Friday, August 8, 2014
Fred L. Houston created a spendthrift trust in 2006. Houston received both income and principal payments from the trust during his life, and set up the trust to vest in his heirs. While Houston was still living the trustee, Ms. Williams, carried out a sneaky plan in which the royalty interest in a lease was assigned by Houston to the Noble House, and Williams received 50% of the interest. At Houton’s death, this deal was the source of a lawsuit with the executor challenging the deal as an absolute nullity, and Williams and the president of Nobel House defending the assignment.
In J-W Operating Co. v. Olsen, the executor’s argument won and the assignments were ruled absolute nullities based on public policy. The Louisiana court reasoned that the assignment was not within the intent of the settler as expressed in the trust document.
See Charles Sartain & Brooke Sizer, Treachery of the Untrustworthy Trustee, JD Supra, August, 6, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.