Originally published by David Fowler Johnson.
In Estate of Keener, two heirs of a trust settlor filed an application to declare heirship. No. 13-18-00007-CV, 2019 Tex. App. LEXIS 1222 (Tex. App.—Corpus Christi February 21, 2019, no pet. history). The beneficiary of the trust filed a plea in intervention in the heirship proceeding, but the trial court denied his intervention. The trust beneficiary filed an appeal of that order. The trust was styled a “gun trust.” The attorney who drafted the trust document advertised “NFA gun trusts” at gun shows across Texas. “In his promotional materials, Crownover advertises his gun trusts as vehicles used to easily transfer federally regulated firearms upon death and also as a way to legally share the use of a federally regulated category III asset, such as a silencer or suppressor, among multiple individuals. The terms of Crownover’s trusts, however, do not limit the trust property to only firearms.” Id. Under the terms of the trust, the settlor could add any real and personal property to it, and the trust did not specify how property was to be added.
The court of appeals first described the concept of a trust:
A trust is a mechanism used to transfer property. Generally, to create a trust in real or personal property, the terms of the trust must be in writing and be signed by the settlor or the settlor’s authorized agent. An inter vivos trust is a trust that is created and takes effect during the settlor’s lifetime. An inter vivos trust is typically created by (1) a declaration of trust, by which the property owner establishes a trust and declares himself or herself to be trustee, or (2) an agreement of trust, by which the property owner establishes a trust and names a third party to be the trustee. Also, a trust cannot be created unless there is trust property [], and the settlor must manifest an intention to create a trust. However, no testamentary intent is required for an inter vivos trust. When a valid trust is created, the beneficiaries become the owners of the equitable or beneficial title to the trust property and are considered the real owners. The trustee is vested with legal title and right of possession of the trust property but holds it for the benefit of the beneficiaries, who are vested with equitable title to the trust property. Acceptance by the trustee of an interest in a trust is presumed. Finally, “[p]roperty may be added to an existing trust from any source in any manner unless the addition is prohibited by the terms of the trust or the property is unacceptable to the trustee.”
Id.
The beneficiary alleged that he was the owner of the property that the heirs sought to inherit because the settlor placed the disputed property in the trust and pointed to Schedule A of the trust for this proposition. The court of appeals agreed: “Our review of the record shows that Yarter is the beneficiary of a trust established by Keener, it is undisputed that a valid trust exists, and the trial court correctly issued a finding that a trust was established.” Id. The court noted that the trust documents also did not limit the purpose of the trust or state that it was intended to only hold firearm-related property. Thus, the heir’s argument that the trust was not intended to transfer anything more than the suppressor necessarily failed. The court held that as the beneficiary of a trust, the beneficiary was an interested person under the Texas Estate’s Code and was the owner of any property that was placed in the trust. “In other words, he has a claim against the property in Keener’s estate that appellees seek to inherit.” Id. The court found that there was a fact issue as to the overall property in the trust and whether Schedule A added any property to the trust. The court concluded that the beneficiary established a justiciable interest in the proceeding and that the trial court failed to follow controlling legal precedent. The trial court erred in denying his plea in intervention.
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