In a recent decision the Houston Court of Appeals [1st District] rejected breach of fiduciary claims against the settlor of a trust:
Once a settlor completes a
transfer of assets to a trust, the beneficiaries gain beneficial title and the
trustee gains sole legal title in, and exclusive control over, the trust
property, subject to the trust instrument. Black’s Law Dictionary 1546 (8th
ed. 2004) (explaining characteristics of various trusts); see also Pickelner,
229 S.W.3d at 526. At the same time, the trustee, as a fiduciary, has
equitable duties to hold and manage the property for the benefit of the
beneficiaries. Tex. Prop. Code Ann. §§ 113.051, 113.056(a) (Vernon
2007). Certain of those fiduciary duties are nondelegable. See
Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 249 (Tex. 2002); Slay
v. Burnett Trust, 187 S.W.2d 377, 387–88 (Tex. 1945); see also
Transamerican Leasing Co. v. Three Bears, Inc., 586 S.W.2d 472, 476 (Tex.
1979) (“The general rule is that a trustee may not delegate his discretionary
power to another. A trustee may, however, . . . give authority to another
to carry out ministerial or mechanical acts . . . .”); see generally Tex.
Prop. Code Ann. § 113.018 (Vernon 2007) (allowing trustee to employ
investment agents and brokers “as reasonably necessary in the administration of
the trust estate”). Unless the trust instrument expressly provides
otherwise, a settlor has no duty to manage trust property, and the trustee
alone is responsible as a fiduciary if he allows the settlor to mismanage trust
property to the detriment of the trust.
None of the three trusts
assigned any duty to Alpert, and thus Alpert could not otherwise owe any
fiduciary duty. Absent some assignment of duty to the settlor in the
trust instrument, a trustee has no cause of action to sue the settlor of a
trust for a breach of fiduciary duty to the trust beneficiaries. Cf.
Ray Malooly Trust v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006) (noting that
under Texas law, a trust refers to “the fiduciary relationship governing the trustee
with respect to the trust property”) (emphasis added) (quoting Huie v.
DeShazo, 922 S.W.2d 920, 926 (Tex. 1996) (per curiam). A trust
settlor has no fiduciary obligation to a trust beneficiary once that trust is
created, and control of the trust assets is vested with the trustee. See
id.; see also Tex. Prop. Code Ann. § 111.004(4) (Vernon 2007 &
Supp.) (defining “express trust”).
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