Ron v. Ron, No. 3:19-CV-00211, 2020 WL 1426392 (S.D. Tex. Feb. 4, 2020), adopted by Ron v. Ron, 3:19-CV-00211, 2020 WL 1700320 (S.D. Tex. Mar. 23, 2020).

Trusts

Trust Protectors

Ex-wife claims that during marriage, the ex-husband, the trustee, improperly transferred community property into an irrevocable trust she created and that the trust protector assisted him in making the transfers. In addition, the trust protector, using the authority granted to him as the protector, appointed the ex-husband as a beneficiary of the trust. Ex-wife claims, among other things, that the trust protector breached his fiduciary duties to her.

The court examined the ex-wife’s claim that a formal fiduciary relationship existed between her in her capacity as the trust’s settlor and the trust protector. The court agreed that the protector was a fiduciary because of express language in the trust so providing. However, those fiduciary duties are owed to the trustee and beneficiaries, not the settlor. The court was not swayed by the terms of the trust which indicated that the protector’s duties were to achieve her “objectives as expressed by the other provisions of my estate plan.”

Moral:  Unless the terms of the trust provide otherwise, a trust protector does not owe fiduciary duties to the settlor of an irrevocable trust who is not also a beneficiary.

 

 



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