Mary Goodblood grew up believing that she was Cash Goodblood’s only daughter. Twenty-five years after he died, her dad’s brother Uncle Trusty sold the Goodblood family business for a tidy sum. After report of the lucrative sale was plastered on the front page of the local newspaper, Mary received a Facebook message from a stranger Désirée saying “Hi, I think your Dad is also my Dad. Do you want to exchange DNA?” In talking to her Uncle Trusty Mary learned that Désirée’s mom, Candy Onenight, had a brief relationship with Cash long before Cash and Mary’s mom got married. When Uncle Trusty, the trustee of Cash’s trust that specifically names Mary and nowhere mentions Désirée, is presented with Désirée’s claim for a share of Cash’s estate, what should Uncle Trusty do?
Proceed cautiously. While Désirée, too, may be a beneficiary to whom Trusty may later be determined to owe a fiduciary duty, Désirée has some daunting challenges. First, she must prove that she is Cash’s biological daughter. Second, she must prove that the language of Cash’s estate documents – especially his trust – benefits any biological heirs besides Mary. Until Désirée proves her claims to be correct, what must Uncle Trusty do as Mary’s fiduciary?
Uncle Trusty’s Trustee Duties Owed to Mary
Generally, a fiduciary has the duty to do what is reasonable under the circumstances to defend actions by third parties against the trust estate. Mary’s rights to Cash’s trust are unquestioned. Desirée’s rights are, at best, tentative – claims by a third party against the trust estate which require a judicial finding or the parties’ agreement.
With respect to paternity – DNA testing – what is reasonable under the circumstances for Uncle Trusty to do? Should he voluntarily test himself and other Goodblood family members? Is Desirée’s claim, alone, sufficient to put him on notice to give her some credibility? Does Uncle Trusty owe Desirée a fiduciary duty to proactively assist in a court’s determination of her claim? Is that solely her responsibility? Recognizing that a trustee has a duty to act for all the beneficiaries, not for only some of them without expense to the others, if Trusty acts is he being impartial?
With respect to Cash’s Trust assets – values and funds distribution – how can Uncle Trusty satisfy his fiduciary duty of impartiality in managing, supervising and safeguarding the trust assets of his brother Cash? For example, Trusty owes Mary a duty to make full and accurate disclosure of all material facts necessary for her to protect her interest, including all financial information affecting Cash’s Trust. Before Cash is determined to be Desirée’s father establishing her interest in Cash’s Trust, does Trusty owe Desirée a duty to fully and accurately disclose to her the Trust’s finances and assets? Is Desirée yet a beneficiary whose interests Uncle Trusty is duty-bound to protect? If not, is Trustee being impartial in disclosing to Desirée confidential information about Cash’s Trust?
Following up a bit on Trusty’s duties, they may also include getting a judicial determination whether the language of Cash’s trust is written to include illegitimate descendants. For more on this topic, check out “Illegitimate Heirs – Trust Language: “Hi, I Think Your Dad is also My Dad” – Part 2.”
With respect to distributions from Cash’s Trust – scheduled cash payments – what should Trusty do with undistributed Trust funds? Of all the unanswered questions, this may be the easiest – set aside the share that may later be due to Desirée until final determination of rights and ownership.
Family in Transition
In all candor, the burden placed on Cash’s brother Uncle Trusty was probably a little unfair. He was catapulted into new and uncharted waters. Yet, there were certain tenets of fiduciary duties that continued unchanged. A trustee has a fiduciary duty to protect those to whom he owes a duty – and only them – until the beneficiaries change. In doing so, the best advice to Trusty – in caring for his beneficiary – is to hold back a fair share that may later become due to a claimant. Perhaps the overarching consideration for Trusty is to honor his duty to act impartially in managing the trust assets, considering any differing interests of the beneficiaries – impartially managing the trust assets, and in so doing, impartially fulfilling his duties to the trust beneficiaries. That means not sharing either Cash’s Trust information or funds until a new beneficiary unquestionably has the right to both. For example, doing nothing to assist Desirée’s claim may well include not unduly assisting her by offering to gather and test DNA samples.
Balancing the Scales – for both the Family and the Business in Transition. Careful thought must be given to both the strictly legal answers as the business transitions from one generation to the next, and the emotional / practical answers as the family transitions between generations. Both must be weighed to chart a workable solution for all interested parties.
Tilting the Scales Blog
This is the fourth and final in a series of Tilting the Scales articles on “real life” business and family issues in the lives of the Goodblood family and the claims or an illegitimate heir which were litigated and resolved by Gray Reed lawyers Greg Sampson, Cleve Clinton and Bill Drabble. This Part 4 of “Illegitimate Heirs: Fiduciaries – ‘Hi, I think Your Dad is Also My Dad’” addresses the questions raised by Desirée Onenight that upended the Goodblood family as Desirée navigated her way to the courthouse.
Unanswered Question: Did Desirée wait too long?
Mary’s dad Cash, being her Uncle Trusty’s brother died over twenty-five years ago. How long can Desirée wait before she has waited too long to make a claim? Generally, the statutory deadline to claim it or lose it is four years. Twenty-five years sounds too long. However, today Texas law offers no answer. Generally, Texas statutes and case law have been unchanged in trusts and estates law for hundreds of years. There is presently no statute of limitations on filing such a claim.
No Legal Advice
This blog is informational only. The names have been changed. The facts and legal issues are sometimes changed to make a point. Seek advice worthy of your trust from someone with the necessary education and experience.