/>iIn Crossley v. Crossley, a plaintiff, who was the beneficiary of, or had the power to designate the beneficiary, in two trusts established by his mother, and he filed suit requesting that the court determine whether he or his sister was the trustee, and in the alternative, he sought termination, modification, or reformation of the trusts. No. 08-23-00104-CV, 2024 Tex. App. LEXIS 3323 (Tex. App.—El Paso May 14, 2024, no pet. history).
The court of appeals first made a rather surprising holding regarding Texas Trust Code Section 115.001:
Garry characterizes his claims seeking a determination about his status as trustee as being brought under Section 115.001 of the Texas Property Code. That section provides that “a district court has original and exclusive jurisdiction” over categories of cases, including those requesting that a court “construe a trust instrument,” but it does not itself provide for a cause of action. Tex. Prop. Code Ann. § 115.001(a). Because Garry asked the court to determine whether he is the trustee under the trust, we construe his claim as one for declaratory judgment brought under Chapter 37 of the Civil Practices and Remedies Code.
Id.
The court reviewed whether the sister had resigned as trustee. The trial court granted summary judgment for her, holding as a matter of law that she was the trustee and had not resigned. The court of appeals determined that there was a fact issue on that claim. The court noted that the sister signed resignation documents and that her proof did not establish whether she delivered those to the plaintiff, the successor trustee, as required by the trust. Further, the sister had signed a document with the plaintiff where the plaintiff signed as the trustee of the trusts.
The sister also contended that even if her signed resignations were effective, that she resumed her position as trustee because the plaintiff failed to serve and because she has been performing the duties of a trustee. The court disagreed: “We have not located, and [Appellee] does not identify, any authority [that] allow a successor to take over as trustee without a court proceeding when a trustee fails or no longer serves for certain reasons: death, resignation, removal, or incapacity resulting from illness, injury, advanced age, or other legal disability.” Id. The court also held that the sister’s actions as trustee (for example, signing tax returns each year) do not make her trustee.
The court also held that the trusts were irrevocable and did not allow the settlor to modify them to remove a successor trustee (the settlor attempted to remove the plaintiff as successor trustee in 2009 when he took over that position in the 1990s). The court concluded: “we hold that there is a fact issue about whether Karen resigned as trustee and Garry succeeded her.” Id.
The court then turned to whether or not the trial court erred in granting summary judgment and dismissing plaintiff’s claims for termination and modification. The court first looked at construing the trust and determining whether it should be terminated:
Garry’s position is that the purposes of the Garry Trusts were to avoid estate taxes and, since Maxine died in 2009, that purpose has been fulfilled. Karen’s position is that “the overall purpose of the estate plan is to keep the Ranch in the Crossley family by initially avoiding a forced sale of the Ranch to pay inheritance taxes upon Maxine’s death and then to prevent ownership interests in the Partnership from being acquired by non-family persons or entities, particularly the creditors (or their transferees) of trust beneficiaries.” We disagree with both Garry and Karen.
We construe a trust according to the express language used… Both parties confuse a trust’s purpose with a settlor’s intent. A settlor’s intent is not “necessary or controlling” to a finding of a trust’s purpose. In determining a trust’s purpose, courts look solely to the trust’s language of how the trust is to be used and not why a grantor chose to transfer property via a trust instead of any other method… The Garry Remainder Trust provides that the trustee can, in his or her absolute judgment, distribute funds from the trust to Garry or a person or entity that he may appoint. The payments “shall be made only for the purposes of health, maintenance and support” of the distributee. The Garry Family Trust provides that the trustee has the absolute discretion to make distributions to Garry’s descendants and any person or entity that he appoints. Both trusts can be terminated if they become uneconomical. But otherwise, they continue for 21 years after the death of certain people listed by the trusts. It is these terms, and no external sources, from which we must derive the purposes of the Garry Trusts. Those purposes then are to make distributions to Garry, people or entities he may appoint, or his descendants. These purposes have not been fulfilled and it is necessary for the Garry Trusts to continue to achieve their purposes. Therefore, Karen met her burden and disproved two predicate grounds to terminate or modify a trust, § 112.054(a)(1) and (a)(5)(A), and summary judgment on those bases was properly granted.
