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Bradley v. Shaffer

Court of Appeals of Texas, Eleventh District

November 30, 2017


         On Appeal from the 350th District Court Taylor County, Texas Trial Court Cause No. 09673-D

          Panel consists of: Wright, C.J., Willson, J., and Bailey, J.



         This appeal presents the question of whether an extension provision in a family trust violates the rule against perpetuities. Family members placed mineral interests they inherited into the trust. The trust instrument contained a spendthrift provision precluding the beneficiaries of the trust from anticipating or assigning their interests in the trust. A subsequent beneficiary of the trust executed deeds purporting to convey his share of the mineral estate to a third party. The trustees of the trust obtained a summary judgment declaring the deeds to be invalid with respect to the beneficiary's interest in the trust. We affirm.

         Background Facts

         W.S. Shaffer (husband) and E.S. Shaffer (wife) owned the minerals associated with approximately 1, 765 acres of land located in Taylor County. As a result of their deaths in the 1960s, their mineral interests were devised to two testamentary trusts that remained in existence until 1993. At that time, the beneficiaries of the two testamentary trusts conveyed their interests in the testamentary trusts to the "W.S. Shaffer Family Trust."[1]

         The trustors/settlors were the initial beneficiaries of the trust. The trust instrument set out their respective ownership interests in the trust based upon their relationship to W.S. Shaffer and E.S. Shaffer. The trust instrument stated that W.S. Shaffer and E.S. Shaffer had four children. Their two surviving children received a one-quarter beneficial interest in the trust. The remaining settlors were the grandchildren of W.S. Shaffer and E.S. Shaffer whose parents had died prior to the execution of the trust instrument. They each received a proportionate share of their deceased parent's one-quarter beneficial interest.

         Clarence Shaffer was a settlor and an original beneficiary of the trust owning a one-quarter beneficial interest in the trust. The trust provided that, upon the death of a settlor/initial beneficiary, that beneficiary's interest in the trust "shall immediately vest and pass directly to his or her children." Clarence died in 1999. Pursuant to the terms of the trust, Clarence's one-quarter beneficial interest in the trust passed at his death to his children, Darell Shaffer and Darlene Shaffer.

         The trust instrument named three trustees and granted them broad powers that could be exercised at any time, including the power to sell the mineral estate or lease it for exploration. Specifically, the trust provided that the trustees were authorized "[t]o act at all times, to do all the acts, to take all the proceedings and to exercise all the rights, powers and privileges which an absolute owner of the property would have, subject always to the discharge of the Trustees' fiduciary obligations." The trust also contained a spendthrift provision that provided as follows:

7.22 LIMITATION OF AUTHORITY OF TRUSTEES AND BENEFICIARIES. No Trustee nor beneficiary of this Trust shall have any right or power to anticipate, pledge, assign, sell, transfer, alienate or encumber his or her interest in the Trust in any way; nor shall any such interest in any manner be liable for or subject to the debts, liabilities, or obligations of such Trustee or beneficiary or claims of any sort against such Trustee or beneficiary.

         The trust contained the following provision pertaining to its duration: "This Trust shall be for a term of twenty (20) years from the latest date of execution by an initial Trustor. This Trust may be continued upon unanimous agreement of all beneficiaries hereunder . . . ." The latest date of execution of the trust by an initial trustor/settlor occurred on June 23, 1993. Accordingly, the trust would have expired on June 23, 2013, if not extended.

         Darell owned the surface estate of the subject property. It is undisputed that Darell's ownership of the surface estate was not subject to the trust. Darell conveyed the subject property to Terry W. Bradley by warranty deed in 2004. The warranty deed did not contain a reservation pertaining to Darell's one-eighth beneficial interest in the minerals held in the trust. Darell subsequently executed a mineral deed in favor of Bradley in 2006. The mineral deed specifically referenced Darell's beneficial interest in the trust, and it contained language conveying both his mineral interest held in the trust as well as any mineral interest held in the trust that he may acquire in the future.

          Prior to the twenty-year anniversary of the trust, the trustees and Darlene filed the underlying suit against Bradley seeking a declaratory judgment that the conveyances from Darell to Bradley were void with respect to the mineral interests held by the trust.[2] The twenty-year anniversary was subsequently reached during the pendency of this litigation.

         In March through June of 2013, the current beneficiaries of the trust, including Darell and Darlene, executed an extension of the trust that provided as follows: "Pursuant to Article VIII, Paragraph 8.07, the undersigned beneficiaries unanimously agree that the W.S. Shaffer Family Trust shall be extended for a term of twenty (20) years. ...

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