112,001. TRUST BUILDING METHODS. A trust can be formed by: (1) a statement by an owner that the owner holds the property in trust for another person; (2) the intervival transfer of property from the owner of the property to anyone other than the transferor's trustee or a third party; (3) the testamentary transfer of the owner of the property to another person as a fiduciary for a third party; (4) the appointment of another person by proxy as a trustee for the Power of Attorney or a third party; or (5) a promise to any other person whose rights under the promise are held in trust by a third party.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,002. INTENT TO BUILD TRUST. Trust is only formed when the settlor expresses the intention to establish a trust relationship.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,003. CONSIDERATION. No consideration is required to establish a trust relationship. A promise to establish a trust in the future is only enforceable if the conditions for an enforceable contract are met.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,004. LAW AGAINST FRAUD. A trust in real or personal property is enforceable only if there is written evidence of the terms of the trust, signed by the trustee or authorized representative of the trustee. However, a trust consisting of personal property is enforceable if it is created by: (1) a transfer of ownership of the trust to a trustee who is neither a settlor nor a beneficiary, if the assignor expresses an intention to establish a promise on the same time or before the transfer; or (2) a written statement from the owner of the property that the owner holds the property on behalf of another person, or that the owner and another person are beneficial owners.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
112,005 sec. RELIABLE PROPERTY. A trust can only be created when there is trust ownership.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,006. ADDENDUM TO TRUST PROPERTY. Property may be added to an existing trust from any source and by any means, unless the addition is prohibited by the terms of the trust or the property is unacceptable to the trustee.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,007. CONFIDENT CAPACITY. A person has the same capacity to establish a trust by declaration, assignment or designation between living or testamentary that he must dispose of, testify or designate in trust.
Added from Acts of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,008. TRUSTEE CAPABILITY. (a) The trustee must have legal capacity to acquire, hold and transfer the trust property. If the trustee is a corporation, it must have the power to act as trustee in that state. (b) Except as provided in Section 112.034, the fact that a person named as a trustee is also a beneficiary does not preclude him from acting as a trustee if otherwise qualified. (c) The settlor of a trust may be the trustee of the trust.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,009. TRUSTEE ACCEPTANCE. (a) The signature of the person named as trustee on the letter of trust or on a separate written acceptance will be conclusive evidence that the person has accepted the trust. A person named as a trustee exercising powers or performing functions under the trust is presumed to have accepted the trust, except that a person named as a trustee may do the following without accepting the trust: (1) act to preserve ownership of the trust if, within a reasonable time after taking action, the person notifies disapproval of the trust to: (A) the settlor; or (B) if the settlor is deceased or incapacitated, all beneficiaries are entitled to receive distributions from the trust from the trust; and (2) inspect or examine the Trust's property for any purpose, including determining the Trust's potential liability under environmental or other laws. (b) A person appointed as trustee who does not accept the trust will have no liability in connection with the trust. (c) If the person named as the original trustee does not accept the trust, or if the person dies or is unable to act as the trustee, the person named as the alternate trustee under the terms of the trust or the person who may be appointed pursuant to a method established under the trust is prescribed, can accept the trust. If no trustee is appointed or no alternative trustee is appointed or chosen in the manner prescribed by the terms of the trust, the Court shall, at the request of any interested person, appoint a trustee.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984. Amended by: Acts 2005, 79th Leg., Cap. 148, Mon 4, Cash. January 1, 2006.
