Gutierrez v. Gutierrez, 662 S.W.3d 573 (Tex. App.—El Paso 2022, no pet. h.).
Mother devised her property equally to her four sons with two receiving their shares outright and two receiving their shares in trust. The trustees of the trusts were the sons who received their shares outright. All four sons executed a partition deed regarding the disposition of this property. The key issue in this case is whether after the partition deed one of the sons whose property was held in trust then owned a fee simple interest in the property or only a life estate interest with the remainder being controlled by the terms of the trust. Subsequently, this son executed a will leaving all his property to his wife as well as a warranty deed conveying the interest he received from the partition deed to his wife. After this son died, competing claims were made to the property by the surviving spouse and the remainder beneficiaries of the trust. Both the trial and El Paso Court of Appeals held that the surviving spouse was the owner of the property.
The appellate court focused on a provision of the son’s trust that provided the trustees could terminate the trust at any time by “paying over and delivering to such beneficiary all of such beneficiary’s part of the trust estate.” Id. at 584. Thus, the issue is whether the partition deed acted to terminate the son’s interest in the trust and give him the property outright. The trustees signed the deed in both their individual and trustee capacities. Thus, the trust terminated and the son owned the property in fee simple. Although the remainder beneficiaries alleged that the son’s deed to his wife was forged, the issue was irrelevant because the son also had a valid will leaving all his property to his wife.
Moral: Remainder trust beneficiaries may lose their interests if the trust is properly terminated prior to the event which would cause their interests to vest.