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In re Estate of Little

Court of Appeals of Texas, Fifth District, Dallas

August 20, 2019


          On Appeal from the Probate Court No. 1 Dallas County, Texas Trial Court Cause No. PR-15-03606-1

          Before Justices Whitehill, Partida-Kipness, and Pedersen, III



         This case involves a dispute between three siblings concerning funds in their deceased father's survivorship bank account that gave only one sibling survivorship rights. The trial court granted summary judgment for the account surviving party against his siblings' claims and entered a final take nothing judgment from which his siblings appeal.

         A pivotal question is whether, absent additional facts not present here, a revocable trust's non-settlor co-trustee owes the trust's contingent beneficiaries fiduciary duties regarding the settlor's decisions to exclude assets from the revocable trust and instead deposit those assets in a survivorship account favoring the co-trustee as the sole surviving party. The answer is "no," because the settlor retains the prerogative to dispose of the assets under his or her control as he or she sees fit.

         More specifically, appellants raise two issues. The first issue argues that the trial court erred in granting final summary judgment against them on their fiduciary breach and money had and received claims[1]. We reject that issue because, although appellants have standing as trust beneficiaries complaining about appellee's conduct as a co-trustee instead of the settlor's conduct, appellants did not raise a genuine issue of material fact showing that appellee breached a fiduciary duty owed to them in this case.

         The second issue argues that the trial court erroneously excluded certain evidence from the settlor's estate planning lawyer regarding the trust's creation-but before the settlor engaged in the transactions at issue. We reject this issue because appellants have not shown that the excluded evidence was relevant.

         Accordingly, we conclude that the trial court did not err in granting summary judgment against appellants and affirm the trial court's judgment.

         I. Background

         John Little, Jr. (Father) had three children; Mary Ann, Jay, [2] and Dan.[3] The Little family owned a ranch and related livestock and equipment.[4] Father owned a 100% interest in the livestock and equipment. Prior to 2006, Mary Ann, Father, Jay, and Dan each owned a 25% undivided interest in the real estate.

         Father also had a will and a revocable living trust (the Trust). According to Dan's affidavit, Father created a will dated June 2, 2010. Dan further stated that Father created the Trust in 2005 and amended and restated the Trust agreement in February 2014. Mary Ann and Jay do not dispute these facts, and the Trust agreements are in the record. The Will, however, is not.

          Father named Dan, Mary Ann, and Jay residuary Trust beneficiaries, and he named himself and Dan co-trustees during Father's life t i me. The Trust fur t her provided that Northern Trust would serve as trustee when Father died.

         Both Trust agreements include a "Schedule of Property." Both schedules list "$10" as the Trust's only asset. There is no argument or evidence that Father ever deeded the ranch real estate or conveyed the ranch livestock and equipment to the Trust. Nor is there any evidence in the record that Father ever funded the Trust with anything other than $10.

         In 2000, and again in October 2014, Father created survivorship bank accounts at Northern Trust. He named Dan as both accounts' sole surviving party. Mary Ann and Dan do not dispute these facts.

         In 2006, Father sold his 25% interest in the ranch land to Mary Ann, Jay, and Dan, in exchange for which each signed a $169, 500 promissory note secured by each child's interest in the real estate. Although the notes themselves are not in evidence, Dan's summary judgment affidavit states that the notes were "payable to Dad in the amount of $169, 500 which were all payable on demand, though the understanding among our family members was that Dad would not make demand for payment until the ranch was sold to a third party." Mary Ann and Jay did not controvert this evidence. There is no argument or evidence that the Father transferred or conveyed the notes to the Trust.

         Dan's affidavit further states:

As with the first Northern Trust survivorship account, Dad deposited whatever funds came into his possession into the second account and paid all of his living expenses and debts out of that account until his death, with me or my assistant Debbie Cooper helping make deposits and prepare and send out checks for him throughout that time until his death.

         There is no contrary evidence.

         A document dated March 24, 2014 (roughly eight years after the notes were executed) and captioned "RELEASE OF LIEN" is in the record. This document recites that Father and the Trust were the note payees. These documents, however, do not themselves contain a promise by any note obligor to pay any money to any payee.

         The Little family sold the ranch in March 2014. In addition to the amount paid for the real estate, the purchaser paid: (i) $108, 000 for equipment, (ii) $108, 000 for livestock, (iii) $23, 904.08 for a life estate on 24.820 acres of the ranch owned by a family partnership in which Father had an interest, and (iv) $134, 723.68 for the partnership interest purchased in connection with the life estate. All of the sale proceeds attributable to Father's interests were deposited in the second survivorship account. There was $605, 751.45 in that account when Father died in 2015.

         By the Trust's terms, Dan ceased being a co-trustee when Father died. Although named as successor trustee, Northern Trust declined to serve. Consequently, the probate court appointed a substitute trustee who accepted that appointment.

         Father's estate earned $4, 349.24, which was deposited in the survivorship account.[5] And Dan paid $200, 611.92 of Father's post-death expenses from that account.

         After being told that the note proceeds were to become Trust property, Dan transferred money from the survivorship account to the trustee, including (i) $70, 595.49 in proceeds from the promissory note payments, (ii) $23, 904 received for the life estate, and (iii) $121, 201.43 for Father's share of the partnership. He transferred the money so the trustee could cover Father's bequests and remaining expenses. Post-transfer, $216, 000 in survivorship account funds remained. Those remaining funds form the basis of this dispute.

         On December 9, 2015, Mary Ann and Jay sued Dan in the 191st District Court alleging that he breached a fiduciary duty regarding the transfer of funds from the revocable trust to the survivorship account. That case was subsequently transferred and made a part of the current probate court proceeding.[6]

         The trustee moved for instructions seeking direction regarding the disposition of potential claims against Dan for the remaining survivorship account funds. The probate court subsequently entered an order finding that "pursuing the claims against Dan would not be in the best interest of the Trust, the Estate, or the beneficiaries." Accordingly, the probate court ordered the trustee to assign the potential claims against Dan 1/3 each to Mary Ann, Jay, and Dan-which the trustee did.

         Dan moved for summary judgment arguing that (i) Mary Ann and Jay have no standing to assert their claims against him and (ii) there is no evidence that Dan breached a fiduciary duty in connection with the $216, 000.

         Mary Ann and Jay responded to that motion and attached the affidavit of James Mincey, Father's estate planning lawyer. Dan objected to paragraphs three through five of that affidavit, and the court sustained those objections. The court also sustained objections to Dan's summary judgment exhibit 4 (an email from Mincey).

         The court granted Dan's summary judgment motion and entered a final judgment that dismissed with prejudice all claims that Mary Ann and Jay have asserted or could have asserted in ...

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