A trust is a relationship between the settlor, the trustee,and the beneficiary. An “express trust” means a fiduciary relationship with respect to property which arises as a manifestation by the settlor of an intention to create the relationship and which subjects the person holding title to the property to equitable duties to deal with the property for the benefit of another person. Tex. Trust Code § 111.004 (4).
The term “settlor” means a person who creates a trust or contributes property to a trustee of a trust. If more than one person contributes property to a trustee of a trust, each person is a settlor of the portion of the property in the trust attributable to that person’s contribution to the trust. The terms “grantor” and “trustor” mean the same as “settlor.” Tex. Trust Code § 111.004(14). A settlor may, but is not required to be, a trustee of the trust.
A trust cannot be created unless there is trust property. Tex. Trust Code § 112.005. Under the Texas Trust Code, “property” means any type of property, whether real, tangible or intangible, legal, or equitable, including property held in any digital or electronic medium. The term also includes choses in action, claims, and contract rights, including a contractual right to receive death benefits as designated beneficiary under a policy of insurance, contract, employees’ trust, retirement account, or other arrangement. Tex. Trust Code § 111.004 (12).
The “Trustee” means the person who holds the property in trust, including an original, additional, or successor trustee, whether or not the person is appointed or confirmed by a court. Tex. Trust Code § 111.004(18).
Finally, the term “beneficiary” means a person for whose benefit property is held in trust, regardless of the nature of the interest. Tex. Trust Code § 111.004(2). A person can be both a trustee and a beneficiary of a trust as long as the trustee does not hold all of the beneficial interests. It is common for a grantor to establish a trust for her sole lifetime benefit, name herself as trustee, and then provide that upon her death, the remaining property passes to other individuals.
One of the key features of a trust is the separation of legal and equitable title. If legal and equitable title merge, the trust relationship can be destroyed. If a settlor transfers both the legal title and all equitable interests in property to the same person or retains both the legal title and all equitable interests in property in himself as both the sole trustee and the sole beneficiary, a trust is not created and the transferee holds the property as his own. Tex. Trust Code § 112.034 (a). A generally trust terminates if the legal title to the trust property and all equitable interests in the trust become united in one person. Tex. Trust Code § 112.034 (b).