A person who is an Executor, Administrator, Trustee, or who has a Power of Attorney is a fiduciary. A fiduciary must act in the best interest of the beneficiaries and show that each of his actions was in the beneficiaries’ best interest. When an action benefits the fiduciary in any way, there is a presumption of unfairness, and the fiduciary may be liable.
David Johnson, an attorney who writes on fiduciary litigation, has an article that addresses the case of In re Estate of Klutts, 02-18-00356-CV, (Tex. App.—Fort Worth December 19, 2019, no pet. history). In Klutts, a son who had a power of attorney helped his mother prepare a new will which benefited the son. When the mother died, he attempted to probate the new will. However, his siblings contested the will. The son asked the court to dismiss the contest because his siblings had no evidence that he unduly influenced his mother. The trial court agreed with the son and rejected the will contest. On appeal, the appeals court reversed.
The appeals court held that because he had a power of attorney, the son had to overcome the presumption of undue influence. Thus, the burden was not on the siblings to prove undue influence but on the son to disprove it.
When a person tells someone how he wants his property handled when he dies but he has a written will or trust, the oral statements will not change how his property is handled if the will or trust is unambiguous.
Problem
Someone testifies in a Texas will or trust contest that the testator told them how he wanted his property distributed. The will or trust of the testator specifies a different way to distribute the property. What effect do the testator’s statements have on the Texas will or trust?
Facts
In her lawsuit, Blanca alleged that when Frank decided to sell the Ranch, he told family members they would be given an opportunity to match any offer he received.
Blanca filed the underlying lawsuit seeking a temporary restraining order and injunction to prevent Frank from conveying the (property based on the statements by the testator).
The court had to decide if or how this evidence should be treated.
ESTATE OF RODRIGUEZ, 04-17-00005-CV, (Tex. App. – San Antonio January 10, 2018)
Trust versus Will in Texas
Since this case dealt with a trust, the court stated the Texas’ rules for construing trusts.
The same rules of construction apply to both wills and trusts. The construction of an unambiguous trust instrument is a question of law for the trial court.
An appellate court may not focus its attention on what the testator intended to write, but on the meaning of the words he actually used. That is, we must not redraft a trust instrument to vary or add provisions under the guise of construction of the language of the trust to reach a presumed intent. No speculation or conjecture regarding the intent of the testatrix is permissible where, as here, the will is unambiguous, and we must construe the will based on the express language used therein.
This court must harmonize all terms to give proper effect to each part of the instrument; in construing the instrument, we must give effect to all provisions and ensure that no provisions are rendered meaningless. Provided the language of the instrument unambiguously expresses the settlor’s intent, there is no need to construe the instrument because “it speaks for itself.”
What are the rules for construing a trust in Texas?
ESTATE OF RODRIGUEZ, 04-17-00005-CV, (Tex. App. – San Antonio January 10, 2018)
Ruling
Based on the facts of the case and applying Texas law, the court found that the trust stated how the property was to be handled and that any statements by the Testator to the contrary were to be disregarded.
Notes
There are some Texas cases where a will or trust was ambiguous and statements by the Testator were used to determine what he meant. In this case, the trust was not ambiguous.
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Oral Statements by the Testator about a Texas Will
What happens if instead of signing his name, the testator just initials the document?
Texas courts have been lenient regarding the location and form of a “signature.” They have approved an X as a sufficient signature on an attested will. The most important factor is that the testator intended his mark to constitute his signature. A signature by initials executes a will if the instrument is testamentary in character and if the testator meant his initials to be his signature. 862 s.w.2d 8.
What are the requirements of a will in Texas
Texas requires that a will be in writing and signed by the testator or signed by another person on behalf of the testator and in the testator’s presence and under the testator’s direction.
Will contest in Texas
If someone is contesting a will in Texas and contends that the initials or the mark are not a sufficient signature, the issue at trial will be the testator’s intention when he initialed or put his mark on the document rather than whether or not the initials or the mark constitute a valid signature.
A Texas executor, administrator, trustee, or other fiduciaries can be removed by the probate court but not because the beneficiaries under the will don’t like him. A Texas executor can only be removed for specific reasons that must be pled and proven by the beneficiaries who are seeking his removal. Some of those grounds are gross misconduct, gross mismanagement and a material conflict of interest.
Gross Mismanagement
In a 2015 casefrom the San Antonio court of appeals, the beneficiaries pled that the executor had not “assiduously pursued settlement of the estate” and that the executor had a conflict of interest with the estate. The application further alleged that “grounds exist for removal of the independent executor due to misapplication of funds and other fiduciary property, breach of fiduciary duty, and self-dealing in estate property.” The complaint was that the executor had not tried to sell the estate’s only asset, a house and that he had moved in the house and was not paying rent. The executor claimed that the application for his removal did not allege gross misconduct, gross mismanagement, or material conflict of interest as grounds for his removal which are the only grounds for removal. The court ruled that Texas has notice pleadings and that the application in this case while not using the words in the removal statute was sufficient to give the executor notice of why the beneficiaries wanted his removal.
Conflict of Interest
In addition to the pleadings question, the executor alleged that the conflict of interest alleged by the beneficiaries was only a good-faith disagreement regarding the value of the property. The supreme court of Texas has ruled that good faith disagreements regarding the value of the property do not constitute a conflict of interest sufficient to remove an executor. The court rejected the executor’s argument noting that he had moved from a garage apartment into the house, had said that he was going to live there forever, and had changed the locks. The court ruled that these acts were not just good-faith disagreements over the value of the property but were sufficient grounds for the removal of an executor in Texas.
For the same reasons Texas is seeing an increase in will contest. I have previously written on why contesting a will has become more common. You can view that article here. An English law firm, Soosmiths, has an article on their website that discusses the Ministry of Justice statements on the causes of the increase in such cases in England. The increase is as much as 700% over prior years!
English law is different from Texas law but the law firm notes several reasons that I have previously discussed like the change in the family structure and the fact that we are living longer. The English article also talks about self made or do it yourself wills being a cause (more…)
