Court Reverses The Appointment Of A Receiver Over Trust Property

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Courts generally review receiverships very closely, and a party requesting one should follow all required procedures.  In Elliott v. Weatherman, parents created an irrevocable living trust and designated their three adult children as co-trustees. No. 03-12-00346-CV, 2013 Tex. App. LEXIS 1301 (Tex. App.—Austin February 8, 2013, no pet. history). The daughters sued their brother, asserting that he had violated the terms of the trust, breached his fiduciary duties, and converted trust property. Due to the discord among the co-trustees, the trial court appointed a receiver over the trust property at the request of the brother. The brother had not pled for a receivership, and there was nothing in the record suggesting that the daughters otherwise had notice prior to the hearing that the brother would request such relief. The court of appeals reversed the trial court's order appointing the receiver because the daughters were not provided a hearing after three days’ notice, which is required for a receivership. Moreover, the evidence was insufficient to justify the appointment of a receiver because there were less intrusive remedies that would have been sufficient, such as injunctive relief.

The brother should have filed a formal request for a receivership and provided sufficient notice of a hearing on same.  At the hearing, the brother should have provided specific evidence that there were no other remedies available that would have been sufficient.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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