Fourteenth Court of Appeals Decides High-Stakes Estate-Planning Appeal
November 10, 2020 Case Study
Moody v. Moody
On November 10, 2020, the Fourteenth Court of Appeals in Houston rendered a take-nothing judgment in favor of Beck Redden’s client, reversing a judgment that threatened the integrity of a multi-million dollar estate plan.
In 2014, William L. Moody, IV executed a comprehensive estate plan to assure that his wife of more than 50 years, Deloris Darlene Moody, would be financially secure following his death and that the couple’s assets would eventually be distributed equally among the family’s children. Mr. Moody’s beneficiaries included three children from a prior marriage, one child from his marriage to Mrs. Moody, and a child from Mrs. Moody’s prior marriage whom Mr. Moody always treated as an equal member of the family. Mr. Moody’s estate plan was composed of a will, a trust instrument, and a marital property agreement that characterized a parcel of real estate worth approximately $45 million as community property for purposes of achieving this equal distribution among all five children.
Mr. Moody died unexpectedly a few months after executing the estate plan. No one contested his will or the trust instrument. But one of Mr. Moody’s daughters from his first marriage filed suit to challenge the marital property agreement, arguing that he lacked capacity to execute it and it was subject to challenge under provisions of the Texas Family Code. She also alleged her step-mother, Mrs. Moody, had committed fraud and breached fiduciary duties to Mr. Moody by inducing him to sign the agreement. She did not challenge the will or the trust instrument, which had been executed on the same day. The net effect of a successful challenge would have been to set aside the marital property agreement and its characterization of the real estate as community property while leaving the rest of the estate plan intact – which raised the prospect of shifting the vast majority of the value of the estate to the plaintiff and her two sisters from the first marriage while leaving Mrs. Moody and her daughter from a prior marriage with relatively little. Moody National Bank, in its capacity as executor of the will and trustee of the trust, did not join these claims and defended the enforceability of the marital property agreement.
The case was tried to a jury in Galveston and the jury returned a verdict for the plaintiff. The trial court issued a declaratory judgment holding that the marital property agreement was unenforceable on numerous grounds. Shortly after the trial, Mrs. Moody passed away.
Beck Redden was engaged to handle the appeal on behalf of Mrs. Moody’s executor. The appeal alleged numerous errors in the trial court proceedings, the most important of which was the plaintiff’s lack of standing or capacity to challenge the marital property agreement executed by Mr. Moody when Mr. Moody’s executor and the trustee of his trust had declined to do so. The court of appeals unanimously agreed, holding that claims challenging the marital property agreement belong to the executor, not to individual beneficiaries of Mr. Moody’s trust, and thus the plaintiff lacked standing and capacity to assert those claims. Accordingly, the court reversed and rendered a take-nothing judgment in favor of Beck Redden’s client.
The appeal was handled by appellate partner Russell Post in collaboration with appellate attorney John Adcock. Beck Redden worked closely with Mrs. Moody’s estate-planning counsel and trial counsel from Locke Lord LLP.