Fiduciary & Probate Litigation

Texas fiduciary and probate litigation encompasses a broad spectrum of legal disputes arising from the administration of estates, trusts, and guardianships. These disputes can involve challenges to the validity of a will, claims that a fiduciary has mismanaged assets or breached their duties of loyalty and care, actions to remove an executor or trustee, and contested guardianship proceedings. Texas law provides a comprehensive statutory framework — principally the Texas Estates Code and the Texas Property Code (Texas Trust Code) — that defines the duties of fiduciaries, establishes procedures for challenging their conduct, and provides a wide array of remedies for wrongdoing. Courts in Texas take fiduciary obligations seriously, and the law affords both fiduciaries and those who depend on them significant rights and protections.

The Statutory Framework and Court System

Texas fiduciary and probate matters are governed by two primary bodies of law. The Texas Estates Code governs the administration of decedents' estates (including the appointment, powers, and removal of executors and administrators), guardianship of incapacitated persons, and the probate of wills. The Texas Property Code (Texas Trust Code), found in Title 9, governs the creation, administration, and termination of trusts, including the fiduciary duties of trustees.

Jurisdictionally, all probate proceedings must be filed in a court exercising original probate jurisdiction. The entire administration of a decedent's estate is considered a single proceeding in rem for jurisdictional purposes. Trust matters, by contrast, fall within the exclusive jurisdiction of the district court. A unique procedural feature of Texas probate is that it is an exception to the "one final judgment" rule; a probate proceeding consists of a continuing series of events, and multiple final, appealable orders may be rendered on discrete issues throughout the administration.

Types of Fiduciaries Under Texas Law

Texas law recognizes several categories of fiduciaries, each subject to specific legal obligations:

Executors and Administrators

Executors and administrators are appointed by the probate court to administer a decedent's estate. Independent administration is available in Texas, in which the executor serves free of ongoing court supervision once appointed, provided the will so specifies or all beneficiaries consent. The executor owes a duty to take care of estate property as a prudent person would take care of their own property. Courts have held that the fiduciary duties of an executor are the same as those of a trustee.

Trustees

Trustees are subject to the Texas Trust Code and owe a comprehensive set of duties to trust beneficiaries. The prudent investor rule is the default standard for investment management and is an objective rather than subjective standard — a trustee must behave as other trustees similarly situated would behave.

Guardians

Guardians are appointed by the probate court to manage the person and/or estate of an incapacitated individual (the ward). Texas has more than 51,000 open guardianships, a number that has grown significantly as the population ages. A guardianship proceeding begins upon the filing of an application for appointment of a guardian, and the probate court retains jurisdiction until the guardianship is fully settled and closed.

Will Contests

A will contest is a legal proceeding challenging the validity of a will offered for probate. Will contests must generally be filed within two years after the will is admitted to probate. The most common grounds for contesting a will in Texas are:

Lack of Testamentary Capacity

The proper inquiry is the condition of the testator's mind on the day the will was executed. A court's finding on testamentary capacity may, however, be based on evidence of the testator's mental condition before and after the execution date. Testamentary incapacity implies the want of intelligent mental capacity to understand the nature and effect of the act of making a will.

Undue Influence

Undue influence is a separate and distinct ground from testamentary incapacity. As the Texas Supreme Court articulated, "undue influence implies the existence of a testamentary capacity subjected to and controlled by a dominant influence or power." A contestant must prove: (1) the existence and exertion of an influence; (2) that the influence effectively overpowered the testator's mind at the time of execution; and (3) that the testator executed a will they otherwise would not have executed but for the influence. Notably, evidence of weakness of mind — though not rising to actual incapacity — may be a material circumstance in proving susceptibility to undue influence.

Fraud and Improper Execution

A will may also be contested on grounds of fraud in its procurement, or failure to meet the formal execution requirements of the Texas Estates Code.

