Tuesday, July 30, 2019
In a Suit to Reform a Trust, a Texas Court Holds that There was a Fact Issue on the Settlors’ Intent and Remanded for a Fact Finding
A Texas appellate court recently reversed a summary judgement for a petitioner to declare that the wife’s child from a prior relationship was not a beneficiary of the trust. In In re Ignacio G. & Myra A. Gonzales Trust, the daughter petitioned as trustee that because only her and her brother, but not her half-sibling, were named in the Identification Article, this showed her parents (the settlors) only intended for them to benefit from the trust. The trial court agreed and readily granted her summary judgement, but the def
The appeals court found that the "question of Ignacio’s and Myra’s intent was not shown by clear and convincing evidence as a matter of law." Instead, there was a scrivener's error, a mistake of fact that Ignacio and Myra only had two children. There was no dispute that the older daughter was Myra's natural child and Ignacio's adopted child. The Restatement (Third) of Property provides, “A donative document, though unambiguous, may be reformed to conform the text to the donor’s intention if it is established by clear and convincing evidence (1) that a mistake of fact or law, whether in expression or inducement, affected specific terms of the document; and (2) what the donor’s intention was.
As there was distinctly a mistake of fact - there were three children between the couple - the question of whether it was Ignacio's and Myra's intent to disinherit the eldest daughter is one for the finder of fact. If there was no intent to disinherit, the court may provide a remedy of reformation to relieve any ambiguity.
See David Fowler Johnson, In a Suit to Reform a Trust, a Texas Court Holds that There was a Fact Issue on the Settlors’ Intent and Remanded for a Fact Finding, Texas Fiduciary Litigator, July 24, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.