In re Estate of Webb, 266 S.W.3d 544 (Tex. App.—Fort Worth 2008, pet. denied).
Will and testamentary trust beneficiaries reached a settlement with
respect to various will and trust matters. Beneficiaries then sought to
modify the trust under Property Code § 112.054 to bring it into
compliance with their settlement. Trustee objected claiming that he was
not a party to the settlement. The trial court held that Trustee was not
a necessary party to the modification action and granted Beneficiaries’
motion to strike the Trustee’s intervention in the case.
The appellate court reversed. The court determined that Trustee was a
necessary party to the settlement as well as a necessary party to any
action to modify the trust. Property Code § 115.011 provides that the
trustee is a necessary party if the “trustee is serving at the time the
action is filed.” The court explained that under Probate Code § 37,
title to property vests in the beneficiary immediately upon a testator’s
death unless the will provides otherwise. The testator’s will did not
provide otherwise and thus when the testator died, the trustee, as a
beneficiary of the property albeit it trust, had title to the property.
Thereafter, Trustee accepted the trust and thus he was serving as a
trustee making him a necessary party to the action. Likewise, because
Trustee was a beneficiary of the will, a family settlement agreement
would not be binding upon him without his consent.
Moral: A testamentary trustee is a necessary party to (1) family
settlement agreements and (2) actions involving the trust.