What is a trust agreement?

A trust agreement is a legal document that sets up a trust, which is a legal arrangement that manages assets for the benefit of a beneficiary. In a trust agreement, the trustor (person creating the trust) transfers assets to a trustee (person in charge of the trust) to be held, managed, and administered for the benefit of the beneficiary. To create a trust agreement in Texas, there must be a trustor, a trustee, and a beneficiary. The trustor conveys property (assets) to the trustee, who is then responsible for managing the assets for the benefit of the beneficiary. The trustor also sets the rules for how the trustee should manage the trust assets, such as when and how the beneficiary is to receive money or other assets from the trust. Additionally, the trustor can determine the length of the trust and when it will dissolve. Trusts are commonly used in estates and gift planning, as well as other financial planning strategies. A trust can be used to help avoid or reduce estate taxes, protect assets from creditors, and provide for the care of an individual who is unable to manage his or her own assets. A trust agreement typically includes the trustor’s wishes for how the trust assets will be distributed to the beneficiary. It can also include provisions about how the trust assets can be invested and managed.

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