This unique case emerged in November 2020 in Texas court, which truly had a ripple effect on how the trusts are interpreted.
Here is What Happened!
So, what happened was that a mother established a trust in which she authorized a trustee to distribute her assets between her son and the son’s spouse.
The twist here was that at the time of execution of the trust, the son was married to his first wife. However, at the time of implementation, the son had already divorced his first wife and married the second wife.
The children he had with his first joined their mother and held that “she” is the woman referred to as a “spouse” in the trust.
Texas court ran a trial and decided that the true beneficiary of the trust is the second wife. The case does not end here!
What the Case Involved?
There is a concept called “class gifts,” which refers to the gift of an aggregate sum distributed to a group of beneficiaries whose number is uncertain at the time. The descendants of the deceased are not eligible for class gifts.
Thus, the Texas court utilized the term “spouse” to identify the body that was possible to identify at the time of execution of the will.
Here, the grantor’s use of the term “spouse” at the time referred to the first wife and not any future spouses (uncertain at the time of the gift).
Consequently, the decision was reversed in favor of the first wife.
A Crucial Lesson from Ochse
The case is a reminder to remove any ambiguity you may have in your typed or handwritten wills. The inadequacy of the information in the wills can harm the trust creator’s goals in the future.
Talk to a Knowledgeable Attorney
If you or your loved one need assistance in any matter involving estate planning and asset protection, do not hesitate to contact us.
At Keystone Asset Protection and Estate Planning, we would be more than delighted to provide our services so that you can protect your assets and preserve your hard work.