Declaration of Trust

A Declaration of Trust is a legal document that establishes a trust and outlines the terms under which it operates. It is created by a settlor, who is the individual establishing the trust, and serves as a formal declaration of the settlor’s intention to create a trust and to transfer specific assets into that trust.

In a Declaration of Trust, the settlor specifies key elements such as the name of the trust, the trustee (the person or entity responsible for managing the trust assets), the beneficiaries (those who will benefit from the trust), and the powers and duties of the trustee. The document can also outline how income and principal from the trust should be distributed to beneficiaries, any conditions for distributions, and provisions for the management of trust assets.

For example, if a parent wants to set up a trust for their children’s education, the Declaration of Trust would detail that the trustee is responsible for managing the funds and distributing them for educational expenses. It might specify that funds can only be used for tuition, books, and other approved educational costs, thus guiding how the trust operates.

In Texas, including areas like Houston, a Declaration of Trust can be an essential component of estate planning, helping to manage assets both during the settlor’s lifetime and after their death, while potentially avoiding the probate process. It is important to ensure that the Declaration of Trust complies with Texas law to ensure its validity and enforceability.