All doubts are resolved against the trustee who fails to keep adequate records, except in Texas

Charles E. Rounds, Jr.

As a general rule, all doubts are resolved against the trustee who fails to keep adequate records. See generally Loring and Rounds: A Trustee’s Handbook §6.2.9 [page 673 of the 2018 Edition], which section is reproduced in its entirety in the Appendix below. That having been said, in Kohlhausen v. Baxendale, No. 01-15-00901-CV, 2018 Tex. App. LEXIS 1828 (Tex. App.-Houston [1st Dist.] March 13, 2018), the executor of the estate of a deceased trustee who had “left behind scant records” successfully raised as a defense against allegations that the trustee had engaged in unauthorized acts of self-dealing the trust instrument’s exculpatory provisions: “Because the summary judgment evidence failed to raise an issue of material fact as to whether any of the …[trustee’s]…alleged acts or omissions forming the basis of the …[the plaintiff’s]…breach of fiduciary duty claims were taken in bad faith or gross negligence, …[the plaintiff]…failed to meet her burden of establishing the inapplicability of the exculpatory clause to such acts or omissions.”

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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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Charles E. Rounds, Jr.

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