Second. 112,010. ACCEPTANCE OR DISCLAIMER OF LIABILITY BY OR ON BEHALF OF THE BENEFICIARY. (a) Acceptance of an interest in a trust by a beneficiary is presumed. (b) When a trust is established by will, a claim may be relinquished by a beneficiary in the manner and with the effect provided by the applicable succession law (c) Except as provided in subsection (c-1), the following persons may in a testamentary trust may be waived by: (1) a beneficiary, including a beneficiary of a wasted trust; (2) ) the personal representative of an incapacitated, deceased, unborn, or undefined beneficiary or minor with the judicial approval of the court having jurisdiction over the personal representative; and (3) the independent executor or independent trustee of a deceased beneficiary without court approval. (c-1) A person entitled under subsection (c) to waive a interest in a trust shall not relinquish the interest if the person in the trust acts as the person's beneficiary, personal representative, independent executor, or exercised independent trustee ownership and control over the assumed interest or benefit of the trust. (c-2) A person authorized by subsection (c) of this Section to waive an interest in a trust may waive an interest in whole or in part by: (1) establishing his irrevocable and unconditional refusal; accept the participation, by means of a written memorandum authenticated before a public notary or other person authorized to recognize the transfer of immovable property; and (2) the memorandum to the trustee or, if there is no trustee, to the assignor or his legal representative up to nine months after: (A) the date on which it is drawn up the beneficiary's interest becomes justification for the transfer; (B) the date on which the Beneficiary turns 21; or (C) in the case of future interest, the date of the event that definitively determines the holder of the interest and makes it irrevocable. (d) A waiver under this Section will be effective from the date of transfer of the relevant Share and shall, for all purposes, relate to the date of transfer and will not be subject to the claims of any creditor of the transferring part. Unless the terms of the trust provide otherwise, the interest subject to the transfer will pass as if the assignor had died prior to the transfer and any future interest otherwise invested or after termination of the transferred property. be treated as if the transfer beneficiary had died prior to the transfer. The disclaimer under this section is irrevocable. (e) Failure to comply with this section will invalidate any release, except in the case of an assignment of interest to those who would have received the declined interest if the person attempting the release had predeceased the assignee of the release.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984. Amended by the Laws of 1987, Leg. 70, Chap. 467, sec 3, cash. September 1, 1987; File 1993, Leg. 73, chap. 846, sec 3, money. September 1, 1993. Amended by: Acts 2009, 81st Leg., R.S., Ch. 672, sec. 2, eff. September 1, 2009.
SUBCHAPTER B. VALIDITY Sec. 112,031. PURPOSES OF TRUST. A trust can be created for any purpose that is not illegal. The Fiduciary Conditions cannot compel the Trustee to commit any criminal, illegal or disorderly act.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,032. TRUST OF ACTIVITY AND RESPONSIBILITY; STATUTE OF USE. (a) Except as provided in subsection (b), ownership of property held in a trust passes directly to the beneficiary when the trustee has no powers or duties relating to the administration of the trust. (b) Title of trustee in immovable property shall not be alienated where the title of trustee is not merely nominal but is subject to any power or duty in connection with the property.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,033. RESERVE OF CONFIDENTIAL INTERESTS AND POWERS. If, during the life of the settlor, an interest in a trust or trust is created in a beneficiary other than the settlor, the disposition is not void as an attempted testamentary disposition merely because the settlor reserves or retains himself or another person. other than the trustee, any and all other interest or power in the trust or in the trust property, as B.: (1) a lifetime interest in itself; (2) the power to revoke, amend or terminate the fund in whole or in part; (3) the power to designate the person to whom or on behalf of whom the income or principal is to be paid or applied; (4) the power to control all or part of the administration of the trust; (5) the right to exercise any power of disposition or option over the ownership of the trust or over the interest due on the trust under any employee benefit plan, life insurance policy or otherwise; or (6) the power, at any time, to add property or pay additional employee benefits, life insurance or other interest to the Fund.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,034. FUSION. (a) If a settlor transfers legal title and all equitable rights to the property to the same person or retains legal title and all equitable rights to the property itself as sole trustee and sole beneficiary, no trust and the assignee retains the property as own. This subheading does not invalidate a trust account validly created and current under Chapter XI, Texas Probate Code. (b) Except as provided in Subsection (c) of this section, a trust terminates if legal title to the property in the trust and all equitable interests in the trust are united in one person. (c) Title to the trust property and all equitable interests in the trust property cannot be united in a single beneficiary other than the settlor, whose interest is protected by a spendthrift trust, in which case the court will appoint a new trustee or co-trustee. -trustee to administer the trust for the benefit of the beneficiary.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,035. Lavish backgrounds. (a) A settlor may provide in the terms of the trust that a beneficiary's share of income or capital or both is not transferred, voluntarily or involuntarily, prior to the payment or delivery of interest to the beneficiary by the trustee. (b) A statement in a trust deed that a beneficiary's interest is subject to a "wasteful fund" shall be sufficient to restrict a beneficiary's disposal of interests, whether voluntary or involuntary, to the maximum extent permitted by this subtitle. (c) A trust that contains terms authorized under subsection (a) or (b) of this section may be considered a wasted trust. (d) If the settlor is also a beneficiary of the trust, no provision restricting the voluntary or involuntary transfer of the settlor's beneficial interest shall prevent the settlor's creditors from satisfying any claims arising out of the settlor's interest in the trust. A settlor is not considered a beneficiary of a trust solely because a trustee other than the trustee is entitled under the instrument of the trust to pay or reimburse the trustee taxes on the income or capital of the trust or pay directly to the taxing authorities. Trust property payable by the trustee in accordance with the Tax Act. (e) A trustee cannot be considered a settlor simply on the expiration, waiver, or release of: (1) any power of attorney described in subsection (f); or (2) the beneficiary's right to withdraw any portion of the trust property to the extent that the value of the property affected by the forfeiture, delivery or release in any calendar year does not exceed the greater value set forth in: (A) Section 2041(b) (2) or 2514(e), Internal Revenue Code of 1986; or (B) Section 2503(b), Internal Revenue Code of 1986. (f) A beneficiary of the trust shall not be deemed a settlor after making or having power to transfer, voluntarily or involuntarily, the beneficiary's interest in the trust to make a transfer, voluntary or involuntary, of the beneficiary's interest in the trust simply because the beneficiary, in whatever capacity, possesses or exercises: (1) power currently exercisable to: (A) consume, invade, appropriate property or distribute to or in benefit of the beneficiary if the power is: (i) exercisable only with the consent of another person whose interests conflict with the interests of the beneficiary; or (ii) restricted by any verifiable standard, including health, education, support or livelihood of the beneficiary; or (B) assign assets of the trust to anyone other than the beneficiary, a creditor of the beneficiary, the beneficiary's estate or a creditor of the beneficiary's estate; (2) a testamentary power of appointment; or (3) a currently exercisable right described in subsection (e)(2).
