In re Estate of Dillard, 98 S.W.3d 386 (Tex. App.—Amarillo 2003, pet. denied).


A will creating a testamentary trust was admitted to probate in a constitutional county court. Later, an action to resolve various issues regarding the trust such as its construction, the conduct of the trustees, and the identity of the beneficiaries was brought in district court. The appellate court held that the district court had jurisdiction to hear the case under Trust Code § 115.001. The court indicated that although the county court order provided that a particular person was the sole distributee of the testatrix’s estate, this order could not adjudicate matters relating to the trust.

Moral: Constitutional county courts do not have jurisdiction over trusts and thus actions involving trusts in those counties need to be filed in the appropriate district court.



Construction and Interpretation

“Cash” and “Money in Any Financial Institution”

In re Estate of Dillard, 98 S.W.3d 386 (Tex. App.—Amarillo 2003, pet. denied).


Testatrix’s will provided that her personal property except for “cash,” “certificates of deposit,” and “money in any financial institution” pass outright to Husband. The excepted property went into a trust. Testatrix died owning stocks, bonds, and partnership interests. The trial court held that these items were included in the excepted property and passed to the trust. Husband appealed.

The appellate court reversed. The court construed the phrase “cash, certificates of deposit, and money in financial institutions” to encompass coins, paper money, checks, and demand deposits only and not stocks, bonds, or partnership interests. The court recognized that circumstances surrounding the execution of the will or some other provision of the will could perhaps require a different construction but that there was no such evidence in this case. The court engaged in an extensive discussion of surrounding circumstances justifying its conclusion as well as citing to the landmark Texas Supreme Court case of San Antonio Area Foundation v. Lang, 35 S.W.3d 636 (Tex. 2000), in which the court held extrinsic evidence may not be used to create an ambiguity if the language has a settled legal meaning.

Moral: A will drafter must be careful in selecting will language to make certain the testator’s intent is carried out.



Discretion of Trustee

In re Estate of Dillard, 98 S.W.3d 386 (Tex. App.—Amarillo 2003, pet. denied).


Settlor granted Trustee of a testamentary trust the ability to make distributions of principal to Beneficiary (who happened to be the same person as Trustee) if Beneficiary “in the discretion of the Trustee, * * * should be in need of additional funds for maintenance and support.” Trustee/Beneficiary claimed that his discretion was not limited to situations where his other resources were inadequate. Both the trial and appellate court disagreed.

The court held that the trust was not ambiguous and that Settlor’s intent was clear that principal distributions were allowed only if Beneficiary actually needed the additional funds for maintenance and support. The trust did not give Trustee “utter discretion to do that which the trustee may care to at any given moment. * * * [Trustee] must exercise [discretion] only after considering the beneficiary’s needs, age, condition, separate resources, the size of the trust estate, health, and the like.” In re Estate of Dillard at 395.

Moral: A support trust should clearly indicate whether the trust “may,” “must,” or “may not” consider the beneficiary's other resources in determining whether to make a distribution. In other words, is the trust to provide a minimum level of support and anything the beneficiary has or acquires is irrelevant, or is the trust to provide a safety net if the beneficiary’s other resources and income are inadequate?



Multiple-Party Accounts

Survivorship Rights

In re Estate of Dillard, 98 S.W.3d 386 (Tex. App.—Amarillo 2003, pet. denied).


Husband and Wife opened an account with a brokerage firm and signed an agreement containing clear survivorship language sufficient under Probate Code § 439. The agreement, however, expressly referred to a different account number than the number which was on the account when Wife died. The trial court found that the current account was also controlled by the survivorship agreement.

The appellate court agreed. The evidence showed that the two numbers actually referred to the same account. The numbers changed when the account was transferred from the brokerage’s office in one city to an office in another city. Accordingly, the funds in the account were still governed by the original agreement containing the survivorship language.

Moral: The attorney should personally inspect all signature cards and account contracts to make certain they are signed, unambiguously create precisely the type of account the client desires, and clearly reference the current account numbers.




In re Estate of Dillard, 98 S.W.3d 386 (Tex. App.—Amarillo 2003, pet. denied).


The court ordered Trustee to provide an accounting in the form required by Trust Code § 113.152. Trustee submitted an accounting and the court approved it. The appellate court, however, held that the trial court erred in so doing because the accounting did not contain all the items enumerated in the Code.

Moral: A trustee should render a complete accounting in the form mandated by the Trust Code.