How to Set Up a Trust Fund in Texas

By Louis Kroeck

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.

Step 1

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.

Step 2

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.

Protect your loved ones. Start My Estate Plan

Step 3

Decide on who you want to be your beneficiaries, and decide how and when you want the trust's assets to be used.

Step 4

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.

Step 5

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.

Protect your loved ones. Start My Estate Plan
How to Set Up a Blind Trust
 

References

Resources

Related articles

How to Terminate a Living Trust

Any trust that you establish during your lifetime is a "living trust." Living trusts can be revocable, which means that the person creating the trust, known as the "grantor," can terminate it during her lifetime. However, living trusts can also be irrevocable, which means the grantor cannot terminate the trust. In this case, the trustee can terminate the trust, but only in the manner specified in the trust – for example, after all the assets have been distributed.

Blind Trust Vs. Revocable Trust

A trust is a legal structure used to safeguard assets. Revocable trusts and blind trusts serve distinctly different functions. Trust law is very state-specific; those with questions about setting up a particular trust should enlist a local legal professional or an online drafting service.

The Pros & Cons of Making a Will

A will is a written legal document that describes how you would like to distribute your property after you die. However, there are both pros and cons to making a will and whether drafting a will is beneficial to you may depend on your particular circumstances. In addition, there are other estate planning tools that you can use to handle your property following your death, such as creating a living trust. If you do not have a will or other estate planning document in place upon death, your property will be distributed according to your state’s rules.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

How to Create a Revocable Trust

A revocable living trust allows you to provide for the distribution of your property after your death. When you set up ...

How to Title Assets for a Trust

Transferring property from yourself to your revocable or irrevocable trust is known as funding the trust. Only assets ...

How Much Money Do You Need to Start a Living Trust?

A living trust is used for estate planning and acts as a holding area for property. The person who creates the trust ...

The Difference Between a Grantor & a Beneficiary

Grantor is the legal term for a person who creates a trust, and beneficiaries are people named by the grantor to ...

Browse by category
Ready to Begin? GET STARTED