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984. Amended by the Laws of 1997, Leg. 75, Chap. 109, section 1, effective September 1, 1997. Amended by: Acts 2005, 79th Leg., Cap. 148, sec 5, cash. January 1, 2006. Acts of 2007, Leg. 80, RS, chap. 451, sec 4, money. September 1, 2007.
Second. 112,036. REIGNS AGAINST FOREVER. The rule against perpetuity applies to funds other than charitable trusts. Consequently, a stock is no good unless it must, in any case, be acquired no later than 21 years after the lifespan at the time the stock was created plus one gestation period. However, any interest in a trust may be changed or construed to the extent and pursuant to Section 5.043.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984. Amended by Acts of 1984, 68th Leg., 2nd CS, chap. 18, mon 10, money. October 2, 1984.
Second. 112,037. CONFIDENCE IN ANIMAL CARE. (a) A trust may be formed to insure the care of a live animal during the lifetime of the trustee. The trust ends with the death of the animal or, if the trust was established to care for more than one live animal during the life of the trustee, with the death of the last surviving animal. (b) A trust permitted by this Section may be executed by a person appointed by the terms of the trust or, if a person is not named by the terms of the trust, by a person appointed by the court. A person who has an interest in the welfare of an animal subject to a fund authorized by this section may apply to the court to appoint a person to enforce the fund or to remove a person designated to enforce the fund. (c) Except as provided in subsections (d) and (e), ownership of a trust authorized by this section may apply only to the intended use of the property under the trust. (d) Property in a trust permitted by this Section may be used for any purpose other than the intended use of property under the trust, provided the Court finds that the value of the property in the trust exceeds the amount required for the purpose. . (e) Unless otherwise provided in the terms of the trust, property not necessary for the intended use shall be distributed to: (1) if the settlor is alive at the time the trust property is distributed, to the settlor; or (2) if the trustee is not alive at the time of distribution of the trust property: (A) if the trustee has a will, the beneficiaries of the trustee's will; or (B) in the absence of an effective will, the heirs of the trustee. (f) For purposes of Section 112.036, the lifetimes used in determining the maximum duration of a trust authorized by this Section are: (1) the individual beneficiaries of the trust; (2) the persons named in the trust instruments; and (3) if the settlor(s) are alive at the time the trust becomes irrevocable, the settlor(s) of the trust or, if the settlor(s) are alive at the time the trust becomes irrevocable, the persons who inherit the settlor(s) property in accordance with the laws of that State if the settlor(s) died intestate at the time the trust became irrevocable.
Added from Acts of 2005, Leg. 79, chap. 148, sec 6, in cash. January 1, 2006.
Second. 112,038. PARTY CLAUSE. A provision in a trust that would result in forfeiture or void an interest through legal action, including a challenge to a trust, is unenforceable if: (1) there is probable cause for bringing the action; and (2) the claim was filed and upheld in good faith.
Added from Acts of 2009, Leg. 81, RS, chap. 414, sec 3, money. June 19, 2009.
