Instead, the alleged successor trustee had only signed a letter which had not been notarized. Although this letter would be sufficient under Trust Code § 112.009(a), the trust itself prescribed a method and the settlor’s instructions prevail over the Trust Code’s default method under Trust Code § 111.0035(b) The court also rejected the alleged successor trustee’s claim that equitable theories such as estoppel or deviation would allow him to assume the trusteeship without compliance with the express language of the trust.

The court also held that trial court abused its power in appointing a successor trustee without first attempting to follow the trustee selection method Settlor detailed in the trust itself.

Moral: A trust provision providing a method for the appointment of a successor trustee needs to be clearly stated and then clearly followed.



Breach of Fiduciary Duty



Settlor created irrevocable trusts. Later, Trustee sued Settlor for breach of fiduciary duty. The court determined that Trustee lacked standing to sue Settlor because “[a] trust settlor has no fiduciary obligation to a trust beneficiary once [a] trust is created, and control of the trust assets is vested with the trustee.” Alpert, at 292. The court rejected Trustee’s claim that he could bring the action based on a breach of Settlor’s fiduciary duty as a parent to the beneficiaries, his sons.

The court also pointed out that Trustee was precluded from suing Settlor under Trust Code § 113.028(a) which provides that a trustee may not asset a claim for damages against a party who is not a beneficiary if each beneficiary provides written notice of his or her objection as was done in this case.

Moral: Unlike with a trustee, a trust does not create a fiduciary relationship between the settlor and the beneficiary.



Attorneys Fees

Standard for Allowance


The trial court denied Beneficiaries’ request to have attorney’s fees awarded against Trustee and Beneficiaries appealed. The appellate court reversed. Under Trust Code § 114.064, the trial court has the discretion to make an award of attorney’s fees as it determines to be “equitable and just.” Because of the way in which the appellate court disposed of other issues in this case, the court held that the trial court needed to make a redetermination of whether an award of fees would now be appropriate.

Moral: The trial court’s determination whether to award, or not award, attorney’s fees may need to be reexamined after an appellate court disposes of other issues in the case.