Bradley v. Shaffer, 535 S.W.3d 242 (Tex. App.—Eastland 2017, no pet.).


Spendthrift Provisions


A trust beneficiary attempted to convey his interest in a trust contrary to a spendthrift provision which precluded beneficiaries from assigning their trust interests. The trial court granted the trustees’ request for a summary judgment declaring the deeds to be ineffective. The grantee of the deeds appealed.


The appellate court affirmed. The court focused on the spendthrift provision applicable at the time the trust beneficiary attempted to convey his trust interest. The clause clearly precluded the beneficiary from transferring the interest and the court explained the assignment was invalid at the time it occurred.


The court next had to determine whether the invalid conveyance could become valid at a later time. First, the court rejected a claim that the trust violated the Rule Against Perpetuities because if permitted an extension of the trust’s duration beyond a life in being plus twenty-one years. The court explained that the duration of a trust is irrelevant to a RAP analysis. Instead, the key determination is whether the interest vests within the RAP period. The court studied the trust and determined that vesting occurred immediately upon creation of the trust – not one second of the RAP period was “used.”


In addition, the court rejected the argument that the after-acquired title doctrine could fix the conveyance because the grantor later acquired title to the conveyed property free of trust. Because the initial attempt transfer was void, it could not be cured by the grantor later acquiring the title which he attempted to transfer.


Moral:  A conveyance of property ineffective because of a spendthrift provision cannot be cured by the beneficiary later acquiring that property free of trust.