What is a trust account?

A trust account is a type of legal arrangement that allows for a third-party to manage and control the assets that are placed into it. In Texas, a trust account is usually set up in order to provide for the future needs of a beneficiary or beneficiaries, such as providing an inheritance for children upon the death of a parent. Trust accounts can also be used to provide for the ongoing care of a disabled individual, or to maintain assets to be used for charitable purposes. In Texas, trust accounts are outlined by the Texas Estates Code. The terms of the trust are determined by the person creating the trust, called the settlor. The settlor will specify when assets should be distributed, who should receive the assets (the beneficiaries), and how the trustee should manage the trust. The trustee is the person or party who is legally responsible for managing the trust. Often in Texas, a trust account will be used to protect assets from creditors and keep them out of the probate process. Probate is a legal process in which the assets of the settlor are divided and distributed after death. If assets are placed in a trust, they will not be subject to probate and will remain in the trust, according to the terms of the trust agreement. In Texas, trust accounts are often managed by banks, trust companies, or investment advisors. A trust agreement is a legal document that must be in writing and signed by all parties involved. If the trust agreement is not properly established, or if the terms are not followed, the trust account may be liable for legal action.

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