How to Set Up a Trust in Texas: Trustee, Funding, and Pour-Over Will

To set up a trust in Texas, you complete six steps in order: choose between a revocable or irrevocable trust, select a trustee, name your beneficiaries and inventory the assets you plan to place in the trust, draft a written trust agreement, sign it, and then fund the trust by retitling your property into its name. Texas Property Code Section 112.004 requires written evidence of the trust’s terms bearing the settlor’s signature, and Section 112.005 requires actual trust property, so a trust that is never funded is not really a trust.¹ Miss any step and the arrangement fails to do the job you built it for.

Step 1: Choose Revocable or Irrevocable

Make this decision before you draft anything. Texas law defaults to revocable. Under Property Code Section 112.051, you can revoke a trust unless the document expressly says it is irrevocable.² Silence on the point means you keep the power to change your mind.

A revocable trust, also called a living trust, keeps you in control. You can amend terms, change beneficiaries, or dissolve it during your lifetime. The trade-off: creditors can still reach the assets, and the property stays in your taxable estate. Most Texans setting up a first trust choose revocable because it avoids probate while preserving flexibility.

An irrevocable trust generally locks the terms in place once signed. Modification requires beneficiary consent or a court order under Section 112.054.³ In exchange, assets properly transferred to an irrevocable trust are typically shielded from your personal creditors and may fall outside your taxable estate. Irrevocable trusts fit people with substantial wealth, asset-protection goals, or Medicaid planning needs. When in doubt, start revocable and consult an estate planning attorney before making anything irrevocable.

Step 2: Select a Trustee

The trustee manages the assets, makes distributions, files tax returns, and follows the terms you set. For a revocable living trust, most Texans name themselves as initial trustee and continue running their own property day to day. The important pick is the successor trustee, who takes over when you die or become incapacitated.

The successor can be a family member, a trusted friend, or a corporate trustee such as a bank or trust company. Individuals work well when the trust is straightforward and the person is organized and willing. Corporate trustees charge annual fees, generally between 1% and 2% of asset value per year with occasional additional charges tied to income, but they bring professional investment management and continuity, and they handle the administrative burden.

Co-trustees are allowed. They spread the workload but can create friction if they disagree. Whatever route you take, always name at least one backup successor in case your first choice cannot or will not serve.

Step 3: Name Beneficiaries and Inventory Your Assets

Identify each beneficiary with a full legal name, and where useful, a date of birth or relationship. Vague language like “my children” is fine when you have two children and no complications, but it invites disputes when stepchildren, adopted children, or later-born children enter the picture. For a charity, use the full legal name and tax identification number.

Think through distribution terms. You can direct everything to be paid out at your death, or spread payments over time. For younger beneficiaries, staggered distributions at set ages, such as one-third at 25, one-third at 30, and the remainder at 35, keep a large inheritance from landing on someone who is not ready to handle it.

Build a detailed inventory of every asset you plan to place in the trust: real estate, bank accounts, brokerage accounts, business interests, vehicles, and valuable personal property. This inventory becomes your funding checklist. Section 112.005 requires trust property for a trust to exist, so the inventory defines the substance of what you are creating.¹

Step 4: Draft the Trust Agreement

The trust agreement is the governing document. Section 112.004 requires written evidence of the terms signed by the settlor or an authorized agent.¹ A handwritten document on notebook paper technically satisfies that, but sloppy or ambiguous drafting creates expensive problems later.

At a minimum, the agreement should cover:

Whether the trust is revocable or irrevocable, stated in plain language.
Trustee powers, including authority to buy, sell, and manage investments, borrow money, distribute income or principal, and hire professionals.
Distribution terms: when, how, and under what conditions beneficiaries receive assets.
Successor trustee provisions and the process for transition.
Incapacity planning for when you are serving as your own trustee but no longer able to.
Trust termination conditions and how remaining assets are distributed.

If the trust will hold assets for minor children, include a spendthrift provision. Under Section 112.035, a spendthrift clause prevents beneficiaries from voluntarily or involuntarily transferring their trust interest before the trustee actually delivers it, which shields the assets from a beneficiary’s creditors.¹ One limitation: if you are both the settlor and a beneficiary, a spendthrift clause will not protect your interest from your own creditors.

Step 5: Sign the Document

Texas law does not require witnesses or notarization for a trust to be legally valid. Your signature on the written document creates the trust. That said, notarization is a practical necessity. Transferring real estate into the trust requires a notarized deed, and financial institutions routinely refuse to retitle accounts without a notarized trust document. Sign the agreement in front of a notary, and have the trustee sign as well. The notary’s acknowledgment verifies identity and heads off later challenges to authenticity.

For a revocable trust, keep the original signed document in a fireproof safe or safe deposit box, and give copies to your successor trustee and your attorney. Unlike a will, a trust is a private document. It is never filed with any court or government office unless litigation forces it into the record.

Step 6: Fund the Trust

This is where most people stall, and it is the step that matters most. An unfunded trust is a binder full of good intentions. Property not formally transferred into the trust passes through probate as though the trust did not exist. Each asset on your inventory needs its own transfer.