SUBCHAPTER C. REVOCATION, MODIFICATION AND TERMINATION OF TRUSTS Sec. 112,051. REVOCATION, MODIFICATION OR ALTERATIONS BY THE GRANTOR. (a) A settlor may revoke the trust unless it is irrevocable by the express terms of the instrument it creates or an instrument it modifies. (b) The settlor may modify or add to a revocable trust, but may not increase the trustee's obligations without the express consent of the trustee. (c) If the trust was established by a written instrument, the revocation, modification or addition of the trust must be in writing.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,052. TERMINATION. A trust ends when, in accordance with its terms, the trust is intended to continue to exist only until the specified lapse of time or until a specified event occurs and either time has elapsed or the event has occurred. If a Termination Event occurs, the Trustee may continue to exercise the Trustee's powers for the period of time necessary to conduct the business of the Fund and make distributions of its assets to appropriate beneficiaries. The continued exercise of the Trustee's powers after a Termination Event will not affect the accrued rights of beneficiaries of the Fund.
Amended by the Laws of 1983, Leg. 68, p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,053. DISPOSAL OF TRUST ASSETS DUE TO LACK OF TRUST. The settlor may determine in the trust deed how the assets may or may not be disposed of in the event of default, termination or revocation of the trust.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984. Amended by the Laws of 1991, Leg. 72, Chap. 895, art.17, in effect. September 1, 1991.
Second. 112,054. JUDICIAL MODIFICATION OR TERMINATION OF TRUSTS. (a) At the request of any trustee or beneficiary, a court may order that the trustee be changed, the terms of the trust be changed, the trustee be ordered or authorized to perform any act not authorized or prohibited by the terms of the trust, which the trustee you will be prohibited from taking any action required by the terms of the trust, or the trust be terminated in whole or in part, if: (1) the purposes of the trust are or become unlawful or impossible to perform; (2) due to circumstances unknown or anticipated by the settlor, the order will further the purposes of the trust; (3) change in administrative regulations, not fiduciary agreements, is necessary or appropriate to prevent waste or deterioration of fiduciary administration; (4) the order is necessary or reasonable to achieve the settlor's tax objectives and is not contrary to the settlor's intentions; or (5) subject to subsection (d): (A) the continuity of the trust is not necessary to achieve an essential purpose of the trust; or (B) the appointment does not conflict with an essential purpose of the fund. (b) The court will exercise its discretion to order any modification or termination under subsection (a) in the manner most consistent with the probable intent of the settlor. The court will consider lavish provisions as a factor in its decision to amend or terminate, but it is not precluded from exercising its discretion to amend or terminate just because the trust is a lavish trust. (c) The court may order that an order described in subsection (a)(4) be enforced retrospectively. (d) The court may not take any action permitted by subsection (a)(5) unless all beneficiaries of the trust have consented or presumably consented to the order. A minor, legally incapacitated, unborn, or indefinite beneficiary is deemed to have consented if a person representing the beneficiary's interests pursuant to Section 115.013(c) has consented or if a guardian has been appointed to represent the beneficiary's interests pursuant to with Section 115.013 (c) Section 115.014 consents to represent on behalf of the beneficiary. 🇧🇷
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eff. January 1, 1984. Amended by Acts 1985, 69th Leg., ch. 149, sec. 1, effective May 24, 1985. Amended by: Acts 2005, 79th Leg., Cap. 148, sec 7, cash. January 1, 2006.
Second. 112,055. CHANGE OF RULE OF LAW TO FUNDAMENTALS OF CHARITY. (a) Except as provided in Section 112.056 and subsection (b) of this Section, the governing instrument of a trust that is a private foundation pursuant to Section 509 of the Internal Revenue Code, as amended, is a non-exempt charitable trust treated as a private trust pursuant to Section 4947(a)(1) of the Internal Revenue Code, as amended, or, to the extent that Section 508(e) of the Internal Revenue Code applies thereto, an equity fund divided not exempt pursuant to Section 4947(a)(2) of the Internal Revenue Code, as amended, contains provisions that require the Trust to: (1) make distributions from time to time so that the Trust is not liable to tax pursuant to Section 4942 of the Internal Revenue Tax Code; (2) You may not engage in any proprietary business that would be taxable under Section 4941, Internal Revenue Code; (3) You may not withhold excess business interests that would be taxable under Section 4943 of the Internal Revenue Code; (4) You may not make an investment that would be taxable under Section 4944 of the Internal Revenue Code; and (5) you cannot incur any taxable expense that would subject you to tax under Section 4945 of the Internal Revenue Code. (b) If a trust was formed before January 1, 1970, this Section applies only to its fiscal years beginning on or after January 1, 1972. (c) This section applies notwithstanding anything in the instrument trust of a trust and notwithstanding any other law of that state, including the provisions of this title.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,056. PERMITTED ALTERATION FOR CHARITABLE TRUSTEES. (a) If the settlor of a trust described in subsection (a) of Section 112.055 of this Act is alive and has legal capacity and consent, the trustee may, without judgment, amend the trust to expressly include or exclude the provisions required in subsection ( ). a) of Section 112.055 of this Act (b) The amendment must be made in writing and will take effect when a duplicate of the original is filed with the Attorney General.
