A trust fund is a way of conveying money or property following your death. In Texas there are many different types of trusts, including revocable and irrevocable trusts. A revocable trust may be altered by the person who created it, whereas an irrevocable trust cannot. Each type of trust has different tax consequences. Before you begin, you need to familiarize yourself with some terminology associated with trust funds: A "grantor" is the person creating the trust, a "trustee" is the organization or individual in charge of administering the trust and a "beneficiary" is an individual who will receive the proceeds of the trust.
Decide on the type of trust you wish to establish. A revocable trust may be dissolved or otherwise amended during your lifetime but an irrevocable trust cannot. Both types of trusts can be created in the same manner, but they have very different tax consequences. If you are in doubt, it's best to consult an estate-planning expert.
Identify a trustee to administer the trust in your absence. Common selections include a bank or financial institution, an attorney or a trusted family member. Contact your proposed individual or institution and determine if they are willing to serve as trustee. You may serve as the trustee of your trust during your lifetime -- especially if you create a revocable trust -- but you will need to choose a trustee to serve after your death. Serving as the trustee of an irrevocable trust you've created is widely considered to be a bad idea, because it can have tax consequences that negate the original purpose of the trust. If you are considering setting up an irrevocable trust and serving as trustee, consult an estate-planning expert.
Decide on who you want to be your beneficiaries, and decide how and when you want the trust's assets to be used.
Draft a trust agreement in accordance with the laws of the state of Texas. Your trust agreement must include the name of your beneficiaries, the name of your trustee, your stipulations for handling of assets and disbursements, and all other applicable rules the trust must follow. Unless you are already experienced in setting up a trust in Texas, you might consider using a third-party document preparation service, which can provide you with a set of forms that will work for your purposes.
Execute the trust. You and the trustee -- or just you, if you're serving as the trustee --must sign the trust agreement in front of a notary. In Texas, trust agreements must be signed in front of a notary public in order to be binding. Provide a copy of the executed trust to the trustee -- or the person you've designated to serve as trustee after your death -- so that your instructions can be followed following your death.