Trust disputes and estate disputes usually involve the same family and the same assets. In Dallas County, the same judge can often hear both, and that isn’t true in every Texas county.
Property Code Section 115.001(a) gives district courts original and exclusive jurisdiction over proceedings by or against a trustee and proceedings concerning trusts. That includes construing the instrument, appointing or removing a trustee, ascertaining beneficiaries, requiring an accounting, reviewing trustee fees, and surcharging a trustee.
Subsection (d) makes exceptions to that exclusive jurisdiction, and the first court it lists is a statutory probate court.
Dallas County has three statutory probate courts. Estates Code Section 32.006 gives them jurisdiction over actions by or against a trustee and actions involving an inter vivos, testamentary or charitable trust, and Section 32.007 makes that jurisdiction concurrent with the district courts. So when there’s a fight over an estate and a related fight over the decedent’s trust, you usually don’t have to split them between the probate courts and a district court.
Local Rule 2.01(b) handles the mechanics. An action concerning a testamentary trust gets a new cause number and is assigned to the court where the administration of the will that created the trust is pending.
Keeping everything in one court saves a lot of money. Two forums mean two scheduling orders, two rounds of discovery and two chances for inconsistent findings about the same conduct.
Section 115.001(a)(3) lists removal among the things the court can do, and Property Code Section 113.082 sets out the grounds. On an interested person’s petition, the court may remove a trustee who materially violated the trust terms and caused a material financial loss, who became incapacitated or insolvent, or who failed to make an accounting required by law or by the trust. The court may also remove for other cause, and it can deny some or all of the trustee’s compensation.
The strongest removal cases are built on documents. If a trustee sold trust property to a relative, paid himself without authority, or produced an accounting that doesn’t reconcile, you have a case. If the beneficiaries just don’t like the trustee, you probably don’t.
Under Property Code Section 113.151(a), a beneficiary can make a written demand that the trustee deliver a written statement of accounts. If the trustee doesn’t deliver it within 90 days, any beneficiary may sue to compel it. If the beneficiary wins, the court may award the beneficiary’s reasonable and necessary attorney’s fees against the trustee individually or as trustee.
There are two limits to keep in mind before you send the demand. A trustee doesn’t have to account more than once every 12 months unless the court requires it. Under subsection (b), an interested person may also sue to compel an accounting to that person, and the court decides whether the person’s interest justifies it.
In most of these cases the accounting is where the dispute is won or lost, so we send the demand first. What the trustee sends back, or the fact that he sends nothing, shapes everything we do next.
Property Code Section 112.054(a) lets a court modify or terminate a trust on the petition of a trustee or a beneficiary. The grounds include a purpose that has been fulfilled or become illegal or impossible, circumstances the settlor didn’t know about or anticipate where the order will further the trust’s purposes, a change to administrative terms needed to prevent waste, an order needed to meet the settlor’s tax objectives or qualify a distributee for government benefits, and a trust whose continuance isn’t necessary to any material purpose. Subsection (b-1) separately allows reformation, including to correct a scrivener’s error.
Section 112.054(b) requires the court to conform its order as nearly as possible to the settlor’s probable intention. It also says a spendthrift provision is a factor the court considers, and that it doesn’t by itself prevent a modification.
These petitions are often agreed. A trust written in 1994 for a tax regime that no longer exists, or one holding an asset nobody anticipated, is usually a good candidate for an agreed modification.
Sometimes nobody has done anything wrong and the document just doesn’t say what happens next. The distribution standard may be ambiguous, a class of beneficiaries may be open to two readings, or a successor trustee provision may have failed. Section 115.001(a)(1) puts construction within the court’s jurisdiction, and a construction suit gets you an answer that binds everyone.
All three sit on the 7th floor of the George Allen Courts Building, 600 Commerce Street, Dallas, Texas 75202.
The contested-matter rules apply here as they do in any Dallas County probate litigation. Before filing a motion in a contested matter, counsel has to make at least three personal attempts to reach opposing counsel on at least two business days under Local Rule 3.04(c). The motion needs a certificate of conference in one of the verbatim forms in Rule 3.04(d), and briefs on a motion set for hearing (other than summary judgment) are due no later than one business day before the hearing under Rule 3.05(a).
Bring the trust instrument, any accounting you’ve received, and a list of the beneficiaries. The first conversation is short and free.