No-Contest Clauses

Many wills include a no-contest (or in terrorem) clause, which provides that a beneficiary who contests the will forfeits their bequest. Under Texas Estates Code §254.005, such clauses are enforceable unless the contesting party can establish by a preponderance of the evidence that just cause existed for bringing the action and that the action was brought and maintained in good faith. Texas courts narrowly construe no-contest clauses to avoid forfeiture. Critically, no-contest clauses do not apply to actions seeking to compel a fiduciary to perform their duties, to hold a fiduciary accountable for a breach, or to seek a judicial construction of the will or trust.

Family Settlement Agreements

As an alternative to formal will contests, all interested parties may enter into a family settlement agreement to resolve disputes over the distribution of an estate. Such agreements are favored in Texas law, but must include all beneficiaries, must contain both an agreement not to probate a will and an agreed plan of distribution, and are unenforceable to the extent they fail to dispose of all estate property.

Breach of Fiduciary Duty Claims

Breach of fiduciary duty is one of the most common and consequential claims in Texas probate and trust litigation. The core fiduciary duties subject to litigation include:

Duty of Loyalty / Self-Dealing

A fiduciary must act solely in the best interest of the beneficiaries and is prohibited from engaging in transactions that benefit the fiduciary personally at the expense of those they serve. Texas courts recognize that self-dealing claims are analytically distinct from other breach of fiduciary duty claims. In self-dealing cases, the burden shifts to the trustee to establish that the transaction was fair and compliant with the trustee's fiduciary duties, whereas in other breach claims, the beneficiary bears the burden of proof.

Duty of Care / Prudent Investor Rule

For trustees, the standard of care in investment management is governed by the prudent investor rule. Executors are held to the prudent person standard — they must take care of estate property as a prudent person would take care of their own property.

Duty to Account

Fiduciaries must provide accurate accountings of their management of estate or trust assets. Failure to account can form the basis for removal and personal liability.

Removal of Fiduciaries

Removal of Trustees

A trustee may be removed in accordance with the terms of the trust instrument. Alternatively, on petition by an interested person and after a hearing, a court may, in its discretion, remove a trustee and deny part or all of their compensation if: (1) the trustee materially violated or attempted to violate the terms of the trust and the violation results in a material financial loss; (2) the trustee becomes incapacitated or insolvent; (3) the trustee fails to make an accounting that is required by law or by the terms of the trust; or (4) the court finds other cause for removal. The phrase "other cause" gives the court broad discretion. Importantly, a trustee removal action is not subject to a limitations analysis, although separate claims for fiduciary breaches remain subject to the four-year limitations period.

Removal of Independent Executors

Texas Estates Code §404.0035 authorizes the probate court, on its own motion or upon motion of any interested person, to remove an independent executor with notice upon proof that the executor: (1) fails to make an accounting which is required by law; (2) is guilty of gross misconduct or gross mismanagement; (3) has become legally incapacitated; or (4) has a material conflict of interest. Removal without notice is available when there is sufficient ground to believe the executor has misapplied or embezzled estate assets, or when the executor cannot be served.

Texas courts have defined "gross misconduct" and "gross mismanagement" to include, at minimum, any willful omission to perform a legal duty, the intentional commission of a wrongful act, and any breach of fiduciary duty that results in actual harm to beneficiaries' interests. Ordinary negligence alone is insufficient to warrant removal. The party seeking removal bears the burden of establishing a statutory ground.

Remedies in Fiduciary Litigation

Texas law provides a broad range of legal and equitable remedies for breaches of fiduciary duty:

• ●Actual Damages. A claimant who suffers financial loss resulting from a fiduciary's breach may recover actual damages measured by the harm to the estate or trust.
• ●Disgorgement of Profits. Disgorgement is an equitable remedy requiring the fiduciary to return profits wrongfully obtained through a breach of duty. Disgorgement may be awarded even in the absence of proof that the principal suffered actual damages.
• ●Constructive Trust. A court may impose a constructive trust over specific property or assets to which the fiduciary has wrongfully obtained title, but the claimant must be able to trace the specific assets to the breach.
• ●Attorney's Fees. In trust proceedings, Texas Property Code §114.064 grants the court discretion to award costs and reasonable and necessary attorney's fees as may seem equitable and just. Texas courts have interpreted this as not being a prevailing party statute, so an award is not dependent on a finding that a party substantially prevailed.

