Can A Trust Own Property In Texas
Trusts are not just something that rich celebrities or bankers do. Anyone that has property or assets can set up a trust. You can set up a trust to manage assets for loved ones with special needs, minors, and spendthrifts.
A trust can help you ensure that your assets will ultimately pass to your children if you had a blended family or protect your assets from creditors, taxation, or potential lawsuits. The person creating the trust or the Settlor can include terms on how the trust should be managed and how the assets should be distributed to the beneficiaries.
Using A Trust To Hold Title To Real Property
Trusts are not legal entities that can own, manage or sell property. It is the trustee of the trust that can hold legal title to the property on behalf or for the benefit of the beneficiaries of the trust.
What this means is that a trustee has the power to sell or lease the property. But the amount of power the trustee has is determined by the terms of the trust agreement. So, title companies often ask to know the trustee of a trust (can be a person or organization) before they agree to any transactions. They also seek to know the powers that the trustee has as far as the real property is concerned and the limitations that were placed on those powers in the trust document.
Land Trusts
Land trusts are often set up to maintain the privacy of the ownership for real property. That means that if you search public records for the ownership of a property held under a land trust, it will show you that the land trust owns that real property, but you won’t find the name of the settlor.
Some people create land trusts for each of their real property so that when one property faces a lawsuit the other real properties are not encumbered.
To set up a land trust you need two documents. The first document is the trust itself that names the settler, trustee, and the beneficiaries. Then you need the deed that transfers the title to the property from the settlor to the trustee.
Requirements For Of A Valid Trust In Texas
The legal requirements for creating trusts in Texas are:
- The settlor or the person creating the trust must have intent for creating the trust. That means that the settlor must have a purpose for the trust.
- The settlor must be over 18 years old and must be of sound mind. Sound mind here means that the settlor knows the nature and extent of the property the settlor owns and the natural objects of his bounty
- The trust must be in writing if it involves the transfer of real property
- The settlor not only has to identify the assets covered by the trust but must also place the assets in the trust for the benefit of the beneficiaries
- The settlor must name the beneficiaries of the trust with sufficient certainty
- The trust must comply with the Rule Against Perpetuities
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