Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

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Wednesday, August 31, 2011

Long-Term Leases

Texas Myrick v. Moody Nat’l Bank, 336 S.W.3d 795 (Tex. App.—Houston [1st Dist.] 2011, no pet. h.).

Trustee entered into a lease extending beyond the termination of the trust.  Beneficiary sued asserting that doing so was a breach of duty.  The trial court found in favor of Trustee and Beneficiary appealed.

The appellate court affirmed.  Section 113.011(b) of the Trust Code grants the trustee the authority to “execute a lease containing terms or options that extend beyond the duration of the trust” unless the trust instrument provides otherwise.  See § 113.001.  The court examined the trust instrument and found no provision which would limit Trustee’s ability to enter into a long-term lease.  The court rejected Beneficiary’s argument that the requirement that Trustee distribute property to Beneficiary when the trust terminates operates to prohibit long-term leases.  See § 112.052.

Moral:  A settlor who wishes to prohibit long-term leases must expressly so provide in the trust instrument.

http://lawprofessors.typepad.com/trusts_estates_prof/2011/08/long-term-leases.html

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