While there are a number of different types of trusts, there are only two basic categories—revocable trusts and irrevocable trusts.
TYPES OF TRUSTS
When a Trust has been established, the manager or administrator of a trust (the “trustee”) has a fiduciary duty to the beneficiaries of the trust. Many of these fiduciary duties are set forth in the Texas Trust Code, Texas court rulings, as well as the trust document itself, often including: inventory and assessment of assets, contacting beneficiaries and potential creditors, paying debts and taxes, and making distributions from the trust. Due to the complexities involved in trust administration, few trustees have the requisite knowledge and expertise to handle every area of trust administration on their own. For this reason, a trust company or corporate fiduciary often can be a good choice to serve as a trustee, especially for investment trusts with significant assets.
On the other hand, for smaller trusts or special needs trusts, a competent friend or family member may be the best person to serve as the trustee. Indeed, a competent family member may be able to administer the trust with less overhead cost and with a greater degree of personal concern for the interests of beneficiaries than a trust company or corporate fiduciary.
Furthermore, the family member may need to consult with an accountant, investment advisor, or other professional only on occasion. Navigating the minefield of fiduciary duties and responsibilities that are involved in trust administration is a challenging taskfor any trustee. For this reason, a trustee should seek competent legal counsel before making any decisions related to trust administration, especially when a new concern or a previously unaddressed issue arises.
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