Longoria v. Lasater, 292 S.W.3d 156 (Tex. App.—San Antonio 2009, pet. denied).
In 1924, a partition agreement and decree created a trust of real
property in favor of named beneficiaries. Disagreement arose over a 1950
deed which covered the same property – did the 1950 deed (1) continue
the 1924 trust or (2) create a new trust? The appellate court determined
that because one of the beneficiaries of the 1924 trust died prior to
the 1950 deed, his portion of the property was not covered by the 1950
deed. The court relied on established Texas law as well as the
Restatement (Second) of Trusts when it held that a person cannot be a
beneficiary of a trust if that person dies prior to the date of trust
creation. Because the 1950 deed did not create a trust with regard to
the predeceased beneficiary’s portion of the 1924 trust, the appellees
could not prevail because the alleged trustees held the property either
free of trust or as a resulting trust.
Moral: Complex land transactions can trigger disputes many decades
later. Accordingly, great care needs to be taken to be sure “simple”
mistakes are not made such as naming a deceased person as the
beneficiary of a trust.