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TRUSTS Introduction

TRUSTS Introduction. Basic Idea. Settlor Legal Equitable Interest Interest Trustee Beneficiary. Basic Functioning.

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TRUSTS Introduction

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  1. TRUSTSIntroduction

  2. Basic Idea Settlor Legal Equitable Interest Interest Trustee Beneficiary

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

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

  5. 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.

  6. Purposes and Uses of Trusts • 3. Protection against settlor’s incompetence • The “stand by” trust

  7. Purposes and Uses of Trusts • 4. Professional management of property

  8. Purposes and Uses of Trusts • 5. Probate avoidance.

  9. Purposes and Uses of Trusts • 6. Tax benefits

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

  11. Texas Trust Legislation • 1. Before 1943 • Case law • Sparse statutes

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

  13. 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.

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