Added by Acts 1983, 68 Leg., p. 3332, chap. 567, art. 2 seconds. 2, eph. January 1, 1984.
Second. 112,057. DIVISION AND COMBINATION OF TRUSTS. (a) The trustee may, except as expressly prohibited by the terms of the instrument establishing the trust, divide a trust into two or more separate trusts without judgment of law, where the result does not prejudice the rights of any beneficiary or does not adversely affect the performance of the background purposes of the original background. The Trustee may make an allocation under this Subsection by: (1) giving written notice of the allocation to each beneficiary who would be entitled to receive or be entitled to any distributions from the Fund not later than 30 days prior to the date of any allocation under this Subsection to be obtained from the Trust once financed; and (2) sign a written instrument, certified before a notary public or other person authorized to receive confirmations of transfers of property, showing that the trust has been divided in accordance with this section and that the notification requirements of this section have been met. (b) A trustee shall, in a written instrument dividing a trust, apportion the ownership of the trust among each trust on a fractional basis, specifying the assets and liabilities that will pass into each trust or otherwise appropriate. The trustee shall allocate the unrestricted trust property received after the trustee has divided the trust into separate trusts in such manner as may be provided for in the written instrument dividing the trust, or if not otherwise provided for in the written instrument, in such manner as may be determined by the Trustee. (c) The trustee may, except as expressly prohibited by the provisions of the instrument establishing a trust, combine two or more trusts into a single trust without judgment if the result does not prejudice the rights of any beneficiary or the performance of the trust interferes with the purposes of any of the separate funds. The Trustee will complete the Merger of Funds by: (1) sending written notice of the Merger to each Beneficiary who would then be entitled to receive distributions from the separate Funds at least 30 days prior to the Effective Date of the Merger to be agreed or to each Beneficiary who may be entitled to receive distributions from the separate funds once the funds are funded; and (2) sign a written instrument, certified before a notary public or other person authorized to receive confirmations of transfers of property, stating that the trust has been constituted in accordance with this section and that the notification requirements of this section have been met. (d) The trustee may divide or combine a testamentary trust after the will establishing the trust has been admitted as evidence, even if the trust is established at a later date. The trustee can split or combine any other fund before funding it.
Added by Acts of 1991, 72nd Leg., chap. 895, art.18, in effect. September 1, 1991. Amended by: Acts of 2005, 79th Leg., Cap. 148, mon 8, cash. January 1, 2006. Acts of 2005, Leg. 79, chap. 148, sec 9, in cash. January 1, 2006.
Second. 112,058. TRANSFORMATION OF COMMUNITY TRUST INTO A NON-PROFIT CORPORATION. (a) In this section: (1) “Ownership” means the ownership of the trusts that are constituents of a community fund. (2) “Community Fund” means a community fund as defined in 26 C.F.R. Section 1.170A-9(e)(11) (1999), including subsequent amendments. (b) A court-authorized community trust may transfer trust property to a not-for-profit corporation and terminate the trust in accordance with this section. (c) The community trust may transfer trust property to a nonprofit corporation only if the nonprofit corporation is organized under Texas Nonprofit Corporation Law (Section 1396-1.01 et seq., Vernon Texas Civil Statutes) and organized for the same purpose than the Community Trust. The nonprofit corporation's articles of incorporation must describe the corporation's purpose and proposed use of the transferred assets in language substantially similar to the language used in the community trust deed. (d) In order to transfer assets and terminate a community trust pursuant to this Section, the governing body of the community trust shall: (1) Apply to the probate court, district court, or district court and seek to: (A) transfer the trust assets for a not-for-profit corporation incorporated for the purpose of receiving and administering trust funds; and (B) termination of the trust; (2) send by first class mail to each settlor of the trust and each trustee of each sub-trust of the community trust that can be located with reasonable care, a copy of the application of the governing body and notice to that effect at the time and place venue designated by the court for hearing the claim; and (3) once in a newspaper of wide circulation in the county where the case is pending, publish a notice substantially as follows: TO ALL INTERESTED PERSONS: (COMMUNITY GROUND NAME) FILED A PETITION FOR (COURT NAME) FROM ( NAME OF COUNTY), TEXAS, IS APPLYING FOR PERMISSION TO BECOME A NOT-PROFIT CORPORATION. IF CONVERSION IS PERMITTED: (1) THE (COMMUNITY TRUST NAME) WILL BE TERMINATED; AND (2) THE TRUST ASSETS WILL BE: (A) TRANSFERRED TO A NON-PROFIT ENTITY OF THE SAME NAME AND ESTABLISHED FOR THE SAME PURPOSE AS (COMMUNITY TRUST NAME); AND (B) OWNED AND MANAGED BY THE COMPANY AS PROVIDED IN THE TEXAS NONPROFIT CORPORATION ACT (SECTION 1396-1.01 E SEQ., VERNON TEXAS CIVIL STATUTES).