How Much Documentation Do You Need to Establish a Trust in Texas? 14 Words May Do.

   The Restatement of Trusts and Texas Trust Code describe 5 ways to create a trust: 1.) The grantor declares he’s the trustee over certain property, 2.) The grantor makes an inter vivos transfer of property to a trustee, 3.) The grantor makes a testamentary transfer of property to a trustee, 4.) The Grantor uses a power of appointment to transfer property to a trustee and, 5.) The grantor promises to create a trust, and the promise creates some type of enforceable rights.  The Uniform Trust Code includes all the above methods, save for making a promise with enforceable rights. 

    Conspicuously absent from these treatise is any guidance detailing what documentation is required, leaving that to state law.  Texas’ requires only that the property, object and beneficiary be clearly ascertainable in the available documents.  Several cases are illustrative.  The grantor in Barrientos v. Nava wrote the following in the beneficiary section of a Blue Cross/Blue Shield life insurance contract: “Barbara Nava Barrientos “Trustee for minor children Tyler & Brooke Nava Children 7-17-92 Tyler 2-16-94 Brooke.”  The court ruled these 14 words and 2 birthdays were sufficient to prove the existence of a trust.  Describing an individual as a trustee on a life insurance beneficiary form strongly implies the policy’s proceeds would supply the trust property while the person described as a trustee would perform that role.  Finally, the beneficiaries were clearly named and further clarified by including each child’s birthday. 

     A similar fact pattern occurs in Tomlinson v. Tomlinson, where the granter added the following information to his profit sharing plan’s death benefits: “Richard Lee Tomlinson II, Rileigh William Tomlinson, Trustee Lynn Tomlinson.”  Richard Lee and Rileigh William were the grantor’s sons while Lynn Tomlinson was the grantor’s wife.  As in Barrientos, the grantor in Tomlinson provided sufficient information to determine the trust property, the trustee and the beneficiaries, allowing the court to rule a trust existed.

   While Barrientos and Tomlinson dealt with language written on a death benefit, Davis v. Gayer involved the following language written on a deed: “Jim Gibson, Trustee for two (2) minor children, James R. Gibson, II and Adrian L. Gibson."  The court ruled these words provided sufficient information to determine the trust property, beneficiaries and object.  While the trust’s purpose was not directly stated, the court cited additional case, noting, “If a trust is set up for minor children, it is reasonable to conclude that the trust was intended for the general welfare of the children.”
    
    Why would a court rule that such minimal information was sufficient to establish the existence of a trust?  Doesn’t the court want additional information and documentation?  Of course they do; such a small amount of detail about the trust does nothing but invite conflict and ultimately, litigation.  But consider the words used in the above three cases, where the grantor specifically names a person and then added the word “trustee” after their name.  In all three cases, the word “trustee” is an “appositive” -- a noun placed after another noun for the express purpose of explaining or further identifying the first noun.  Describing the person as a “trustee” leaves little room for debate as to what they’re role is.  Furthermore, including the names of the grantor’s children in the same bequest strongly implies they are the beneficiaries.  In all these cases, the Texas Trust code fills in the holes left by the lack of any writing.
    
​    Given the information and the wording in each of these cases, it’s difficult to argue the grantor wanted to do anything except create a trust.  While it’s always better to write a complete trust document, it’s good to know that, if necessary, as few as 14 words written on certain documents can create a trust.