An executor, a trustee, and a holder of a power of attorney are all fiduciaries and owe the upmost duty to those they serve. In a Texas case out of the Houston Court of Appeals in 2016, a will had given a certain piece of land to several of the decedent’s children share and share alike. The will appointed one of the children as the executor of the estate. The executor sold the property to himself instead of giving it to all the children. The other siblings were not happy and one of them asked the court to void the deed and to remove the executor for his actions. The court did remove the executor and voided the deed. The executor appealed. The executor told the appeals court that the will had a provision that the executor could “sell, manage, and dispose” of the property in the estate. Relying on this provision in the will, the executor said that he had the power under the will to sell the property to himself.
An executor who sells property to himself is self-dealing
The Court of Appeals was not impressed with the executor’s argument. The court held that the Texas Estates Code did not allow the executor to sell the property to himself unless it was authorized by the will. §356.651, §356.652 and §356.655. They held that the use of the words “sell, manage, and dispose” were not a sufficient authorization for him to deed the property to himself. They upheld the trial court’s ruling that the deed was void and that the executor be removed.
To Learn more about fiduciaries and their duties and liabilities, see this article.
A power of attorney in Texas creates a fiduciary duty between the person who holds the power (agent) and the person who gives it (principal.) The agent owes his principal a high duty of good faith, fair dealing, honest performance, and strict accountability. A 2015 case out of Fort Worth dealt with the issue of breaching a fiduciary duty in Texas.
A man (agent) had his aunt (principal) give him a power of attorney. About a year before the aunt died, the nephew executed deeds to the aunt’s real estate to himself and his son. After the aunt died, a probate was filed. When the beneficiaries of the aunt found out about the deeds, they were understandably upset.
Family Settlement Agreement
Apparently, most of the beneficiaries did not have the money to sue the agent so they entered into a family settlement agreementto give one of the beneficiaries the right to sue the agent for breaching a fiduciary duty in Texas. Suit was filed and (more…)
The Supreme Court of Texas upheld an arbitration clause in a trustand the same reasoning may apply to wills although the court has not ruled on this question where a will was involved. Arbitration clauses are usually found in contracts or other agreements. The parties agree to arbitrate. Disputes are submitted to an arbitrator instead of being tried by a court in a lawsuit. There are perceived cost savings with arbitration and arbitration can be quicker than normal litigation. One of the main benefits of arbitration is privacy. Litigation is public, arbitration is private.
Even though the beneficiaries did not agree to arbitration, the Supreme Court held that, by accepting benefits under the trust, they had agreed to the arbitration clause in the trust. 11-0708.
Arbitration clauses in wills
A testator may not want the world to know about his estate and may prefer that all disputes be settled by arbitration. In the context (more…)
This post concerns fiduciary duties in Texas. The case that is discussed deals with an Executor but could also apply to a trustee or any other fiduciary in Texas. A court of appeals ruled in 2014 that a Texas Executor commits breach of trust not only where he violates a duty in bad faith, or intentionally although in good faith, or negligently but also where he violates a duty because of a mistake. Executor Violates Duty because of a Mistake even if he relied on his attorney for advise. No. 02-14-00170-CV.
Executor Violates Duty because of a Mistake
A man died. He had two sons. First son was appointed executor under the man’s will. Second son was, for some reason, not (more…)
Elder abuse is increasing, often at the hands of those closest. In an article in the Arizona Daily Star by Patrick McNamara, which was published on their website, tucson.com, the paper reported that law enforcement is seeing an increase in elder abuse.
Reason that elder abuse is increasing
As our elderly population grows, law enforcement and prosecutors are seeing an increase in the number of incidents of exploitation and abuse against older people. According to the article, law enforcement has seen a nearly 50 percent increase in elder exploitation reports. Financial crimes are taking a toll on lives and pocketbooks reports Constance Gustke in the New York Times. Trusted caregivers – friends and relatives who offer support and guidance – are often the ones at fault. The article states that older adults are appealing – and vulnerable – targets (more…)
When a judge orders someone to do something and that person doesn’t do it, the judge can hold him in contempt and put him in jail.
Failure To Pay A Debt Of The Estate
In cases where an Executor or Trustee has been ordered to pay a debt out of the estate, he can’t be put in jail if he refuses because the Texas and U.S. constitutions prohibit putting someone in jail for a debt. It doesn’t mean that the Executor or Trustee doesn’t have to pay the debt, he does. It just means that the court will have to use another method to get the debt paid such as seizing assets rather than jail.
Failure To Distribute The Assets To A Beneficiary.
However, when an Executor or Trustee refuses an order of the judge to turn over estate assets to a beneficiary, he can be put in jail if he refuses even if the asset is money. The beneficiary owns the property in question. It is not a debt. Courts reason that the Executor or Trustee is holding the assets in trust for the rightful owner, the beneficiary. The critical difference is that the Executor or Trustee possesses the property of another but refuses to deliver it to the rightful owner, despite being ordered to do so. Since it is not a debt it is off to jail he goes if he refuses. 316 sw3 787.