1. TRUSTS Introduction

2. Basic Idea Settlor Legal Equitable Trustee Beneficiary
Interest Interest
Trustee Beneficiary

3. Basic Functioning
Settlor transfers legal title to trustee (honest and reliable) and equitable title to beneficiary (deserving of a windfall).
Trustee manages property according to:
legal duties and
the settlor’s instructions.
Trustee distributes to beneficiaries according to settlor’s instructions.
Trust ends when duties complete.

4. Purposes and Uses of Trusts

5. Purposes and Uses of Trusts
1. Provide for and protect beneficiary
Minors
Incompetents
People without management skills
Spendthrifts

6. Purposes and Uses of Trusts
2. Flexibility of asset distribution
Spread benefits over time.
Give trustee discretion whom to pay and how much to pay.
Set standards.
Impose conditions.

7. Purposes and Uses of Trusts
3. Protection against settlor’s incompetence and help avoid guardianship
The “stand by” trust

8. Purposes and Uses of Trusts
4. Professional management of property

9. Purposes and Uses of Trusts
5. Probate avoidance if trust inter vivos
Privacy of asset distribution

10. Purposes and Uses of Trusts
6. Tax benefits

11. Warning!
Trusts, although very helpful, are not always worth the cost, expense, and hassle.

12. Texas Trust Legislation
1. Before 1943
Case law
Sparse statutes

13. Texas Trust Legislation
2. April 19, 1943 to December 31, 1983
Texas Trust Act

14. Texas Trust Legislation
3. January 1, 1984 to present
Texas Trust Code
Part of Property Code
Trust legislation is also found in many other places.