Benge v. Roberts, No. 03-19-00719-CV, 2020 WL 4726688 (Tex. App.—Austin Aug. 12, 2020, no pet. h.).


Former Trustee Liability

A beneficiary sued the successor trustee for alleged breaches of trust committed by the former trustee. The trial court granted summary judgment in favor of the successor trustee based on the exculpatory provision of the trust which provided:

No successor Trustee shall have, or ever have, any duty, responsibility, obligation, or liability whatever for acts, defaults, or omissions of any predecessor Trustee, but such successor Trustee shall be liable only for its own acts and defaults with respect to the trust funds actually received by it as a Trustee.

The beneficiary appealed.

The appellate court affirmed. The court first cited Texas Property Code § 114.007(c) which allows the settlor, with some exceptions not relevant to this case, to relieve the trustee from a duty or restriction imposed by the Trust Code or common law. The court explained that this provision relieved the successor trustee of the normal duty under Texas Property Code § 114.002(3) to “make a reasonable effort to compel a redress” of breaches the predecessor trustee committed.

Moral:  A properly drafted exculpatory clause can remove a successor’s duty to sue prior trustees for breaches of trust.