Facultades del fideicomisario en Texas

Where a trustee's powers come from

Two sources, read together. The first is the trust instrument: the settlor's words grant, enlarge or limit what the trustee may do, and the Trust Code's default rules yield to them except for the short list of mandatory rules the terms cannot override (§111.0035). The second is the Code's general grant: a trustee may exercise any power necessary or appropriate to carry out the purposes of the trust, subject to the terms (§113.002). A power the Code grants and the instrument withholds is withheld; a power the instrument grants and the Code's mandatory rules forbid is forbidden.

The Code's grant, grouped

The Texas Trust Code does not list a trustee's powers in one long section the way some states do; it grants the general power and then speaks to particular ones where they need rules of their own.

• The general power: anything necessary or appropriate to carry out the trust's purposes, subject to the instrument (§113.002).
• Agents: employing attorneys, accountants, agents and other advisors, and delegating as the section provides (§113.018); delegating investment and management functions with the care in selecting, instructing and monitoring that §117.011 requires.
• Distributions: making them as the instrument directs and as §113.027 provides, and exercising discretionary powers in good faith (§113.029).
• Decanting: an authorized trustee with full discretion may distribute principal to a second trust within the subchapter's limits (§112.072), after the written notice §112.074 requires.
• Dividing or combining trusts on the conditions the section states, after notice (§112.057); terminating an uneconomic trust after notice to the distributees (§112.059).
• Compensation and reimbursement: reasonable compensation unless the instrument provides otherwise (§114.061); reimbursement of expenses properly incurred (§114.063).
• A certification of trust in place of the instrument for the people who deal with the trustee (§114.086).

What the instrument can change

Almost everything, within the mandatory rules. The terms of the trust prevail over the Code except for the list §111.0035 keeps mandatory — among them the duty to answer an accounting demand from a current or presumptive remainder beneficiary of an irrevocable trust (§111.0035(b)(4)) and the duty to keep a beneficiary of an irrevocable trust who is 25 or older informed (§111.0035(c)). A settlor may also name an advisor or protector with powers of direction, and Texas's own directed-trust section sets the directed trustee's duties and the limits of its duty to monitor (§114.0031).

What the instrument cannot do, a court sometimes can: on the petition of a trustee or a beneficiary a court may modify, reform or terminate a trust on the grounds §112.054 lists, and the instrument's own words are read against the rule against perpetuities, which for a trust whose effective date is on or after September 1, 2021 requires an interest to vest within the later of 300 years or a life in being plus 21 years (§112.036). A trustee who finds the instrument's words unworkable has a route; it runs through the court, not through the trustee's own reading.

Decanting, dividing and combining: the powers with notices attached

Three structural powers the Code grants come with their own notice. An authorized trustee with full discretion may distribute principal to a second trust — decanting — within the limits the subchapter sets (§112.072), after written notice at least thirty days before the distribution to the current beneficiaries and the presumptive remainder beneficiaries the section names, and to the attorney general where a charity is involved (§112.074). A trustee may divide a trust into separate trusts, or combine trusts, on the conditions §112.057 states, again after the notice it requires. And a trustee may terminate a trust whose total value is under $50,000 when that value does not justify the cost of administration, after notice to the distributees and permissible distributees (§112.059).

Each is a power, and each is bounded the way every power is: by the instrument, by the purposes of the trust, and by the duties of loyalty and impartiality. The notice is what gives the beneficiaries their say before the structure changes, and the record of the notice — who was sent what, and when — is what shows the power was exercised as the Code provides.

Spendthrift terms and the trustee's hands

A spendthrift provision restrains a beneficiary's interest from being transferred, voluntarily or involuntarily, before the trustee pays it (§112.035), and so it shapes what a trustee may do with a beneficiary's demand that a distribution go to someone else, or with a creditor's letter. The protection does not reach a settlor who is also a beneficiary as to that settlor's own interest, with the exceptions the section states, and it never makes the trust's property answerable for the trustee's personal debts — trust property is not liable for the trustee's personal obligations (§114.0821). Reading a spendthrift clause against a particular creditor's claim is licensed-attorney work; recognizing that the clause exists, and administering within it, is the trustee's.