(1) THE (NAME OF COMMUNITY TRUST) WILL BE TERMINATED; AND (2) THE TRUST ASSETS WILL BE: (A) TRANSFERRED TO A NON-PROFIT ENTITY OF THE SAME NAME AND ESTABLISHED FOR THE SAME PURPOSE AS (COMMUNITY TRUST NAME); AND (B) OWNED AND MANAGED BY THE COMPANY AS PROVIDED IN THE TEXAS NON-PROFIT CORPORATE ACT (SECTION 1396-1.01 E SEQ., VERNON TEXAS CIVIL STATUTES). THE PURPOSE OF THE CONVERSION IS TO ACHIEVE SAVINGS AND USE THE MONEY SAVINGS BEYOND THE PURPOSES FOR WHICH THE (COMMUNITY TRUST NAME) WAS CREATED. A HEARING ON THE PETITION IS SCHEDULED FOR (DATE AND TIME) AT (COURT LOCATION). COMMUNITY TRUST) AT (ADDRESS AND PHONE NUMBER) OR IN COURT. (e) The court shall schedule a hearing on the claim to be held no later than the tenth day after the date the notices required in subsection (d)(2) were sent or the date the notice was posted pursuant to subsection (d) )(3), whichever comes later. The oral hearing must take place at the time and place specified in the notices, unless the court postpones the oral hearing for cause. If the hearing is adjourned, a notice of the date and time of the adjourned hearing must be posted at the courthouse in the district where the case is pending or at the place in or near the courthouse where public notices are normally posted, to be released. (f) The court, at the request of the governing body of the community trust, may issue an order requesting approval from the Internal Revenue Service for a transfer of assets under this section. If the court orders Internal Revenue Service approval, the transfer of ownership may occur on the date the community fund governing body serves notice to the court that the Internal Revenue Service has approved the transfer of ownership. The notice required in this subsection must be submitted by the first anniversary of the date of execution of the court order approving the transfer of ownership. Failure to submit the notice within the period provided for in this subsection will invalidate the court order. (g) A court order transferring the assets and terminating a community trust must provide that the obligations of each trustee of each divisional trust of the community trust shall terminate on the date the assets are transferred. Nothing in this subsection shall affect the liability of any trustee for any act or omission that occurred prior to the termination of the trustee's duties.
Added from Acts 1999, Leg. 76, chap. 1035, sec 1, effective September 1, 1999.
Second. 112,059. TERMINATION OF NON-ECONOMIC GROUNDS. (a) By notifying the Beneficiaries that they are beneficiaries or permitted beneficiaries of the income or capital of the Fund or that they would be beneficiaries or permitted beneficiaries if the Beneficiaries' or Fund's holdings were terminated and no power of appointment was exercised by the trustee of a trust consisting of trust property with an aggregate value of less than $50,000 may terminate the trust if the trustee, after considering the purpose of the trust and the nature of the trust property, determines that the value of the trust property is insufficient to meet ongoing administrative costs . (b) Upon termination of a trust under this Section, the trustee shall distribute ownership of the trust in a manner consistent with the purposes of the trust. (c) A trustee may not exercise any power described in subsection (a) if possession of the trustee's power results in the inclusion of the trust property in the trustee's estate for federal estate tax purposes. (d) This section does not apply to a preservation or conservation easement.
Added from Acts of 2007, 80th Leg., R.S., Chap. 451, sec 5, money. September 1, 2007.
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FAQs
How do you modify a trust in Texas? ›
A court will allow a trust to be modified if you can show that the trust's main purpose is being inhibited in some way. A third way to change an irrevocable trust is by what is called “decanting”. This means the trustee modifies the trust by moving assets from one trust to a new trust with different terms.
How do I terminate an irrevocable trust in Texas? ›To revoke and/or terminate an irrevocable trust, the settlor and all beneficiaries must express consent. If one party seeks modification of the trust against the interest of another party, the petition will need to be brought before a court to decide.
Can a trust hold title to real property in Texas? ›A trust cannot own, manage, or sell real estate or other property. However, the trustee administering the trust may hold legal title to the property on behalf of the individual or individuals that the trust benefits. This means that the trustee may lease, sell, or otherwise manage the property.
