Revocable Trust
(Married or Single Individual) (Trust(s) for Children) (TX)

Summary

This template is for use as part of a client's wealth transfer plan in Texas. The trust provides for distribution of assets at the death of the trustor. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. This template is for use as part of a client's wealth transfer plan in Texas. The trust provides for distribution of assets at the death of the trustor. This template includes practical guidance, drafting notes, alternate clauses, and optional clauses. At the death of the trustor (or at the death of the survivor of the trustor and his or her spouse, if applicable) the trust directs the assets held in further trust for the trustor's children. This template includes options for either (1) a shared "pot" trust for the benefit of the trustor's children collectively, or (2) separate share trusts for each of the trustor's children.Pot trusts aim to distribute assets equitably to a group of children or other beneficiaries of a possible range of ages. The purpose of this trust arrangement is to avoid unjustly enriching beneficiaries who have already received the benefit of support through most of their life while younger minor beneficiaries still have a longer period of need. Rather than dividing the trust in equal fractional shares or percentages to each child, such as the case with separate share trusts, the trustee has discretion to delay the division of trust assets until a certain date, such as when the youngest child or beneficiary turns a specified age. Until then, the money is held in one common fund or pot, and can be spent on any beneficiary at the trustee's discretion. Establishing individual separate share trusts, as opposed to a single pot trust, is appropriate when all of the beneficiaries have reached the age of majority. The individual trusts usually provide an equal share of principal for each child but can be modified to provide unequal shares. The trustee has discretion in providing for each beneficiary from his or her own trust until he or she attains the specified age.A revocable trust is one element of a comprehensive probate avoidance strategy in the state of Texas. The most common reason a trustor may prefer to avoid probate is privacy. The revocable trust also includes elements of disability planning, as assets held in trust can be managed by the trustee without a judicial determination of incapacity in a guardianship matter.The most common pitfall with revocable trusts is that the trustor fails to fund the trust during his or her lifetime. An unfunded trust may lead to unintended consequences under Texas state law. A common practice is to minimally fund the trust as a "standby trust." This prevents clients with expansive holdings from expending time, effort, and talent to retitle all currently held and later acquired titled property. Be aware that for most clients, however, it is best for them to fully fund the trust at the outset. The exhibit at the close of this template is intended to help prevent the unfunded trust problem by creating a standby trust with nominal funding on the day it is executed. However, you should advise your client to coordinate and routinely update the estate plan. For example, assets not contributed to the trust—after acquired property held in joint tenancy with right of survivorship, accounts with a payable on death designation, or tax deferred accounts passing by contractual beneficiary designations—will not be distributed in accordance with the trust terms. Life events occurring after the execution of this Agreement may also necessitate revisions and amendments to the trust. Notwithstanding the creation and funding of the trust, probate may be required. Once the client gives you a completed questionnaire, you should provide a checklist to help them understand the additional action required to coordinate the estate plan beyond executing the documents. This includes, for example, recording new deeds for real property, updating beneficiary designations with investment, retirement, checking, and savings accounts, and more.Texas recognizes same-sex marriages pursuant to Obergefell v. Hodges, 135 S. Ct. 2584 (2015), but does not, at the state-level, recognize domestic partnerships. However, several larger counties, such as Dallas County and Harris County, provide for the registration of domestic partnerships for certain limited purposes, such as access to a partner's health insurance. This template makes use of only spousal and marital terms. If your client relocated to Texas from a domestic partnership jurisdiction predating Obergefell, or wishes to make use of another term to refer to their partner, you will need to modify this template further. This trust template is intended as a general drafting aid for and will require modification according to the particular circumstances of the trustor, trustee, and beneficiaries, and in accordance with the specific intentions of the trustor. This trust template is intended as a general drafting aid for and will require modification according to the particular circumstances of the trustor, trustee, and beneficiaries, and in accordance with the specific intentions of the trustor. You should use the template in conjunction with a pour over will and a Power of Attorney (Statutory, Durable) (TX). For a full listing of key content related to estate plans for married or partnered people in Texas, see Estate Plan for Individual with Spouse or Partner Resource Kit (TX). For a related template, see Letter to Client (Funding Revocable Trust) (TX). For a detailed discussion of trusts, see Characteristics and Uses of Trusts (TX) and Requirements and Requirements and Restrictions on Trust Purposes and Administration (TX).