Court Affirmed An Order Modifying A Trust Where The Complaining Beneficiaries Were Not Affected By The Modification, Where The Modification Was Not Contrary To The Purpose Of The Trust, And Where The Beneficiaries Waived Their Right To A Jury Trial

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In In re Ruff Mgmt. Trust, the settlor and primary beneficiary sought and obtained a modification of a trust regarding who could name a successor trustee. No. 05-19-01505-CV, 2020 Tex. App. LEXIS 9467 (Tex. App.—Dallas December 3, 2020, no pet. history). The trust document provided that the settlor and her son would name a successor trustee. If they did not do so, then the settlor’s children would automatically be named co-trustees. The settlor had previously had a very contentious arbitration dispute with her son, and sought to modify the trust to have it state that she could, by herself, name a successor trustee. After the trial court granted that relief, the settlor’s other children (other than the son) appealed that decision. The court of appeals affirmed the modification, not because there was evidence to support it, but because the modification allegedly did not affect the appealing children’s rights. The court held that the children were automatically co-trustees as the mother and her son did not appoint a successor, and that they were still co-trustees. The court stated: “Therefore, as a practical matter, the order does not affect the Children’s rights. Under the Trust agreement’s express terms, the Children became co-trustees when Frost resigned, and the complained-of order does not remove them. Although Suzann may seek court approval to have the Children removed, she has not done so. In short, the only person whose rights are affected by this order is Mike, and he is not a party to this appeal.” Id.

The children also alleged that the modification was contrary to the trust’s purpose. The court disagreed:

The Trust agreement further provides that “[t]he Trustee shall distribute to Settlor so much of the net income and principal of the trust estate as the Trustee determines for Settlor’s Needs or Best Interests.” “Needs” are defined to include “health, support maintenance and education.” But “Best Interests” are as the trustee “deems advisable.” The Children argue that the modification is contrary to the Trust’s terms because it leaves Suzann “unassisted and unchecked relative to her expenditure of the Trust’s dwindling assets,” terminated the remainder beneficiaries’ rights, and removed the Children as co-trustees. We disagree. As previously discussed, the order at issue does not remove the Children as co-trustees. Likewise, it does not appoint Suzann trustee, or affect how the trustees makes distributions. The only Trust term affected by the order is who may participate in decisions concerning the appointment of a new trustee. Before modification, § 6.2 (A) required Suzann and Mike to act jointly to appoint a new trustee. This reflects the Trust’s intent that someone join Suzann in this decision to ensure that the Trust’s purpose and all beneficiaries are served. That person was Mike. The modification, however, simply substitutes the trial court for Mike by requiring Suzann to seek court approval for § 6.2 (A) decisions. Accordingly, because an objective third party is still participating in Suzann’s decisions, the modification is consistent with the Trust’s intent.

Id. Finally, the children alleged that the modification was improper because they were denied their rights to a jury trial. The court of appeals held that they waived the right to a jury trial by failing to assert that right before the first witness testified. Id. The court affirmed the order.

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