Does a certificate of trust need to be recorded in Texas? ›Unlike a corporation, which is required to file a certificate of formation with the Secretary of State, there is no such requirement for a trust. Rather, the trust remains a private document.
Can a trustee remove a beneficiary from a trust in Texas? ›Trustees generally do not have the power to change the beneficiary of a trust.
Can a trustee be removed from an irrevocable trust in Texas? ›To remove a trustee, a petition must be filed in probate court and a hearing will be scheduled. After an incompetent trustee has been removed, a successor will need to be appointed to take his or her place.
Can the beneficiary of an irrevocable trust withdraw money? ›Generally, a trustee is the only person allowed to withdraw money from an irrevocable trust.
Can the IRS break an irrevocable trust? ›This rule generally prohibits the IRS from levying any assets that you placed into an irrevocable trust because you have relinquished control of them. It is critical to your financial health that you consider the tax and legal obligations associated with trusts before committing your assets to a trust.
What is the downside of an irrevocable trust? ›The downside to irrevocable trusts is that you can't change them. And you can't act as your own trustee either. Once the trust is set up and the assets are transferred, you no longer have control over them.
What are the disadvantages of putting your house in a trust? ›The Cons. While there are many benefits to putting your home in a trust, there are also a few disadvantages. For one, establishing a trust is time-consuming and can be expensive. The person establishing the trust must file additional legal paperwork and pay corresponding legal fees.
Who holds the security in a Deed of Trust? ›
For a Deed of Trust, the parties involved are the lender, the borrower, and a neutral third party who will serve as a trustee. The title of the property is held as security for the loan and held by the trustee for the benefit of the lender. The title is released from the trust once the loan is paid.
Who owns the property in a revocable trust? ›Where two or more people buy a property, a trust is automatically imposed upon them without them having to do anything. The legal owners, therefore, hold the property on trust, and so are trustees.
How long does a trust last in Texas? ›How Long Can A Trust Last In Texas? Thankfully, that is all behind us. The new law sets the maximum trust period for 300 years. The 300- year period starts running on the effective date of the trust.
How long does a trustee have to notify beneficiaries in Texas? ›For example: Within 60 days after taking the responsibility of the Trust, the Trustee shall give notice to the qualified beneficiaries of the acceptance and their full name and address of the Trustee.
How long is a deed of trust good for in Texas? ›Beneficiary/Payee:
--Deed of Trust lien becomes barred 4 years after original/extended maturity date of the secured obligation [TEX. CIVIL PRACTICE & REMEDIES CODE §16.035].
A trustee who steals from a trust can be charged with breaching fiduciary duty—failing to act faithfully to benefit a person or group—resulting in potential civil and criminal charges. If you suspect a trustee is stealing from a trust, it's important to gather as much evidence as possible.
Can a trustee withdraw money from a trust account? ›The trustee will generally be permitted to withdraw money from a trust to cover the cost of third-party professionals, as well as any other expenses arising as a result of administration.
Can the beneficiary of an irrevocable trust dissolve the trust? ›The law of the state the irrevocable trust was formed in will specify when and under what circumstances you can dissolve an irrevocable trust. Most states allow all the beneficiaries to agree in writing to dissolve the trust.
Can a trustee ignore a beneficiary? ›Yes, a trustee can refuse to pay a beneficiary if the trust allows them to do so. Whether a trustee can refuse to pay a beneficiary depends on how the trust document is written. Trustees are legally obligated to comply with the terms of the trust when distributing assets.
How do you remove an asset from an irrevocable trust? ›Changes to an Irrevocable Trust
The trustee and any named beneficiaries would need to agree to a change mutually. They would need to decide that removing assets would best serve the trust and would need to go to court to explain the reasoning. Even then, the assets could not come back to you directly.
How much money can you withdraw from an irrevocable trust? ›
The trustee of an irrevocable Trust cannot withdraw money except to benefit the Trust. These terms include paying maintenance costs and disbursement income to beneficiaries. However, it is not possible to withdraw money for personal or business use.
What happens when a beneficiary of an irrevocable trust receives money? ›When an irrevocable trust makes a distribution, it deducts the income distributed on its own tax return and issues the beneficiary a tax form called a K-1. This form shows the amount of the beneficiary's distribution that's interest income as opposed to principal.
Do beneficiaries pay taxes on irrevocable trust distributions? ›Irrevocable trust: If a trust is not a grantor trust, it is considered a separate taxpayer. Taxable income retained by the trust is taxed to the trust. Distributed income is taxed to the beneficiary who receives it.