Directed trusts: when someone else holds the power

Some Texas instruments give a power — over investments, over distributions, over the trustee's own replacement — to an advisor or a protector rather than to the trustee. Texas's own directed-trust section governs that arrangement: the advisor's authority, the directed trustee's duty when acting on a direction, and the limits of the trustee's duty to monitor the advisor or to warn the beneficiaries, each as the section's subsections provide (§114.0031). A trustee serving under such an instrument reads §114.0031 beside the instrument before acting on any direction, and records the direction received and the action taken — the record is the trustee's answer if the direction is later questioned.

The duties that bound every power

A power says what a trustee may do; a duty says how. The general duty of good-faith administration according to the terms and the Code (§113.051) frames every exercise of every power. In investing and managing, the prudent investor rule governs: the care of a prudent investor, considering the trust's purposes, terms, distribution requirements and other circumstances, with each decision judged as part of the whole portfolio (§§117.003–117.004); loyalty — solely in the beneficiaries' interest (§117.007); impartiality among beneficiaries with differing interests (§117.008); and the review of the assets within a reasonable time of taking office (§117.006). A loan of trust funds to the trustee, an affiliate or a relative is restricted outright (§113.052), and trust property is not liable for the trustee's personal obligations (§114.0821).

Discretionary distributions (§113.029)

The words "absolute", "sole" or "uncontrolled" in an instrument do not change the standard: a trustee exercises a discretionary power in good faith and in accordance with the terms and purposes of the trust (§113.029). The section also keeps certain tax-sensitive powers from a trustee who is also a beneficiary, so that a distribution to oneself is measured by the standard the section states rather than by the trustee's own judgment of need. The record of a discretionary decision — what the instrument says, what was considered, why — is what makes the decision defensible later without anyone's say-so.

Powers and the people who deal with the trustee

Banks, title companies and buyers want to know that the person in front of them has the power to act. A certification of trust under §114.086 — the trust's existence and date, the settlor, the trustee and the trustee's powers, without disclosing the whole instrument — is what the Code provides for that, and a person who deals with the trustee in good faith is protected as §114.081 provides. The same sections are why a trustee's authority to sell, borrow or sign is a question of the instrument and the certification, not of the beneficiaries' consent.

Co-trustees, delegation, and the end of a trustee's powers

Cotrustees act by majority decision, with the section's rules for a cotrustee who is unavailable or who dissents (§113.085); when one cotrustee answers for another's breach is §114.006. Delegation to agents is a power with a duty attached (§113.018; §117.011). A trustee's powers end with resignation as the instrument provides or with a court's permission (§113.081), with removal as the instrument provides or by a court (§113.082), and, after a terminating event, with the reasonable period needed to wind up and distribute (§112.052).

The ways trustees exceed their powers

A power exercised outside the instrument or the duties is a breach, and the remedies are the Code's: the trustee is accountable to the beneficiaries for the loss, depreciation or profit the statute describes (§114.001), and a court may compel performance, enjoin a breach, impose a surcharge, remove the trustee or order an accounting (§114.008).

• Lending trust funds to oneself, an affiliate or a relative (§113.052).
• Investing without the prudent investor rule's care, or without reviewing the assets on taking office (§§117.004, 117.006).
• Treating a discretionary power as an unreviewable one (§113.029).
• Delegating without care in selecting, instructing and monitoring the agent (§117.011).
• Continuing to administer after a terminating event beyond the reasonable period needed to wind up (§112.052).

When a licensed Texas attorney is the right next call

TrusteeClear organizes the record; it does not give legal advice and it does not decide any of these questions for you. Many trustees bring the record to a licensed Texas attorney of their choosing before exercising a power the instrument leaves open: a discretionary distribution to oneself, a sale of the homestead a surviving spouse may occupy (Tex. Const. art. XVI, §52), a decanting (§§112.072–112.074), or a transaction with a related party.