USA – TEXAS Law and Practice Contributed by: Perrin Clark and Meredith McIver, Ytterberg Deery Knull LLP
of the transferred interests, as well as their inherent lack of marketability (perhaps enhanced by transfer restrictions within the entity’s governing documents), significant valuation discounts might apply, reducing the transfer costs.
• the ordering of the posting of fiduciary bonds; • the removal and replacement of fiduciaries; • the appointment of guardians; • the imposition of liens; • the imposition of receiverships; and • the imposition of constructive trusts. 6. Roles and Responsibilities of Fiduciaries 6.1 Prevalence of Corporate Fiduciaries The use of corporate fiduciaries, either as executors or trustees, or in other fiduciary and agency capaci - ties, is prevalent in Texas. There are likely hundreds of foreign (non-Texas) national and international financial institutions operating in Texas and offering fiduciary services, either directly or through a dedicated sub - sidiary such as an affiliated trust company. In addi - tion, many Texas state-chartered banks, and quite a few independent Texas trust companies, offer fiduci - ary services. It is very common for an estate plan to include a corporate fiduciary, at least as a fiduciary of last resort, and corporate fiduciaries routinely serve in nearly every fiduciary and agency capacity in Texas. 6.2 Fiduciary Liabilities If a fiduciary fails to administer an estate or a trust according to the terms of the will or trust instrument, fails to act in accordance with the law, or otherwise breaches their duties, a beneficiary can bring suit against the fiduciary and seek various remedies, as discussed in 5.2 Mechanism for Compensation . Beyond the terms of the will or trust instrument, as the case may be, and beyond the provisions of the Texas Code, a fiduciary owes a beneficiary various duties arising from the common law, including, without limi - tation, a duty of loyalty, a duty of care, and a duty of good faith and fair dealing. Importantly, a fiduciary may be personally liable for monetary damages if the fiduciary breaches their fiduciary duties. Various mechanisms exist to protect a fiduciary from personal liability, including, without limitation: • statutorily approved delegation of certain activities by the fiduciary, such as investment management, to qualified persons;
5. Wealth Disputes 5.1 Trends Driving Disputes
The most significant current driver of family conflict is the unprecedented intergenerational wealth transfer that is occurring in the United States and in Texas. See 2.1 Cultural Considerations in Succession Planning . Often, this intergenerational wealth transfer includes the transfer of significant closely held operating busi - nesses and the transfer of control over these busi - nesses can enhance family conflict, particularly if such control is transferred asymmetrically, or family members perceive inequalities in the transfer of such control and the transfer of control over (and owner - ship of) other family properties. These family conflicts are playing out in various forums depending on the specific facts, including probate contests involving wills and testamentary transfers, litigation alleging breaches of fiduciary duty in both estate and trust contexts, litigation alleging breach of various duties in business contexts, and marital disputes. 5.2 Mechanism for Compensation Texas law provides many potential remedies to an aggrieved party in a wealth dispute. The appropri - ate remedy in a specific circumstance is highly fact dependent and may include, without limitation: • the requirement for accountings; • the award of monetary damages, including com - pensatory damages, attorneys’ fees, and punitive damages; • the granting of temporary restraining orders and injunctions; • the issuing of orders compelling fiduciaries to per - form certain duties and undertake certain actions; • the issuing of declaratory judgments; • the ordering of trust reformations; • the ordering of rescissions of a trust instrument or other transaction; • the reduction of fiduciary compensation;
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