Can the IRS touch an irrevocable trust? ›The IRS and Irrevocable Trusts
When you put your assets into an irrevocable trust, they no longer belong to you, the taxpayer (this is different from a revocable trust, where they do still belong to you). This means that generally, the IRS cannot touch your assets in an irrevocable trust.
Grantor—If you are the grantor of an irrevocable grantor trust, then you will need to pay the taxes due on trust income from your own assets—rather than from assets held in the trust—and to plan accordingly for this expense.
Can the IRS take money from a trust fund? ›This is called a trust fund recovery penalty investigation, and it permits the IRS to collect unpaid trust fund taxes. They will not only from the business but from the assets of the individuals responsible for not paying withheld taxes.
Why would you put life insurance in an irrevocable trust? ›Benefits of an irrevocable life insurance trust (ILIT)
Funding a trust with life insurance can also help provide the cash needed to cover estate taxes and other expenses after you die. That helps avoid having to sell a business or other high-value asset to cover those costs.
An Irrevocable Trust means you can protect yourself, your loved ones and your estate against future legal action. It also means you can protect the financial future of your estate by avoiding substantial estate taxes.
What is the difference between an irrevocable living trust and an irrevocable trust? ›A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed at any time. An irrevocable trust describes a trust that cannot be modified after it is created without the beneficiaries' consent.
How do you modify a trust? ›To modify an irrevocable trust, you can either decant the trust or initiate a court procedure through a California probate court. With the latter, you will need to petition the court to allow the modification to the irrevocable trust. It is also possible to include a trust protector provision in an irrevocable trust.
Does a trust amendment need to be notarized in Texas? ›
Amending a revocable trust, however, requires at most a notarized signature. There is often no need for you to sign a trust amendment in your attorney's office.
What is the power to adjust in a trust? ›The power to adjust allows the trustee to take a certain amount of principal, reclassify the assets as income, and distribute the assets to the income beneficiary.
Can a trustee modify alter the contents of a trust deed? ›The trustees have no power to alter, amend or vary the trust purposes, whether on the ground of "expansion" or "addition" or "enlargement" of the objects of the trust.
Can beneficiaries of a trust be changed? ›Should the trust deed be silent on the involvement of the beneficiaries, but the beneficiaries have accepted benefits conferred by the trust instrument, the trust instrument can only be amended or terminated with such beneficiaries' consent.
Can beneficiaries be changed in an irrevocable trust? ›Once a California Trust becomes irrevocable, the Trust beneficiaries generally cannot be changed. That's the good news. The bad news is that there are a few exceptions. The most common exception is called a “power of appointment.” A power of appointment grants a person the right to change the Trust beneficiaries.
Who has the right to change a revocable beneficiary? ›A revocable beneficiary is a more flexible option. It allows the policy owner to change the beneficiary on their policy without restriction. To make a change, the policy owner simply submits the request to the insurance company, and there's no need to notify or ask the current beneficiaries before proceeding.
What happens if a will is not notarized in Texas? ›No — in Texas, you don't need to notarize your will to make it valid. However, a notary is required if you want to make your will self-proving. When a will is self-proving, the court can accept your will without needing to contact your witnesses to prove its validity. This can speed up the probate process.
What is the difference between a deed and a Deed of Trust in Texas? ›Both a warranty deed and deed of trust are used to transfer the title of a property from one person to another. However, the difference between these two contracts is who is protected. As you now know, a deed of trust protects the beneficiary (lender). A warranty deed, on the other hand, protects the property owner.
How long can a trust last in Texas? ›How Long Can A Trust Last In Texas? Thankfully, that is all behind us. The new law sets the maximum trust period for 300 years. The 300- year period starts running on the effective date of the trust.
What is the person who controls a trust called? ›The one establishing a trust is called the trustor or grantor. The one who oversees and manages the trust is called the trustee. In a revocable trust, the trustor may control the trust as well, but in an irrevocable trust, the trustee must be somebody else.
Who is the controlling person of a trust? ›
Controlling Persons of a trust, means the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, and any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership).
What are the four 4 features of trust? ›After reviewing extensive literature on the topic, I believe that trust can be defined in terms of the following components: consistency, compassion, communication, and competency.
Who can amend the trust deed? ›The Board of Trustees shall have full power and authority to make, alter and rescind rules and regulations for the management and administration of the Trust. Any amendment to the Trust Deed will be carried out only with the approval of the Commissioner of Income Tax. 19.
Can an irrevocable trust deed be changed? ›The ownership of an irrevocable trust is transferred to the beneficiaries in the same way as that of the revocable trust. But, as the assets belong under the trust's control, one cannot make any changes to them.