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Give a lot of thought to choosing a trustee

When a Texas millionaire died, he left all his money to a trust.  He ordered the trustee to support his second wife in the standard of living she had enjoyed while he was alive, if her own income and resources weren’t sufficient to do so.  Once that was done, the trustee could use the trust to benefit the children of his first marriage.

However, the millionaire picked as a trustee a man who had been good friends with his first wife. You can probably imagine that all this led to trouble.

The second wife claimed her standard of living included three homes, five cars, a maid, and frequent travel. She claimed she needed $4,400 a month from the trust in addition to her own income to maintain this lifestyle.

The trustee, on the other hand, interpreted the trust in such a way that he didn’t have to give her a dime until she had sold off everything she owned. He argued that only after she had sold off her homes, cars and other property, could it be said that her own resources weren’t enough to support her.

The dispute went all the way to the Texas Court of Appeals, which sided with the second wife. The court said the deceased millionaire intended the trust to benefit his second wife, and it made no sense to force her to sell everything she had in order to enjoy the trust’s income.

But this case is a good lesson in being careful when you pick a trustee. However honest and competent a trustee is, if there’s any reason to think that he or she would have a temptation to administer the trust in a way that’s different from what you want, you could be setting up trouble down the road.

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