Other Estate Planning Matters
Durable Power of Attorney
Hardy v. Robinson, 170 S.W.3d 777 (Tex. App.—Waco 2005, no pet. h.).
Principal signed a statutory durable power of attorney. In the “special instructions” section, he explained that he wanted certain litigation in which he was involved to continue with the proceeds held in trust for his sons. Principal died within hours of signing the power of attorney. The trial court held that this language was sufficient to create a trust.
The appellate court reversed. The court first examined the document and found that it was a statutory durable power of attorney under Probate Code § 482. Consequently, under long-standing Texas law, it must be strictly construed. Principal’s special instructions acted to grant Agent powers he might not otherwise have had the right to exercise. The language did not act to create a trust.
The court also held that Principal did not create an oral trust. Although an oral trust of personal property is enforceable under Property Code § 112.004, there was no evidence that the trust was funded, that is, that Principal actually transferred his rights in the lawsuit to Agent as a trustee. The court also explained that the only evidence of trust intent was the special instructions in the power of attorney which granted Agent the power to create a trust but did not itself create a trust.
Moral: A person desiring to create a trust must make certain to take all necessary steps.