Interpretation – Latent Ambiguity

Eckels v. Davis, 111 S.W.3d 687 (Tex. App.—Fort Worth 2003, pet. denied).


Settlor established an inter vivos trust identifying two accounts at a financial management company by account numbers as trust property. For internal bookkeeping reasons, the company renumbered one of the accounts. When the trust terminated, the remainder beneficiaries asserted that they were entitled to the funds from the renumbered account. However, the beneficiaries of Settlor’s will claimed that they were entitled to the funds because the renumbered account was not covered by the trust. The trial court held that the renumbered account passed under the terms of the trust.

The appellate court affirmed. The renumbering of the account created a latent ambiguity, that is, an ambiguity which is not apparent from the face of the trust but which arises when the trustee attempts to carry out the terms of the trust. Extrinsic evidence is admissible to resolve a latent ambiguity. The evidence was clear that the change in the account number was the unilateral act of the company and thus did not reflect any change in Settlor’s intent to have this account pass under the terms of the trust.

Moral: Wills and trusts need to be periodically reviewed and updated to eliminate ambiguities.