In Alpert v. Riley, 274 S.W.3d 277 (Tex. App.—Houston [1st Dist.] 2008, pet. filed), Settlor created irrevocable trusts. Later, Trustee sued Settlor for breach of fiduciary duty. The court determined that Trustee lacked standing to sue Settlor because “[a] trust settlor has no fiduciary obligation to a trust beneficiary once [a] trust is created, and control of the trust assets is vested with the trustee.” Alpert, at 292. The court rejected Trustee’s claim that he could bring the action based on a breach of Settlor’s fiduciary duty as a parent to the beneficiaries, his sons.
The court also pointed out that Trustee was precluded from suing Settlor under Trust Code § 113.028(a) which provides that a trustee may not asset a claim for damages against a party who is not a beneficiary if each beneficiary provides written notice of his or her objection as was done in this case.
Moral: Unlike with a trustee, a trust does not create a fiduciary relationship between the settlor and the beneficiary.
