Introduction
The fiduciary-beneficiary relationship is one of trust. The fiduciary has a duty to act in the beneficiary’s best interest and must exercise a degree of care that a reasonable person would under similar circumstances. If the beneficiary believes that the fiduciary has breached this duty, can he or she challenge the fiduciary’s actions in court?
Legal Terminology
Fiduciary
A fiduciary is someone who is entrusted with the care of another person’s money or property. In Texas, a fiduciary can be appointed by a court to manage the affairs of someone who is unable to do so themselves, such as a minor child or an incapacitated adult. The fiduciary has a duty to act in the best interests of the person they are representing, and must exercise a standard of care that is higher than that of a normal person in a similar situation.
If the fiduciary breaches their duties, the beneficiary may challenge their actions in court. The court will then decide whether or not the fiduciary acted inappropriately and take appropriate action, which could include removing the fiduciary from their position or ordering them to pay damages.
What are the fiduciary’s duties in Texas?
A fiduciary has a duty to act in the best interest of the beneficiary at all times. This means that a fiduciary must make decisions that are in the best interest of the beneficiary, even if it is not in the best interest of the fiduciary. A fiduciary must also avoid conflicts of interest and self-dealing.
Probate Case Law
McLendon v. McLendon, 862 S.W.2d 662 (Tex. App. – Dallas 1993, writ denied)
Facts & Procedural History of Estate Administration
B.R. and Jeannette McLendon had a son named Glendon B. Lendon, Sr. The McLendons had three grandchildren through Glendon: Glendon’s son, Glendon “Bart” McLendon, Jr., as well as two daughters. Glendon’s daughters were named Anna and Jan McLendon. B.R. and Jeannette McLendon both had passed away by 1985. The McLendons, specifically B.R., Gordon, and Bart, built a successful enterprise focused on the acquisition and operation of radio stations and movie theaters (including drive-in theaters) in Texas. The McLendons possessed assets in the United States and foreign countries. The McLendon holdings existed largely in two entities: (1) The McLendon Company, a Texas General Partnership, and (2) the Tri-State Theaters, a Texas Limited Partnership. Jeannette served as a general partner for The McLendon Company and as a limited partner in Tri-State. Bart and Gordon were general partners of Tri-State.
After Jeannette’s death, the probate court appointed Bart and Bill Odom as independent co-executors of her estate. That same year, the partners of both The McLendon Company and Tri-State Theaters amended their partnership agreements, which led to the subsequent controversy. Anna sued Bart and Billie and challenged: (1) their management of Jeannette’s estate and (2) the validity of both partnership agreement amendments. Bart and Billie filed a counterclaim, alleging that, under the in terrorem clause of Jeannette’s will, Anna had forfeited her interest in the estate by contesting the will. Jan and Anna asserted several causes of action against Bart and Billie, including breach of fiduciary duty. The jury found that Bart and Billie had breached their fiduciary duties, and awarded actual damages, punitive damages, and attorneys’ fees to Anna and Jan. The trial court entered a judgment on the verdict for Anna and Jan, but did not enter judgment regarding the in terrorem clause Bart had asserted.
The Court of Appeals modified, then affirmed, the judgment of the trial court. The Court held that: (1) Bart breached his fiduciary duty; (2) the award of attorneys’ fees to Anna and Jan was not an abuse of discretion even though they were not the prevailing parties in a declaratory judgment action; (3) the partnership agreements were not invalid; and (4) the in terrorem clause did not apply to Anna’s claim. For the in terrorem clause, the Court found that this clause’s language did not mean that a beneficiary was prohibited from initiating a legal action against a co-executor for the breach of fiduciary duties.
The Takeaway: Contesting a Will
McLendon v. McLendon shows that a beneficiary’s right to challenge a fiduciary’s actions is a key aspect of the fiduciary/beneficiary relationship.
Do you need to hire an Experienced Probate Attorney to help with a Will Contest?
When it comes to estate planning, one of the most important things you can do is appoint a fiduciary. A fiduciary is someone who is legally responsible for managing your estate and ensuring that your wishes are carried out. In Texas, if you have any concerns about the way your fiduciary is handling your estate, you have the right to contest their actions in court.
