Ahlgren v. Ahlgren, No. 13-22-00029-CV, 2022 WL 1260190 (Tex. App.—Corpus Christi-Edinburg, Apr. 25, 2022, pet. filed).

Trusts

Oral Trusts

Both the trial and appellate courts determined that the actions of the parties created an enforceable trust despite the lack of a writing by using the oral trust exception in Property Code § 112.004. The settlor transferred personal property to a trustee who was neither the settlor nor a beneficiary. The evidence showed that the settlor expressed trust intent simultaneously with or prior to the transfer, that is, that the property would be held for the settlor’s benefit. The actual dealings between the parties were somewhat convoluted and not clearly documented. Nonetheless, the appellate court determined that reasonable and fair-minded people could conclude that the settlor had proper trust intent.

 

The court also explained that certain real property could also be subject to the oral trust because the trustee used trust personal property to acquired the real property. “If the settlor funds the oral trust with personal property, the trustee cannot render the entire trust unenforceable by later converting the trust assets to real property.” Id. at *19.

 

Moral:  Under proper circumstances, the courts will enforce an oral trust and hold the trustee liable for breach of fiduciary duties.

 

 



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