Texas Trusts & Clauses

by N. Dean Hawkins

Quickly solve trust-drafting challenges with these pattern clauses, helpful suggestions, and tax considerations

A deep and ready reservoir of pattern trust clauses can help the estate planner provide a comprehensive document, address changing circumstances, and adeptly handle novel situations. 

   N. Dean Hawkins shares 180 clauses in Texas Trusts & Clauses.  His are annotated with usage recommendations, tax consequences, recent case law, and drafting issues.  He covers:

Formation

• Funding issues.  §2:20

• Using a pour-over will to place the personal residence in a trust.   §2:25

• Undisclosed vs. dry trust.  §2:42

• Special warranty deed language.  §2:44

• Restrictions to lender’s due-on-sale clauses.  §2:45

• Letters notifying insurer of transfer of real property.  §2:51 and §2:52

• Considerations before transferring ownership in privately-held companies, §2:80, partnerships, LLCs, or family limited partnerships, §2:81, oil and gas interests, §2:84, and sole proprietorships, §2:88

• Assignment of partnership or limited liability interest.  §2:82

• Mineral deed, §2:85, and assignment of mineral lease, §2:86

• Bill of sale for transfer of personal property, §2:89, and assignment of accounts receivable and trade names, §2:90

• Avoiding malpractice and conflict issues when characterizing assets.  §2:112

• Waiver of conflicts of interest for property characterization.  §2:113

Property issues

• Partitioning community property by agreement.  §3:25

• How to avoid commingling upon transfer to a revocable trust, with clause.  §3:26

• Common issues when transferring real property to a revocable trust.  §3:30

• Reconciling planning objectives for retirement benefits at participant’s death.  §3:190

• Qualifying a distribution to the non-participant spouse for the marital deduction.  §3:210

• Prolonging tax benefits with a rollover in the name of the surviving spouse.  §3:211

Revocable management trusts

• When to use, §6:02, planning issues, §6:03, and pros and cons of the decisions required by funding, §6:11

• Additional documents required, with model forms.  §6:20

• Analysis of alternatives.  §6:30

• Compared to guardianship proceedings, §6:34, statutory management trust, §6:40, and management of community property by spouse, §6:50, and durable powers of attorney, §6:60.

• Use for investment planning.  §6:70

Marital estate tax planning

• Advantages and disadvantages of a marital deduction formula clause, with pattern clauses.  §8:21

• Complex pecuniary form clause advantages, with samples.  §8:39

• The types of funding clauses.  §8:60

• Using multiple types of clauses.  §8:63

• Recognizing gain or loss on distribution.  §8:70

• Date of distribution value funding advantages and disadvantages, with clauses.  §8:80

• Fairly representative funding pros and cons, problem avoidance, and clauses.  §8:90

• Minimum worth funding positives and negatives, with form. §8:100

• Reverse pecuniary formula common uses, with form.  §8:110

• Funding issues with the various formulas.  §8:120

• Fractional share marital formula, with clause.  §8:130

• Conflicts in funding.  §8:150

Marital trusts

• Advantages and disadvantages of an estate trust, with form.  §11:41

• General power of appointment trust requirements, usage, tips, and clauses.  §11:51

• Comparison of QTIP trust with charitable remainder to a charitable remainder trust.  §11:72

• QTIP trust requirements, effect on valuation discounts, and marital deduction savings clause.  §11:80

• QTIP election issues, effect of unnecessary QTIP election, and partial QTIP election.  §11:90

• Gift tax consequences.  §11:120

• Transferring income tax interests: full, §11:122, and partial, §11:123.

• Administration of QTIP trusts.  §11:160

• Avoiding general power of appointments, with form.  §11:161

• Limited power of appointment forms.  §11:172

Non-marital trusts

• Suitability of surviving spouse as trustee, §12:31, and estate and gift tax implications, §12:32.

• Determining which type of invasion power or withdrawal right is appropriate.  §12:41

• When to use mandatory distributions.  §12:51

• Structuring the non-marital trust to qualify for the QTIP election, with form.  §12:52

• Planning issues with sprinkling distributions, with forms. §12:61

• Planning issues with limited powers of appointment, benefits and detriments, and forms.  §12:91

• Use of non-marital trust for small estates.  §12:101

• Drafting considerations for death of the surviving spouse, with form.  §12:110

• Reasons to include disclaimer trust provision.  §12:121

• Substituting a disclaimer trust for a pecuniary formula non-marital trust.  §12:126

Trustees

• Third-party trustees.  §15:03

• Trustees for a generation-skipping trust.  §15:32

• Ethical issues and fees when attorney is trustee.  §15:70

• Trustee exculpatory clauses.  §16:14

• Appointing successor trustees.  §16:30

• One spouse vs. two spouses as trustee.  §16:40

• Trustee removal, §16:70, and its tax consequences, §16:90

• Powers and liability of successor trustee, with form limiting liability.  §16:100

Trustee powers and duties

• Exceptions to statutorily-prohibited activities.  §17:04

• Guidelines for drafting the trustee’s powers.  §17:10

• Prudent investor considerations.  §17:23

• Drafting trustee investment powers, with 11 clauses.  §17:30

• Unproductive or underproductive assets.  §17:60

• Trustee’s liability for acts of agent, with form.  §17:71

• Drafting trustee’s management powers, with 8 clauses.  §17:80

• Borrowing and lending.  §17:110

Allocations

• Drafting considerations and tax implications.  §18:10

• When to include detailed allocation clauses.  §18:13

• Factors to consider in adjusting the allocation, with clause.  §18:21

• Accounting issues with bonds.  §18:60

• Apportioned receipts.  §18:70

• Allocation among successive beneficiaries, with form.  §18:190

• Tax adjustments, with form.  §18:210

Updated annually.  ISBN 1-58012-134-9.  Book Price: $129

Related Titles:

Texas Estate Planning

Texas Probate Forms & Procedures