Id. The court affirmed that the trusts should not be terminated. The court then looked at whether the trial court erred in dismissing the plaintiff’s modification relief: “But Karen offered no evidence to disprove that the Garry Trusts could be modified (as distinct from terminated) consistent with their material purposes. Summary judgment on that basis was improper.” Id. The court stated:
Garry sought to modify or reform the trusts to name him as trustee or to remove Karen’s absolute discretion to make distributions. He claimed that these were administrative, nondispositive terms and that Karen’s failure to make distributions or withdraw the trusts from the partnership impaired the administration of the trust. As with her arguments about the purpose of the trust, Karen looks outside the trust documents themselves to Maxine’s relationship with Garry. She argues that Maxine did not intend for Garry to be trustee because she explicitly deleted him as a successor trustee and that she intended for Karen to have absolute discretion because of the “distrustful relationship” between Maxine and Garry and his history of unsuccessful business ventures and unemployment. Karen’s focus on Maxine’s intent is misplaced. Maxine’s intent may become an important factor after a predicate for termination or modification is established. Id. § 112.054(b) (“The court shall exercise its discretion to order a modification or termination . . . in the manner that conforms as nearly as possible to the probable intent of the settlor.”). But intent does not help determine whether a term of a trust is administrative and nondispositive. We must turn to the terms of the trust of find that answer.
The basis for Gary’s argument for a change of trustee relies on this language from the statute: “a court may order that the trustee be changed” . . . “if” . . . “modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or impairment of the trust’s administration[.]”… Gary focuses on “waste or impairment of the trust administration” under Karen’s direction. But another phrase in the provision that Gary proceeds under is that modification must apply to an “administrative, nondispositive term.” The Property Code does not separately define the terms “administrative”, or “nondispositive” or collectively the phrase “administrative, nondispositive term.” No Texas case has to our research defined that collective phrase. We find it used in no other statute. Nothing in the legislative history of § 112.054 illuminates what the legislature meant by those conjoined terms. But based on the summary judgment record we can say that the identity of the trustee in this trust and the discretion given the trustee is something more than an “administrative, nondispositive” term.
An “administrative term” in a trust might describe the identity of a trustee. Black’s Law defines “administrative” to mean “Of, relating to, or involving the work of managing a company or organization, executive.” But the word “administrative” is tied by a comma to the word “nondispositive” which means these are coordinate adjectives that modify the same noun. Any trust “term” must be both administrative and nondispositive for § 112.054(a)(3) to apply.
We find no dictionary definition for “nondispositive” but “dispositive” means “Being a deciding factor; (of a fact or factor) bringing about a final determination” and “of relating to, or effecting the disposition of property by will or deed.” Adding “non” before the word dispositive would have it mean the opposite—not being a deciding factor or not effecting the disposition of property. And that is where Gary’s theory of replacing the trustee under § 112.054(a)(3) stumbles. Under the terms of the trust as written, the trustee has complete discretion to make distributions or not. The trustee is accorded broad powers, including to (1) take possession of trust property; (2) invest trust assets; (3) sell, lease or exchange trust property; (4) borrow on behalf of the trust; (5) administer mineral interest; (6) obtain, continue, and operate a business; (7) merge this trust with another trust; (8) employ professionals to assist the trustee; and (9) even change the jurisdiction under which the trust is administered. With such complete discretion and authority vested with the trustee, we agree with Karen that the identity of the trustee is a dispositive term of this trust. Who gets to exercise the broad discretion and powers under this trust might in fact be its most determinative term. Accordingly, Gary’s theory under § 112.054(a)(3) fails because that provision can only apply to a “administrative [and] nondispositive” terms.
And for the same reason, his theory to reform the trust to name himself as trustee under § 112.054(b-1)(1) fails as well. The only difference between (a)(3) and (b-1)(1) is the whether the trust is “modified” or “reformed.” And the difference in those terms is that reformation makes any change retroactive, while modifications are effective prospectively. But substantively, the coordinate adjectives “administrative, nondispositive” appears in both sections, and it is that phrase that negates Gary’s theory for changing trustees under § 112.054(a)(3) and (b-1)(1).
Similarly, the trustee’s discretion over when and to whom to make a distribution is dispositive as it pertains to how the principal of the trust is to be disposed… Because the discretion provided to the trustee affects how the distributions are made, it is a dispositive term. Summary judgment against Garry on his request to reform the trust to remove the trustee’s absolute discretion was proper.
Id. Because the court reversed some of the trial court’s rulings, it also reversed and remanded an award of attorney’s fees for the defendant for further consideration.
