Revocable trust questions

In the rest of this Guide we use “revocable trust,” or “trust” as shorthand for “revocable trust.”

It’s important to know that some rules about trusts come from Texas law and other rules come from the trust agreement. Be sure to read the trust agreement, but keep in mind that Texas law also has rules about what you can and cannot do as trustee. For this Guide, we’ll pretend that you are a trustee of a trust set up for Rose’s benefit.

What is a revocable trust?

A revocable trust is a legal relationship between Rose and you, her trustee. Rose set up a revocable trust to give you the legal authority to make decisions about her money or property in the trust. The trust agreement or the trust instrument is the document that Rose used to set up the trust. Be sure to read the trust agreement when you become trustee.

Rose may have set up the trust because she wants to make sure that if she gets sick or injured, you can manage Rose’s money and property for her benefit. Rose also may have made the revocable trust to say who will get her money or property after she dies.

Can a revocable trust be changed or revoked?

There are different kinds of trusts. Some are revocable, meaning the trust can be changed or ended (revoked), and others are irrevocable, meaning that they generally cannot be changed. In Texas, a trust is revocable unless the trust agreement says otherwise.

As long as Rose can still make her own decisions and the terms of the trust allow her to do so, she can change or end (revoke) the revocable trust.

Who does what under a trust?

There are three roles under a revocable trust.

  • The person who makes the trust is called the settlor or grantor.
  • The person who makes decisions about the money or property in the revocable trust is called the trustee. A trustee can be an individual or a financial institution. If there is more than one, they are co-trustees. Unless the trust agreement provides otherwise, when the trust has co-trustees, Texas law requires a majority of the co-trustees to agree before you can act. A successor trustee or backup trustee may also be named. The successor trustee acts only if a trustee can no longer fulfill that role. Rose can name herself and you as co-trustee immediately, or Rose may name you as a successor trustee who can act when Rose can no longer make decisions.
  • A person who receives money or property from the revocable trust is called a beneficiary. Rose may be the only beneficiary while she is alive, or she may name co-beneficiaries who receive some money or property from the revocable trust before she dies. The people who receive money or benefits from the revocable trust after Rose dies are called residuary beneficiaries.

What property does a trustee manage?

The trustee has authority only over property actually transferred to the revocable trust and probably only after Rose has lost the capacity to manage her property. You do not have legal authority over any money or property that is not in the trust.

A trust is ineffective unless Rose puts her money or property into it. In Texas, Rose must switch ownership from her name to the name of the trustee who holds the property of the revocable trust on Rose’s behalf. When you are acting as trustee you will have the legal authority to spend and invest the money and property in the revocable trust for the benefit of Rose and any other beneficiaries.

Am I personally liable for Rose’s debts?

No, you are not personally liable for Rose’s debts or for decisions you make on her behalf unless you acted beyond your authority or did not disclose that you were acting as Rose’s agent.

Do I have to serve as Rose’s trustee?

No. You are not required to serve as a trustee. If you want to decline to serve or withdraw, you should consult a lawyer.

When do my responsibilities end?

If Rose names a new trustee or ends the trust, your authority and responsibilities end. However, you may still have to collect the trust’s records and give them to the new trustee or to Rose.

What if I think a change in the trust was a result of fraud or abuse?

If you think Rose does not understand the decision to take away your authority or end the trust, then talk to a lawyer, contact Adult Protective Services, or call the police or sheriff. If a transaction with a bank or credit card company is involved, you should alert Rose's bank or credit card company. They may place a temporary hold on any transaction that involves Rose's account if they believe she is being exploited.

Can I manage digital assets held in the trust?

A digital asset is an electronic record in which Rose’s trust has a right or interest.  Email, social media, and online bank accounts are common examples of digital assets.  The person or business that carries, maintains, processes, receives, or stores Rose’s digital assets is called a custodian.

Whether the custodian of a digital asset will need to disclose the digital asset held in trust will depend on how the asset is held and what Rose’s trust says regarding the disclosure of those assets. 

If the account is held in the trust and the trustee was the original user of the account: 

Unless the trust agreement provides otherwise, the custodian is required to disclose to you, as the trustee, any digital asset of the account held in the trust. 

If an account is held in the trust but the trustee was not the original user of the account:

Unless the trust agreement provides otherwise, the custodian is required to disclose to you, as the trustee, the following information (i) the content of any electronic communications sent to or received by the original user or a subsequent user of the account that has been carried, maintained, processed, received, or stored by the custodian in the account of the trust, (ii) a catalogue of all electronic communications sent or received by an original or successor user and stored, carried, or maintained by the custodian in an account of the trust, and (iii) any digital assets in which the trust has a right or interest (other than the content of electronic communications).  The custodian can request certain documentation prior to making any disclosure.

When you contact a custodian in order to manage Rose’s digital assets held by that custodian, have the following documents ready, in case the custodian wants to review those documents:

  1. a written request for disclosure,
  2. a certified copy of the trust instrument or certification of trust that includes consent to disclose the content of electronic communication to the trustee, and
  3. a certification by you (under penalty of perjury) that Rose’s trust exists and that you are currently acting as trustee of that trust
  4. a unique identifier (e.g., a username) for the digital assets held by the custodian to identify the account and/or evidence linking those digital assets to the trust.

You always should remember that you owe Rose fiduciary duties, including a duty to keep Rose’s information confidential, when managing her digital assets.  Texas law prohibits you from managing digital assets held in the trust by impersonating Rose. 

What about other types of trusts?

Other types of trusts exist and people have different reasons for making trusts. This Guide only covers revocable trusts.

Revocable trusts most likely have family or a friend as a trustee. Other types of trusts often have professional trustees, such as a lawyer or bank trust officer.

Don’t expect others to know what a trustee is or does.

Others may not understand that you have been named as a trustee. They may think that you have more authority or less authority than you really have. You may need to educate them. You could show them this Guide.

Review vocabulary.

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