Real Estate

Transfer a home or other real property with a new deed conveying title from your individual name to the trust. In Texas, this is typically a warranty deed or a special warranty deed. The deed identifies the grantor (you), the grantee (the trust, by its full name and date of creation), and a legal description of the property. Sign it in front of a notary, then record it with the county clerk in the county where the property sits.⁴

If the property is your homestead, moving it into a revocable living trust does not automatically strip your homestead property tax exemption. Texas Tax Code Section 11.13 defines a “qualifying trust” that preserves the exemption, as long as the trust instrument gives you the right to occupy the property as your principal residence rent-free for life. Include language in the trust that satisfies this requirement, or you can lose the exemption and pay more in taxes.

Financial Accounts

Bank accounts, brokerage accounts, and certificates of deposit are retitled by contacting each institution and completing their trust account paperwork. You will typically need to supply a copy of the trust agreement or a trust certification showing the trust name, date, trustee names, and taxpayer identification number. Each institution has its own forms and processing times, so plan on several weeks if you hold accounts at multiple banks.

Business Interests

Transferring an interest in an LLC, partnership, or closely held corporation into a trust takes extra care. Start by reviewing the operating agreement or bylaws for transfer restrictions. Many operating agreements require approval from other members before an ownership interest can be assigned. Once you have clearance, execute a written assignment transferring your interest to the trust, and update the company’s records to reflect the new owner.

Personal Property

Furniture, jewelry, art, collectibles, and other tangible items without formal titles transfer through a written assignment of property. The document lists the items and declares that you are transferring ownership to the trust. No public filing is required. Keep the signed assignment with the trust agreement, and update it when you acquire significant new items.

Retirement Accounts and Life Insurance

IRAs, 401(k)s, and life insurance policies do not get retitled into a trust. They pass by beneficiary designation. You can name the trust as a beneficiary, but doing so has real consequences for how quickly the money must be distributed after your death. Under the SECURE Act, a trust that is a beneficiary of a retirement account generally must distribute the entire balance within a compressed timeframe compared to an individual beneficiary, which can accelerate the tax bill.⁵ Talk to a tax advisor before naming a trust as the beneficiary of a retirement account. In many cases, naming individuals directly and using the trust for other assets produces a better tax result.

Community Property and Spousal Consent

Texas is a community property state, and that matters when funding a trust. Property acquired during marriage is presumed to be community property, owned equally by both spouses. Under Texas Family Code Section 3.102, community property that is not under one spouse’s sole management requires both spouses to act together to transfer it. Putting jointly owned community property into your trust without your spouse’s written consent can be voided as to your spouse’s half.

The safest approach is to have both spouses sign the trust agreement and any transfer documents. Many married couples in Texas create a single joint revocable trust or two separate trusts depending on their planning goals. Either way, both spouses need to participate. Quietly funding a trust with community assets without your spouse’s knowledge is not just poor planning; it can be legally invalid.

Back It Up With a Pour-Over Will

Even the most careful funding effort will miss something. You buy a car, open a new account, and forget to title it in the trust’s name. A pour-over will acts as a safety net by directing that any assets left outside the trust at your death be transferred into it. Texas Estates Code Section 254.001 expressly authorizes the arrangement, allowing a testator to devise property to the trustee of a trust established during the testator’s lifetime.⁶

The catch: assets that pass through a pour-over will must go through probate before reaching the trust. The will does not avoid probate; it just makes sure everything eventually ends up in the right place. Treat it as a backstop, not a substitute for proper funding. The more thoroughly you fund the trust during your lifetime, the less the pour-over will has to do.

Tax ID Number and Filing Requirements

Whether the trust needs its own tax identification number depends on the type. A revocable trust in which you serve as your own trustee does not need a separate Employer Identification Number during your lifetime. You keep using your Social Security number on trust accounts, and trust income appears on your personal Form 1040 as though the trust does not exist for tax purposes.

When you die or become incapacitated and a successor trustee steps in, the revocable trust becomes irrevocable and needs its own EIN. Any standalone irrevocable trust needs an EIN from the start. You can apply on the IRS website at no cost.

A trust with its own EIN must file IRS Form 1041 for any tax year in which it has gross income of $600 or more.⁷ The return is due by April 15 of the following year for calendar-year trusts. The trustee is personally responsible for filing on time and delivering Schedule K-1s to beneficiaries who received income.

Keep the Trust Current

A trust is not a set-it-and-forget-it document. Events that should trigger a review include marriage, divorce, the birth of a child or grandchild, the death of a trustee or beneficiary, a significant change in your financial situation, or a move to another state. Under Section 112.051, any modification of a revocable trust created by written instrument must also be in writing.²

Ongoing funding maintenance matters just as much. Every time you buy real estate, open a new account, or acquire a valuable asset, check whether it needs to be titled in the trust’s name. The most common reason living trusts fail to avoid probate is not a drafting mistake; it is an unfunded asset that was never transferred in. An annual half hour with your asset inventory prevents that outcome.

1
State of Texas. Texas Property Code Title 9 Subtitle B Chapter 112
2
State of Texas. Texas Property Code 112.051 – Revocation, Modification, or Amendment by Settlor
3
State of Texas. Texas Property Code 112.054 – Judicial Modification, Reformation, or Termination of Trusts
4
State of Texas. Texas Property Code Title 3 Chapter 11 – Provisions Generally Applicable to Public Records
5
Internal Revenue Service. Retirement Topics – Beneficiary
6
State of Texas. Texas Estates Code Chapter 254
7
Internal Revenue Service. 2025 Instructions for Form 1041 and Schedules A, B, G, J, and K-1