A trust is a legal entity created by a person known as the trustor, grantor, or settlor who owns assets (cash, stocks, bonds, real estate, art, jewelry, machinery, etc.) and transfers ownership of the assets to the trust—while directing a person or entity known as the trustee to hold and manage the assets for the benefit of a certain person or persons, or classification of persons (descendants) known as the beneficiary or beneficiaries. The assets or property in a trust are sometimes referred to by the Latin word res (pronounced “rays”).
Beneficiaries are often descendants or heirs of the trustor, grantor, or settlor, but in some states (and other countries) the trustor, grantor, or settlor may be the beneficiary—and in that case the trust is known as a self-settled trust.
A trust is generally created when a trustor, grantor, or settlor shows or manifests an intent to create a trust by signing or executing a written trust agreement that is also signed by the trustee.
In Texas, a trust is established when an individual (trustor, grantor, or settlor) expresses the intention to create a trust and executes a written trust agreement, which must also be signed by the trustee. The trust agreement details how the trustor's assets, referred to as the 'res,' will be managed and distributed by the trustee for the benefit of designated beneficiaries, who can be descendants, heirs, or any other persons or classifications of persons. Texas law allows for the creation of self-settled trusts, where the trustor can also be a beneficiary. Trusts in Texas are governed by the Texas Trust Code, which outlines the duties of trustees, the rights of beneficiaries, and the rules for the administration of trusts. The trust code also provides for the modification and termination of trusts, the appointment of successor trustees, and other trust-related matters. It is important for trustors to comply with the specific requirements of the Texas Trust Code to ensure the trust is valid and operates as intended.
