Yes, Texas’s trust code can be found in Subtitle B of Title 9 of the Texas Property Code. While all of Title 9 governs trusts, Subtitle B is referred to as the “Texas Trust Code.” It contains almost all of the relevant provisions regarding trusts and their creation, administration, and termination. Here’s a quick guide. And if you have questions, schedule a free consultation at: RMOlawyers.com
How Long Does a Trustee Have to Distribute Assets?
Because every trust is different, the Texas Trust Code does not establish a set deadline for how long a trustee has to distribute assets. However, trustees are required to follow the terms of the trust instrument and act reasonably based on the requirements of the particular trust they are administering.
The most straightforward type of trust distribution is the “outright” distribution, which is typically used in a testamentary trust after the trustmaker passes away. With an outright distribution, the trustee must distribute all of the trust property in a single lump sum within a reasonable time or after paying all of the estate’s debts depending on the express language of the trust. Trustees are required to take the actions necessary to make outright distributions within a reasonable timeframe.
Some trusts call for “staggered” distributions, which means that the trustee must distribute trust assets over time instead of all at once. These distributions can occur at specific intervals or upon a beneficiary attaining a certain age or milestone. Or sometimes, the trust instrument will grant the trustee complete or limited discretion as to when to distribute assets and how much should be paid. Either way, staggered distributions must be made according to the trust instrument, and trustees have an obligation to make required distributions.
Does a Beneficiary Have a Right to See the Trust?
Yes, a current beneficiary of an irrevocable trust generally has a right to see the trust instrument and receive a copy of the document.
“Beneficiary” means a person for whose benefit property is held in trust, regardless of the nature of the interest.
However, beneficiaries of revocable trusts and contingent or secondary beneficiaries of irrevocable trusts do not have the right to see the trust, as their interests in the trust are not yet finalized or “vested.” With a revocable trust, the trustmaker can cancel or change the trust at any time, so as long as the trustmaker remains alive, the beneficiaries’ interests have not vested.
Similarly, contingent beneficiaries of an irrevocable trust only have the right to receive distributions if a specific event occurs. So even though the trustmaker can’t revoke or change the trust, it is still not certain that a contingent beneficiary will be entitled to receive anything. This means that a contingent beneficiary’s interest in the trust has not vested, and depending on the terms of the trust, they may not have the right to receive a copy of the trust as long as they remain contingent beneficiaries.
Therefore, the language of the trust, the Texas Trust Code, and case law determine whether a beneficiary (primary, secondary or contingent) is entitled to a copy of the trust.
What Rights Do Beneficiaries Have Under a Trust?
Current beneficiaries of irrevocable trusts typically have the following rights:
- The right to receive a copy of the trust instrument
- The right to receive material information about the trust from the trustee
- The right to demand an accounting of the trust’s finances from the trustee
- The right to receive distributions as required by the trust instrument
- The right to petition the court to compel the trustee to act or refrain from acting
- The right to petition the court to remove the trustee under certain circumstances
- The right to petition the court to terminate or modify the trust under certain circumstances
However, these rights are not without limitations. For instance, trustees are typically only required to provide an accounting to the beneficiaries when demanded unless the trust or court requires otherwise. There are also restrictions on when a court will remove a trustee or terminate a trust, even if a beneficiary requests that they do so.
Can I Contest a Trust?
Yes, you can contest a trust if you are an “interested person” and have legal grounds to challenge the trust instrument’s validity.
Under Texas Property Code Section 111.004(7), an “interested person” means a trustee, beneficiary, or any other person who has an interest in or a claim against the trust or who is affected by the administration of the trust. You must be an interested person to dispute or contest a trust in Texas.
You can’t contest a trust just because you disagree with its terms or think you should receive larger distributions. To successfully dispute a trust, you must identify and prove some legal defect that invalidates the trust in its entirety or partially.
Some of the most common grounds for contesting a trust include:
- Lack of mental capacity or intent
- Fraud or forgery
- Undue influence
- Failure to fund
- Illegal purpose
If you are considering contesting a trust or you have been denied your rights as a beneficiary, you should discuss your situation with a reputable trust litigation lawyer as soon as you can. This type of litigation is complicated, and it can be challenging to succeed in these cases. To have your best shot at challenging a trust, you’ll need the help of a professional who can understand and apply the Texas Trust laws.
Have questions? We’re happy to discuss.
Call (424) 320-9444 or email [email protected]
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About RMO, LLP
RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego, Fresno, the Bay Area, Dallas, and Houston. For more information, please visit https://rmolawyers.com/.
