In Ochse v. Ochse, the Texas Appeals Court, Fourth District, San Antonio, had to construe the language of an irrevocable trust to determine whether the grantor, when identifying her son’s “spouse” as a beneficiary, meant the son’s spouse at the time the trust was signed, or denoted a status capable of changing over time.
The Facts of Ochse v. Ochse
In May 2008, Amanda Hurst Ochse created an irrevocable trust (the “Trust”). At the time Amanda created the Trust, Amanda was unmarried, and William Ochse was her only son. William was married to Cynthia, and together they had a daughter named Chloe and a son named William.
Throughout the Trust, the terms “son’s spouse,” “primary beneficiary’s spouse,” and “spouse” were used. For example, regarding distributions of income and principal, the Trust stated:
The Trustee is authorized and directed to distribute to or for the benefit of the primary beneficiary, the primary beneficiary’s descendants and the primary beneficiary’s spouse…
Regarding the right of withdrawal, the Trust stated:
Unless the donor of property to a trust established herein specifically notifies the Trustee to the contrary at the time of such contribution, any contribution to such trust (including the original contribution by the Grantor) shall be subject to a right of withdrawal by each member of the class composed of the primary beneficiary of such trust, the then living descendants of such primary beneficiary and the spouse of such primary beneficiary. . . .
A New Spouse
William and Cynthia divorced in 2012 after about 30 years of marriage. In 2015, William married Carol.
In March 2018, William’s children sued him individually and as trustee of the Trust. The children claimed that William should be removed as trustee because he breached his fiduciary duties and obligations. Cynthia was also named in the suit as an interested person.
Cynthia sought a declaration from the court that the term “spouse” when used in the trust solely referred to her because she was William’s spouse at the time the Trust was executed. Carol (current spouse) sought a ruling that the term “spouse” applied to her from the date she married William in 2015 to the present. Both Carol and Cynthia filed motions for summary judgment for a judicial declaration of the terms “spouse,” “son’s spouse,” and “primary beneficiary’s spouse.”
Cynthia won. The trial court found:
The terms “spouse,” “primary beneficiary’s spouse,” and “son’s spouse” referenced in the Trust Agreement Establishing the William W. Ochse III Family 2008 Trust are unambiguous and specifically mean Cynthia Cadwallader Ochse, to whom William W. Ochse, III, was married at the time the trust instrument was established and does not mean any subsequent spouse of William W. Ochse, III, including but not limited to Carol Dicker Ochse.
Trust Construction Under Texas Law
The appeals court began by reviewing the basics of trust construction under Texas law, stating:
The same rules of construction apply to both wills and trusts. See In re Ray Ellison Grandchildren Trust, 261 S.W.3d at 117. In interpreting a will or a trust, we ascertain the intent of the testator or grantor. See Eckels, 111 S.W.3d at 694; Hurley, 98 S.W.3d at 310. We do so from the language used within the four corners of the instrument. See Eckels, 111 S.W.3d at 694; see also Hysaw v. Dawkins, 483 S.W.3d 1, 7 (Tex. 2016) (applying four-corners rule to construe a will). We harmonize all provisions and construe the instrument to give effect to all provisions so that no provision is rendered meaningless. Eckels, 111 S.W.3d at 694. When, as here, the language is unambiguous and expresses the grantor’s intent, we need not construe the instrument because it speaks for itself. Id. Thus, we do not focus on what the grantor intended to write but the meaning of the words she actually used. San Antonio Area Found. v. Lang, 35 S.W.3d 636, 639 (Tex. 2000); see Hysaw, 483 S.W.3d at 7. That is, we must not redraft a trust instrument to vary or add provisions “under the guise of construction of the language” of the trust to reach a presumed intent. Lang, 35 S.W.3d at 639.
We have written about another Texas trust construction case here.
What Was the Grantor’s Intent At the Time the Trust Was Created?
The Texas appeals court was required to determine Amanda’s intent when she executed the Trust for the benefit of her son’s “spouse.” At the time the Trust was executed, William was married to Cynthia, and had been for about 30 years. Everyone agreed that at the time the Trust was executed, “spouse” unambiguously meant Cynthia.
However, Carol and William argued that Amanda used the term “spouse” to describe status rather than a particular individual. The Texas Appeals Court was not persuaded by the argument. Looking at the entire Trust as a whole, it was clear that the grantor meant to benefit Cynthia.
“Spouse” Not a Status Or Class Gift Under the Trust
William and Carol also argued that Cynthia lost her status as spouse upon her divorce from William, and Carol gained that status when she married William. Cynthia urged that in the absence of a contrary intent, a gift to a “spouse” must mean the spouse at the time of execution, not some future spouse. The Texas Appeals court agreed, stating:
Carol and William’s interpretation would ask this Court to view “spouse” as a status or class gift. This interpretation is inconsistent with Texas precedent regarding the use of classes in trust instruments and wills and, further, fails to harmonize all provisions of the irrevocable Trust before us… A class gift is defined as a gift of an aggregate sum to a body of persons uncertain in number at the time of the gift… Here, it was possible to identify a specific “spouse” at the time the Trust was executed in 2008….In contrast, there is no evidence Amanda intended the term “spouse” to encompass a body of persons uncertain in number at the time of the gift. (internal citations omitted).
The Texas Appeals Court concluded that the term “spouse” meant the spouse at the time of execution of the trust:
Therefore, we hold that the grantor’s use of the term “spouse” referred to William’s spouse at the time the Trust was executed, and did not refer to a class of persons including future spouses. See In re Ray Ellison Grandchildren Trust, 261 S.W.3d at 117 (interpreting the term “descendants” in a trust to exclude individuals who later came to fit the description after execution of the trust). We disagree that the grantor’s use of the term “husband” in sections 6.3 and 6.4 of the Trust, when Amanda was not married, evidences her intent for the term “spouse” to likewise be a status that could later be filled by other persons. Unlike a potential “husband,” the term “spouse” could identify only one specific individual at the time the Trust was executed. We decline to redraft the Trust to reach a presumed intent to benefit a potential replacement “spouse.” See Lang, 35 S.W.3d at 639 (stating that courts must not redraft a trust instrument to vary or add provisions to reach a 04-20-00035-CV – 9 – presumed intent); Frost Nat’l Bank v. Newton, 554 S.W.2d 149, 153 (Tex. 1977) (“No speculation or conjecture regarding the intent of the testatrix is permissible where, as here, the will is unambiguous, and we must construe the will based on the express language used therein.”).
Therefore, under the four-corners rule of Texas trust construction, the Trust grantor’s unambiguous intent was to benefit her son’s then-spouse, not any subsequent spouse.