Myrick v. Moody Nat’l Bank, 336 S.W.3d 795 (Tex. App.—Houston [1st Dist.] 2011, no pet.).
Trustee entered into a lease extending beyond the termination of the
trust. Beneficiary sued asserting that doing so was a breach of duty.
The trial court found in favor of Trustee and Beneficiary appealed.
The appellate court affirmed. Section 113.011(b) of the Trust Code
grants the trustee the authority to “execute a lease containing terms or
options that extend beyond the duration of the trust” unless the trust
instrument provides otherwise. See § 113.001. The court examined the
trust instrument and found no provision which would limit Trustee’s
ability to enter into a long-term lease. The court rejected
Beneficiary’s argument that the requirement that Trustee distribute
property to Beneficiary when the trust terminates operates to prohibit
long-term leases. See § 112.052.
Moral: A settlor who wishes to prohibit long-term leases must expressly
so provide in the trust instrument.