Call Us Today
(972) 382-5400

Trust Law

A trust is a three-party fiduciary relationship in which the first party, the trustor or settlor, transfers (“settles”) a property (often but not necessarily a sum of money) upon the second party (the trustee) for the benefit of the third party, the beneficiary.

A testamentary trust is created by a will and arises after the death of the settlor. An inter vivos trust is created during the settlor’s lifetime by a trust instrument. A trust may be revocable or irrevocable; in the United States, a trust is presumed to be irrevocable unless the instrument or will creating it states it is revocable, except Texas, where trusts are presumed to be revocable until the instrument or will creating them states they are irrevocable. An irrevocable trust can be “broken” (revoked) only by a judicial proceeding.

The trustee is the legal owner of the property in trust, as fiduciary for the beneficiary or beneficiaries who is/are the equitable owner(s) of the trust property. Trustees thus have a fiduciary duty to manage the trust to the benefit of the equitable owners. Some breaches of fiduciary duty can be charged and tried as criminal offenses in a court of law.

A trust is created by a settlor, who transfers title to some or all of his or her property to a trustee, who then holds title to that property in trust for the benefit of the beneficiaries. The trust is governed by the terms under which it was created. In most jurisdictions, this requires a contractual trust agreement or deed. It is possible for a single individual to assume the role of more than one of these parties, and for multiple individuals to share a single role. For example, in a living trust it is common for the grantor to be both a trustee and a lifetime beneficiary while naming other contingent beneficiaries.

While the trustee is given legal title to the trust property, in accepting the property title, the trustee owes a number of fiduciary duties to the beneficiaries. The primary duties owed include the duty of loyalty, the duty of prudence, the duty of impartiality. In addition, a trustee has a duty to know, understand, and abide by the terms of the trust and relevant law.

There are strong restrictions regarding a trustee with conflict of interests. Courts can reverse a trustee’s actions, order profits returned, and impose other sanctions if they find a trustee has failed in any of their duties. Such a failure is termed a breach of trust and can leave a neglectful or dishonest trustee with severe liabilities for their failures. It is highly advisable for both settlors and trustees to seek qualified legal counsel prior to entering into a trust agreement.

To learn more and schedule a free consultation, please call The Cawlfield Law Firm at 972-382-5400, located on the historic downtown square in Celina, Texas.

Schedule Your Fully Confidential Consultation Today

At The Cawlfield Law Firm, PLLC, we are committed to providing results-oriented legal representation to clients. To schedule a confidential, no-obligation initial consultation, please call us at (972) 382-5400or contact us directly online. With an office in Celina’s historic downtown square, we serve communities throughout the region, including in Collin County, Denton County, Grayson County, Cooke County, Tarrant County, and Dallas County.

  • This field is for validation purposes and should be left unchanged.