Trust Termination Clause
(Uneconomical) (Trust or Will) (TX)

Summary

This template is a trust termination clause and may be used in a Texas trust agreement or will to give a trustee discretion to terminate a trust if it is small or if continued administration of the trust would be uneconomical due to the size of the trust estate and the cost of administration. This clause includes practical guidance, drafting notes, and an alternate clause. Termination of an uneconomic trust is addressed by Section 112.059 of the Texas Property Code, which currently defines an uneconomic trust as a trust with a total asset value of $50,000.00 or less. Unless another standard for an uneconomic trust is established within the trust instrument, the statutory definition will control. Once the trust is terminated, the trustee will distribute the trust property in a manner consistent with the trust's purposes. Note, however, that notwithstanding the provisions of Section 112.059, the trustee may not exercise a power that would cause the assets of the trust to be included in the trustee's estate for federal estate tax purposes. Tex. Prop. Code § 112.059(c). For a full listing of key content related to estate plans for individuals in Texas, see Estate Plan for Individual with Spouse or Partner Resource Kit (TX) and Estate Plan for Single Individual Resource Kit (TX). For more information on trust termination, see 1 Texas Estate Planning § 35.62, 9 Texas Transaction Guide--Legal Forms § 48.25, and 9 Texas Transaction Guide--Legal Forms § 50C.29. For an in-depth discussion of trusts, see Characteristics and Uses of Trusts (TX), Requirements and Restrictions on Trust Purposes and Administration (TX), and Revocation, Amendment, and Termination of Trusts (TX).