QUESTION
Who is the real party in interest, the beneficiary of an heir-in-fact trust or the executor of the estate?
Asked on Nov 22nd, 2016 on Litigation - Texas
More details to this question:
An elder couple creates an inter vivos trust with a situs in Texas. They name themselves original Trustees and primary Beneficiaries They name their five issue beneficiaries with HEMS considerations second only to the Grantors themselves. Dad dies and as the second Grantor weakens two of the issue, working with Mom’s atty, secretly seize control of the trust claiming to be trustees and spending trust money like it was their personal piggy bank. When Mom dies they refuse to answer or account to the others. One of the disenfranchised files a breach of fiduciary suit in the general state court as a beneficiary seeking accounting and disclosures. A second disenfranchised then files suit in state probate court as executor of the “Estates” raisng the same claims as the first suit. Both Grantors have pour over wills naming the trust as the only heir.
1 ANSWER
Kevin Spencer
The simple answer is that the Trust is the party that has the necessary standing to bring the suit for the breaches of trust. However, in this case, because the "bad-actors" are - NOW - the Trustees, they are never going to sue themselves. As a result, the beneficiaries, how are not in control or who are not the bad-actors, essentially, "move-up" or "step-into-the-shoes" of the Trustees for purposes of suing the Trustees for breaches of fiduciary duty. It appears that case has or cases have already been filed.
If you have an interest in the Trust - meaning, you are an "interested person" in the trust - then you have a right to be heard in both lawsuits and should enter your appearance, so you can be heard. Obviously, the size of the trust will determine how much you should spend, but, typically, people to do not steal from trusts that have little to no value.
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Sincerely,
Kevin Spencer
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www.spencerlawpc.com
Answered on Dec 09th, 2016 at 9:32 AM