in the Interest of K.K.W., a Minor Child

CourtCourt of Appeals of Texas
DecidedAugust 20, 2018
Docket05-16-00795-CV
StatusPublished

This text of in the Interest of K.K.W., a Minor Child (in the Interest of K.K.W., a Minor Child) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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in the Interest of K.K.W., a Minor Child, (Tex. Ct. App. 2018).

Opinion

Reversed and Remanded in part and Affirmed in part; Opinion Filed August 20, 2018.

In The Court of Appeals Fifth District of Texas at Dallas No. 05-16-00795-CV

IN THE INTEREST OF K.K.W., A MINOR CHILD

On Appeal from the 254th Judicial District Court Dallas County, Texas Trial Court Cause No. DF-04-12034-R

MEMORANDUM OPINION Before Justices Lang-Miers, Evans, and Schenck Opinion by Justice Evans Mother appeals from an adverse final judgment in favor of Father and the trustee of a trust

Mother and Father established for their son, K.K.W., in connection with their divorce. Neither

parent was awarded child support, but they could seek reimbursement from the trust for certain

expenses they incurred on behalf of K.K.W. About seven years after the divorce was finalized,

this litigation ensued principally about Mother’s complaint that Father was paying more to support

K.K.W. than ordered by the family court by providing additional funds to Trustee from which

Trustee paid as much of Mother’s reimbursement submittals as Trustee approved pursuant to the

terms of K.K.W.’s trust. Mother claims the divorce decree supersedes the terms of the trust and

requires Trustee to use only trust funds to reimburse her and that she is entitled to reimbursement

for all of K.K.W.’s expenses, not just those categories of expenses enumerated in the trust. The

trial court ruled against Mother’s claims and in favor of Father and Trustee’s assertions about

K.K.W.’s trust. On appeal in five issues, Mother challenges five of seven partial summary judgment

rulings, as well as the award of attorney’s fees and costs to Father and Trustee after a bench trial.

Generally, we conclude the terms of the divorce decree do not supersede the terms of the trust and

the Trustee is not prevented from using Father’s supplemental funds to reimburse Mother for

K.K.W.’s expenses allowed by the trust. So, we reject Mother’s central theory of her claims. But

we conclude Mother is a contingent residuary and remainder beneficiary of the trust, so we reject

Trustee and Father’s challenge to her standing. That conclusion undermines the limited basis on

which judgment was granted against Mother’s claim for removal of Trustee. So, for the reasons

explained below and without any inference as to the merits, we reverse and remand to the trial

court Mother’s claim for removal of Trustee for further proceedings consistent with this opinion.

As to all the other relief granted by the trial court, we affirm the trial court’s judgment.

BACKGROUND

In July 2004, Father sued Mother for divorce after about four years of marriage. The couple

had one child, K.K.W. Mother and Father executed a mediated settlement agreement (MSA) on

May 3, 2005, an Agreement Incident to Divorce (AID) on August 15, 2005, K.K.W.’s trust on

August 17, 2005, and the divorce decree on August 19, 2005. The MSA included provisions for

creating K.K.W’s trust. The AID did not mention K.K.W.’s trust except to state that in the event

of Mother’s death, any funds in a trust established for her would pass to K.K.W.’s trust.1 The AID

provided that the MSA merged into the AID and decree and that to the extent any differences

existed the decree would control. The merger clause in the AID did not incorporate K.K.W.’s trust

nor was the Trustee a party to the divorce proceedings and he did not sign the MSA, AID, or

1 The AID included provisions for creating Mother’s trust.

–2– decree. Only Father, Mother, and Trustee signed K.K.W.’s trust instrument, not the family district

judge.2

In the Agreed Final Decree of Divorce under the heading, “Child Support,” the decree

ordered Father to provide Mother with $1 million as part of the division of the marital estate and

that Mother contribute the $1 million, together with an additional $1 million contributed by Father,

to establish K.K.W.’s trust. The decree further ordered that John McReynolds serve as the trustee

of the trust. The decree also provided:

IT IS FURTHER ORDERED that the trust shall be used for the exclusive benefit of [K.K.W.] to pay for his education, clothes, special activities, medical expenses, health insurance premiums, extra curricular activities, daycare/nanny expenses and any other necessaries of [K.K.W.] as deemed necessary in the sole discretion of the trustee, John McReynolds.

The Court finds that the [trust] being established by the parties shall pay for all of the child’s financial needs as set forth above.3 IT IS THEREFORE ORDERED AND DECREED that neither party shall be ordered to pay the other party child support. IT IS ORDERED that each parent shall be responsible for the expenses of the child, incurred while in his or her respective possession, that are not paid by the trust.

K.K.W.’s trust instrument contained a statement of intent by the settlors, Mother and

Father, to assist the trustee in making distribution decisions. The statement indicated the primary

purpose of the trust was to provide for K.K.W.’s primary, secondary, and post-secondary

education, and in accordance with the couple’s MSA, to provide for his clothing, special activities,

medical expenses, extracurricular activities, daycare/nanny expenses, “and any other necessaries

of [K.K.W.] as deemed necessary in the sole discretion of the Trustee.”

2 Although it would not be expected that a judge would sign a trust, we set forth those facts on which Father and Trustee later base one of their arguments. See infra n. 11. 3 This sentence originally provided “The Court finds that the [trust] being established by the parties shall pay for all of the child’s significant financial needs.” However, the word “significant” was crossed out and the phrase “as set forth above” was hand written and initialed. –3– The trust set forth different distribution provisions depending on, among other things, who

served as trustee. Section 3.2(c) of the trust instrument provided that if K.K.W. was not serving

as trustee of the trust, the trustee “shall distribute to or for the benefit of [K.K.W.] so much of the

net income or principal or both from such trust as shall be appropriate to provide for [K.K.W’s]

financial needs, including, but not limited to, [K.K.W.’s] health, education, (including extra

curricular activities), clothing (including reimbursement for such clothing purchased by either

parent), special activities and the expense of providing for daycare or private nanny services.”

Under section 4.5, in every case where the trustee was authorized or directed to make payments to

a beneficiary under the trust, he was also authorized to apply monies for the benefit of the

beneficiary, including the power to make payments directly to third parties who furnish goods or

services to the beneficiary. The decision of the trustee “with respect to those uses, purposes and

applications deemed to be for the benefit of [K.K.W.]” is conclusive.

Beginning in 2005, Mother requested and received reimbursement from Trustee for various

expenses she paid for K.K.W. In 2011, a dispute arose between Mother and Trustee after some of

Mother’s reimbursement requests were denied.4 In an August 2012 letter in response to Mother’s

inquiry involving reimbursement issues and trust assets, Trustee indicated, among other things,

that the majority of the trust assets were invested in shares of a private banking company specifying

the current dollar-value of the corpus of the trust and that the trust had not had any expenses to

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