Friday, September 20, 2019
A Texas court has held that when a trust document does not state the procedure for the appointment of a successor trustee under the current circumstances, the Texas Trust Code will come into play. In Waldron v. Susan R. Winking Trust, the court also ruled that "A trustee’s fiduciary duties are not discharged until the trustee has been replaced by a successor trustee," and thus the resigning trustee was allowed to bill for reasonable expenses and fees.
The beneficiary, the daughter of the settlors, appealed the court's decision, believing that the trustee's resignation was complete the moment she received the letter of resignation. She had petitioned the court to allow for herself to be appointed trustee as an individual after she could not find another bank that would agree to act as trustee. The appeals court affirmed the lower court's decision, stating that "Since no bank or trust company could be found that was willing to serve, Waldron could not appoint a successor and her attempt at removal by letter without naming a bank or trust company as successor was ineffective." Although the current trustee was "ready and willing to be replaced," the court said, the trustee "was obligated to continue in the performance of his duties until replaced by a successor trustee."
See David Fowler Johnson, Court Holds That A Trustee Has To Serve Until Properly Replaced, Tx Fiduciary Litigator, September 17, 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.