Defenses Available to Fiduciaries

Fiduciaries facing litigation have several defenses available:

• ●Exculpatory Clauses. A trust instrument may include provisions limiting the trustee's liability for breach. Such clauses are valid but strictly construed, and are unenforceable to the extent they purport to excuse liability for breaches committed in bad faith, intentionally, or with reckless indifference to beneficiary interests.
• ●Release by Beneficiary. A beneficiary with full legal capacity who is acting with full information may release a trustee from any duty, responsibility, restriction, or liability by delivering a signed writing to the trustee.
• ●No-Contest Clause. Where a will contains a no-contest clause, a beneficiary who files a challenge risks forfeiture of their bequest unless they can prove good faith and just cause.
• ●Statute of Limitations. Breach of fiduciary duty claims must be brought within four years of accrual. Texas courts have held that the discovery rule may toll this period when the injury is inherently undiscoverable and evidence of the injury is objectively verifiable.

Guardianship Disputes

Guardianship litigation in Texas has become increasingly significant as the state's elderly population grows. As the Texas Supreme Court observed, wards are vulnerable to neglect, abuse, and exploitation, making it essential that guardianship proceedings ensure the appointment of guardians who will promote and protect the wellbeing of incapacitated persons.

Contested guardianship proceedings may arise at any stage: a proposed guardian's appointment may be challenged, an existing guardian may be removed for mismanagement or misconduct, or disputes may arise over the scope of the guardianship, modifications to its terms, or the guardian's accounting obligations. Guardians, like trustees and executors, are subject to the full range of fiduciary duties and may be held personally liable — and subject to claims on their bond — for breaches that cause harm to the ward's estate.

Practical Implications

Fiduciary and probate disputes in Texas can be emotionally charged and financially significant, often arising at moments of family crisis. Because Texas law allows for independent administration — enabling executors to act without court supervision — disputes can develop over extended periods before they become apparent to interested parties. Beneficiaries of trusts and estates should be aware that they have the right to request accountings and information from fiduciaries.

For those considering a will contest or a breach of fiduciary duty claim, timing is critical. Will contests generally must be brought within two years of the will's admission to probate. Breach of fiduciary duty claims must be brought within four years of accrual, subject to the discovery rule in cases of concealed misconduct. For fiduciaries seeking to manage their exposure to litigation, the trust instrument's terms — including any exculpatory clauses and distribution provisions — play a central role. However, no trust provision can insulate a fiduciary from liability for intentional misconduct, bad faith, or self-dealing that profits the fiduciary at beneficiaries' expense.

Recent Developments

Recent Texas case law reflects an increasing judicial focus on the nuances of burden-of-proof allocation in fiduciary duty cases. In White v. White, decided in December 2024, the El Paso Court of Appeals clarified that self-dealing claims involving a trustee carry a shifted burden of proof — requiring the trustee to establish compliance with fiduciary duties — while other breach of fiduciary duty claims not involving self-dealing keep the burden on the beneficiary. This distinction is significant in practice because many trust disputes involve a mix of self-dealing and non-self-dealing conduct, requiring careful analysis of which claims are properly submitted to a jury and with what burden.

Texas guardianship reform also remains an active area of legislative and judicial attention. The Texas Supreme Court in In re Thetford highlighted the growing volume of guardianships and the heightened vulnerability of wards. Courts and the legislature continue to seek a balance between protecting incapacitated persons and respecting their remaining autonomy and legal rights.