If you are thinking about challenging a fiduciary’s actions, it is important to seek out the help of an experienced probate attorney. An attorney can help you understand the legal process and make sure that your rights are protected throughout. (512) 273-7444.
Related questions
Can a beneficiary challenge an executor of an estate?
If you’re a beneficiary of an estate in Texas, you may be wondering whether you can challenge the executor’s actions. After all, the executor is responsible for administering the estate and distributing the assets to the beneficiaries.
Fortunately, Texas law does allow beneficiaries to challenge an executor’s actions in some circumstances. For example, if you believe the executor is not properly managing the estate or is not distributing the assets fairly, you can file a petition with the court.
Of course, before taking any legal action, it’s always best to try to resolve the matter amicably with the executor. After all, they are likely acting in good faith and may not be aware of your concerns. However, if you’re unable to reach a resolution, then filing a petition with the court may be your best option.
What can override a beneficiary?
It’s common for people to name beneficiaries in their wills, trusts, life insurance policies, and retirement accounts. Beneficiaries are the people or organizations that will receive assets from the account owner upon their death. Under Texas law, a beneficiary can override a fiduciary’s actions if the beneficiary can prove that the fiduciary breached their duties.
A fiduciary is a person or organization that is legally obligated to act in another person’s best interests. A fiduciary has a duty of care and loyalty to the beneficiary and must act in good faith. If the fiduciary breaches their duties, the beneficiary can file a lawsuit against them.
The court will look at several factors when determining whether or not the fiduciary breached their duties, including:
- The nature of the relationship between the fiduciary and beneficiary
- The duties owed by the fiduciary to the beneficiary
- The circumstances under which the fiduciary acted
- Whether or not the fiduciary acted in good faith
- Whether or not the fiduciary’s actions were reasonable under the circumstances.
If the court finds that the fiduciary breached their duties, they may order them to pay damages to the beneficiary.
Can a beneficiary challenge a trustee?
If you’re a beneficiary of a trust in Texas, you might be wondering if you can challenge the trustee’s actions. The answer is yes, you can.
If you think the trustee isn’t following the terms of the trust or is mismanaging the trust assets, you can file a petition with the court. The court will then decide whether or not to remove the trustee and appoint a new one.
Of course, before taking any legal action, it’s always best to try to work things out with the trustee first. It’s possible that there’s just been a misunderstanding and that the trustee is willing to make changes to address your concerns.
If you do decide to go ahead with a legal challenge, be prepared to back up your claims with evidence. The court will want to see that you have a valid reason for challenging the trustee and that there’s a good chance that your case will succeed.
Does beneficiary override will in Texas?
If you’re the beneficiary of an estate in Texas, you may be wondering if you can override the terms of the will. Here’s what you need to know.
In Texas, a will is a legal document that outlines how a person’s assets will be distributed after they die. The person who creates the will is known as the testator.
The testator appoints a fiduciary, such as an executor or administrator, to carry out the terms of the will. The fiduciary has a legal duty to act in the best interests of the beneficiaries.
However, there are situations where the fiduciary may not be acting in the best interests of the beneficiaries. For example, the fiduciary may be mismanaging estate assets or engaging in self-dealing.
If you’re a beneficiary and you believe that the fiduciary is not acting in your best interests, you have the right to challenge their actions. You can do this by filing a petition with the court.
If the court finds that the fiduciary is not acting in the best interests of the beneficiaries, they can remove them from their position and appoint a new fiduciary.
How to contest a will in Texas?
If you’re an heir or beneficiary of an estate in Texas, and you believe the administrator or executor is not following the decedent’s wishes or is mismanaging the estate, you may be able to contest the will. Here’s what you need to know about how to contest a will under Texas law.
There are two ways to contest a will in Texas: through a will contest proceeding or by filing a motion to remove the executor.
A will contest proceeding is filed with the court that probated the will, and must be based on one of four grounds: fraud, forgery, duress, or mental incapacity. You must file a will contest proceeding within two years of the date the will was admitted to probate.
To file a motion to remove the executor, you must file it with the court that probated the will and allege that the executor is not performing their duties properly. The court will then hold a hearing on your motion, and if it finds that the executor is not performing their duties properly, it can remove them from their position.
