Trusts

FAQs About Trusts

What are the Requirements of a Valid Trust in Texas?

by Rania Combs

When people think about trusts and trust funds, images of people like Paris Hilton come to mind. But trusts not just for the wealthy.

What are the benefits of creating a trust?

Trusts can be set up to manage assets for those who are minors, spendthrifts, or have special needs; to ensure that assets in the trust ultimately pass to one’s children in the case of a blended family or if a surviving spouse remarries; or to protect trust assets from creditors and potential lawsuits against the beneficiaries.

They are beneficial because the Settlor (the person who establishes the trust) can direct how the assets should be managed, who will manage the assets, and how and when the assets should be distributed to the Beneficiaries.

What are the requirements of a valid trust in Texas?

The following are the legal requirements for a valid trust in Texas:

    1. The Settlor must have a present intent to create a trust. According to the Texas statutes, a trust is created if the Settlor manifests an intention to create a trust. No specific words are required.”
    1. The Settlor must have capacity to convey assets to the trust. The Settlor has capacity if:
        • he or she is over the age of 18 or has been lawfully married or a member of the armed forces, and
        • is of sound mind, which means he knows the nature and extent of his property, the persons who are the natural objects of his bounty, the disposition that he is making, and how these elements relate to form an orderly plan for the disposition of his property.
    2. The trust must comply with the Statute of Frauds. A trust may be created orally through a declaration of trust; however, if it involves the transfer of real property, it must be in writing.
    1. The trust must have a legal purpose. The terms of a trust may not require the trustee to commit a criminal or tortious act or an act that is contrary to public policy.
    1. The Settlor must identify the property covered by the trust and place it in the trust for the benefit of the beneficiary. The Texas statutes specify that a trust cannot be created unless there is trust property.
    1. The trust must have a Trustee who holds legal title of property for the benefit of the trust’s Beneficiaries. If there is no Trustee named, or if the Trustee that is named does not want to serve or cannot serve for any reason, the court can appoint a Trustee for the trust.
    1. The trust must have ascertainable Beneficiaries. If the Settlor does not name the Beneficiaries with sufficient certainty, the trust will fail.
    1. The trust may not violate the Rule Against Perpetuities, which says that an interest is not good unless it must vest, if at all, not later than 21 years after some life in being at the time of the creation of the interest, plus a period of gestation.

A trust can be set up and funded during a Settlor’s lifetime, or even at the death of the individual who established it. Even if you aren’t wealthy, trusts can help you ensure that your assets are managed according to your wishes during your lifetime and after you die.

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Comments

  1. Do I Need I New Will When I Move – Texas Wills and Trusts Online

    February 27, 2012 at 12:56pm

    […] What are the Requirements of a Valid Trust in Texas? […]

  2. GM

    October 24, 2016 at 2:52pm

    If a sibling is a trust beneficiary and he dies, who will get his share of the trust assets?

    1. Rania Combs

      November 30, 2016 at 4:22pm

      The language of the trust should specify how assets will be distributed when a beneficiary dies.

  3. Cathy

    October 17, 2017 at 12:10am

    My 91 year old cousin (resident of Texas) made a will and a revocable living trust as the beneficiary (in the will) of all real and personal property. Is this considered a “Pour-Over Will?” The living trust was not fully funded. My question is can the assets now be transferred to the living trust by the successor trustee? I believe those assets must now go through probate. Only her annuities had a designated beneficiary and will pass outside the will/living trust. My cousin did her estate plan only 2 months before she passed away; I do not believe that she realized what a living trust really did
    or appreciate the fact that in order to avoid probate, she would have needed to transfer the assets into the living trust.

    1. Rania Combs

      October 17, 2017 at 11:00am

      Yes. A pourover will captures all assets outside of the trust and pours them into the trust after the death of the testator. Property not in the trust will have to go through a probate proceeding.

  4. Nathan

    December 15, 2017 at 2:32pm

    If I am looking to do a trust in Texas, do my trustees or successor trustees have to be residents of the state of Texas or can they be resident in other states? Is the same true of a will’s representative? Thanks

    1. Rania Combs

      December 19, 2017 at 10:26pm

      It is possible to appoint trustees who lives in a different state. Non-residents can serve as executors if they appoint a resident agent to accept service of process in all actions or proceedings with respect to the estate and they file that appointment with the Court.

  5. William E Readman

    November 28, 2018 at 12:51am

    Is there an avenue to end a Revocable Living Trust For Married Settlors after the death of the first Settlor. My wife died before me and now my stepdaughter claims half my home and I can’t sell

    1. Rania Combs

      November 28, 2018 at 6:59pm

      A revocable trust is by definition revocable. In the trusts I draft, each Settlor can amend, restate or revoke the trust as it relates to his or her separate property and share of community property. How the deceased spouse’s community property is distributed is dictated by the terms of the Trust agreement.

  6. Nataraj K

    January 14, 2020 at 8:37pm

    After creating the Trust document and getting it notarized, do I need to register that revocable living trust in court or county in Texas

    1. Rania Combs

      February 1, 2020 at 8:45pm

      It is not necessary to register a living trust in any court or county in Texas.

  7. Lee Sites

    February 19, 2020 at 11:30am

    Question: Does the signature of the person who creates the Revocable Trust need to be notarized or witnessed?

    1. Rania Combs

      February 20, 2020 at 5:01pm

      Revocable trusts are signed by the Grantors and Trustees in the presence of a notary.

  8. john sutton

    June 19, 2020 at 6:04pm

    I’m a naturalized citizen and I have the official document and a passport. I don’t have my birth certificate from Spain and am having a difficult time acquiring it. Do I need this to make a will?

    1. Rania Combs

      June 22, 2020 at 5:00pm

      You do not need a passport or birth certificate to make a Will.