In re Ray Ellison Grandchildren Trust, 261 S.W.3d 111 (Tex. App.—San Antonio 2008, pet. denied).
Settlor established a trust for the “descendants” of his children. A
dispute arose as to whether descendants included the adopted children of
his son who were adopted after reaching adulthood. The trial and
appellate courts agreed that these individuals were not within the class
of individuals who would qualify as descendants.
The appellate court began its analysis by holding that “descendants” is
not an ambiguous term and recognizing that it is well established under
Texas law that extrinsic evidence is not admissible when a term is
unambiguous. The court also determined that merely because Settlor
listed his descendants at the time he created the trust did not act to
limit class membership to the listed individuals..
The court then turned its attention to whether adopted adults would be
considered heirs under the intestacy statutes as they existed on the
date Settlor executed the trust. The court determined that although it
was not bound by these statutes, that they provided evidence of the
meaning of the term “descendants.” Despite the fact that the statute
provided that an adopted adult is the “son or daughter of the adoptive
parents for all purposes,” the court held that this did not abrogate the
“stranger to the adoption rule” because it lacked similar language
contained in the statute governing the adoption of minors which stated
that the term “descendant” includes adopted minors. (Note that this
statement is in direct contravention of a prior ruling of the Texas
Supreme Court in Lehman v. Corpus Christi Nat’l Bank, 668 S.W.2d 687
(Tex. 1984).)
Comment: The court’s opinion is puzzling and appears to distort the law
to reach a decision which it thinks is “morally” correct. The settlor
used a term, “descendants,” which has a well-established legal meaning
and is, as stated by the court, “not an ambiguous term.” Id. at 118.
Accordingly, the adopted children are part of the class gift. The
court’s strained reading of historical statutes does exactly what the
court states consideration of statutes cannot do, that is, to “control
or defeat” the plain meaning of the terms of the trust. Id. at 121.
However, because of allegations that the adoptions were done merely to
give the adopted adults standing to demand an accounting, the court
twists the law to exclude the children. The court should not rewrite a
trust merely because the settlor did not address the issue of adult
adoptions and the court “thinks” the settlor would have excluded them.
As the court explained, but then did so nonetheless, “we must not
redraft a trust instrument to vary or add provisions ‘under the guise of
construction of the language’ of the trust to reach a presumed intent.”
Id. at 117.
Dissent: The well-reasoned dissenting opinion of Justice Rebecca Simmons
explains that this case is one where “bad facts make bad law” and that a
court should not “neglect established precedent and impose [its] own
intent” just because the adopted beneficiaries appear unworthy. Id. at
128. Justice Simmons recognized that even under the 1975 statute in
effective in 1982, adopted adults were considered children for all
purposes.
Moral: When making gifts to classes such as “children,” “grandchildren,”
and “descendants,” settlors and testators should indicate whether
adopted children are included and if adopted children are included, the
age by which they need to be adopted to be included in the class.
The trial court awarded attorney fees to the losing parties in a
trust interpretation case. The trustees appealed claiming that the fee
award was inequitable and unjust because the fees incurred by the losing
parties were actually paid up front by a non-party who would later be
reimbursed for the payment.
The appellate court affirmed the award of fees under both § 114.065 of
the Texas Trust Code and the Declaratory Judgments Act. The trial court
has the ability to award reasonable and necessary attorneys’ fees “as
may seem equitable and just” and there was no evidence that the trial
court abused its discretion by acting without reference to guiding rules
and principles. The court explained that the trustees had “no authority
for the proposition that it is unequitable or unjust to award attorney’s
fees to parties who have had their fees paid up front by another party,
subject to reimbursement.” Id. at 127.
Moral: The fact that attorneys’ fees are paid by a non-party to the case
will not prevent the court from making an award of attorneys’ provided
they are reasonable and