Becoming a Successor Trustee in Texas: Your Duties and a Beneficiary's Right to an Accounting

Quick answer: A successor trustee in Texas must administer the trust in good faith, according to its terms and the Trust Code (Property Code Sec. 113.051). Where the document and the code are silent, the trustee also carries the duties imposed by the common law. A beneficiary can demand a written statement of accounts by written demand (Sec. 113.151). If the trustee does not deliver it by the 90th day, any beneficiary can sue to compel it, and the court may award attorney’s fees against the trustee, even personally. If you were just named in a Houston family’s trust, start with the document and the records before you move any money.

What should a successor trustee do first?

Slow down. Locate the complete trust document, identify and secure trust property, review the instructions, gather financial records, and avoid making distributions until you understand your responsibilities. Legal and tax professionals may need to be consulted before major actions are taken.

Families often press for a quick distribution, especially after a death. Holding off for a short time while you learn what the trust says and what it owns is part of doing the job correctly. If the trust holds a house, look at how title is held and whether the deed was ever recorded. Our page on trust administration covers what the firm can help with.

What is a trustee’s general duty in Texas?

Sec. 113.051 is short and worth reading in full: “The trustee shall administer the trust in good faith according to its terms and this subtitle. In the absence of any contrary terms in the trust instrument or contrary provisions of this subtitle, in administering the trust the trustee shall perform all of the duties imposed on trustees by the common law.”

Three sources of duty, then: the trust’s terms, the Trust Code, and the common law where the first two do not speak. In ordinary terms, a trustee may need to safeguard trust property, keep appropriate records, communicate with beneficiaries, address expenses and obligations, and distribute assets according to the trust’s instructions.

What can’t a trustee do with trust property?

The Trust Code singles out self-dealing. Unless an exception applies:

• A trustee may not lend trust funds to the trustee or an affiliate, to a director, officer or employee of the trustee or an affiliate, to a relative of the trustee, or to the trustee’s employer, employee, partner or other business associate (Sec. 113.052).
• A trustee shall not directly or indirectly buy or sell trust property from or to the same kinds of people, with some differences in the list (Sec. 113.053).

Both sections have exceptions, including loans to a beneficiary in certain situations. Family trustees get caught here without meaning any harm, because lending a brother money from the trust can feel like common sense. Check before you do it.

What can a beneficiary demand?

Under Sec. 113.151(a), “a beneficiary by written demand may request the trustee to deliver to each beneficiary of the trust a written statement of accounts covering all transactions since the last accounting or since the creation of the trust, whichever is later.”

Notice two details. The demand has to be in writing, and the statement goes to each beneficiary, not only the one who asked. The statement also reaches back to the last accounting or the creation of the trust. If nobody has ever prepared one, that can be a long period, which is the best argument for keeping good records from day one.

What must the accounting show?

Sec. 113.152 lists the contents.

The statement must show	In plain terms
All trust property not previously listed or inventoried	Everything that has come to you that was not on an earlier list
A complete account of receipts, disbursements and other transactions	What came in and what went out, with source and nature, with principal and income shown separately
A listing of all property being administered	Each asset, with an adequate description
The cash balance on hand	With the name and location of the depository
All known liabilities owed by the trust	What the trust owes

What happens if a trustee does not respond?

If the trustee fails or refuses to deliver the statement on or before the 90th day after receiving the demand, or after a longer period ordered by a court, any beneficiary may file suit to compel it. If the beneficiary wins, the court may in its discretion award all or part of the costs of court and the beneficiary’s reasonable and necessary attorney’s fees and costs against the trustee, “in the trustee’s individual capacity or in the trustee’s capacity as trustee.”

That last phrase is the one to take seriously. A trustee may face disputes or potential liability when fiduciary responsibilities are breached or trust property is mishandled. The trustee is not required to account more often than once every 12 months unless a court requires it, and a separate provision, Sec. 113.151(b), lets an interested person sue to compel an account as well.

Can you get help as a trustee?

Yes. Sec. 113.018 lets a trustee employ attorneys, accountants, agents, including investment agents, and brokers reasonably necessary in the administration of the trust estate. You do not have to work this out alone.

If you are on the other side of this, setting up your own living trust, keep the job in mind when you pick a successor. Think about who can keep records, handle difficult relatives and say no. Your choice of trustee can change while the trust is revocable. It also helps to know where this role fits against a will and against the agent under a durable power of attorney, since an agent’s authority ends at death and a trustee’s job often starts there.

Why work with Gordon Law & Associates as a trustee

Gordon Law & Associates provides practical legal guidance to trustees: reviewing the governing documents, explaining the trustee’s responsibilities, identifying next steps and addressing questions that come up during administration. Attorney Pamela Y. Gordon’s practice also covers real estate and title issues, which is useful when the main trust asset is a house.

Call (713) 837-7875 for a free consultation, in English or Spanish, or contact the firm.