Wednesday, February 14, 2018
Court Held That Trustee Had Authority to Sell Real Property and That the Beneficiaries Did Not Have a Right of First Refusal
In the Estate of Rodriguez, the beneficiary of a testamentary trust filed suit against the trustee to prevent the sale of a ranch that made up the trust corpus. The court looked to the language of the trust for guidance as to the testator’s intent and based its holding on the testator’s varied use of precatory and mandatory terminology. Generally, words like “wish,” “desire,” “want,” and “request” are considered precatory language. They show that a testator or settlor would prefer something to happen but incorporate language soft enough that following the applicable provision is not a requirement. Language like “must” or “shall” is usually an indication of a mandatory provision.
The trust in Estate of Rodriguez read: “My Trustee can sell the corpus of this Trust, but it [is] my desire my ranch stay intact as long as it is reasonable.” The trust document also stated: “The Trustee during the continuation of each trust shall have the sole and complete right to possess, control, manage, and dispose of each trust estate and the said Trustee shall have the powers, rights, responsibilities and duties given to or imposed upon by trustees by the Texas Trust Code as such Code now exists.” The court held that the wording in the trust defining the scope of the trustee’s powers used mandatory language while the language evidencing the testator’s “desire” to keep the ranch intact was precatory. Given this, the court held that the trustee had complete discretion to sell the property and the beneficiary had no power prevent the sale.
See David Fowler Johnson, Court Held That Trustee Had Authority to Sell Real Property and That the Beneficiaries Did Not Have a Right of First Refusal, Texas Fiduciary Litigator, February 3, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.