onecle - legal research

Court Opinions

State Laws

US Code

US Constitution

Texas Property Code - Section 112.035. Spendthrift Trusts

Legal Research Home > Texas Laws > Property Code > Texas Property Code - Section 112.035. Spendthrift Trusts

§ 112.035. SPENDTHRIFT TRUSTS. (a) A settlor may provide in the terms of the trust that the interest of a beneficiary in the income or in the principal or in both may not be voluntarily or involuntarily transferred before payment or delivery of the interest to the beneficiary by the trustee. (b) A declaration in a trust instrument that the interest of a beneficiary shall be held subject to a "spendthrift trust" is sufficient to restrain voluntary or involuntary alienation of the interest by a beneficiary to the maximum extent permitted by this subtitle. (c) A trust containing terms authorized under Subsection (a) or (b) of this section may be referred to as a spendthrift trust. (d) If the settlor is also a beneficiary of the trust, a provision restraining the voluntary or involuntary transfer of his beneficial interest does not prevent his creditors from satisfying claims from his interest in the trust estate. Text of subsec. (e) effective until January 1, 2006 (e) A beneficiary of the trust may not be considered a settlor merely because of a lapse, waiver, or release of the beneficiary's right to withdraw a part of the trust property if the value of the property that could have been withdrawn by exercising the right of withdrawal in any calendar year does not exceed at the time of the lapse, waiver, or release the greater of the amount specified in: (1) Section 2041(b)(2) or 2514(e), Internal Revenue Code of 1986; or (2) Section 2503(b), Internal Revenue Code of 1986. Text of subsec. (e) effective January 1, 2006 (e) A beneficiary of the trust may not be considered a settlor merely because of a lapse, waiver, or release of: (1) a power described by Subsection (f); or (2) the beneficiary's right to withdraw a part of the trust property to the extent that the value of the property affected by the lapse, waiver, or release in any calendar year does not exceed the greater of the amount specified in: (A) Section 2041(b)(2) or 2514(e), Internal Revenue Code of 1986; or (B) Section 2503(b), Internal Revenue Code of 1986. Text of subsec. (f) effective January 1, 2006 (f) A beneficiary of the trust may not be considered to be a settlor, to have made a voluntary or involuntary transfer of the beneficiary's interest in the trust, or to have the power to make a voluntary or involuntary transfer of the beneficiary's interest in the trust, merely because the beneficiary, in any capacity, holds or exercises: (1) a presently exercisable power to: (A) consume, invade, appropriate, or distribute property to or for the benefit of the beneficiary, if the power is: (i) exercisable only on consent of another person holding an interest adverse to the beneficiary's interest; or (ii) limited by an ascertainable standard, including health, education, support, or maintenance of the beneficiary; or (B) appoint any property of the trust to or for the benefit of a person other than the beneficiary, a creditor of the beneficiary, the beneficiary's estate, or a creditor of the beneficiary's estate; (2) a testamentary power of appointment; or (3) a presently exercisable right described by Subsection (e)(2). Added by Acts 1983, 68th Leg., p. 3332, ch. 567, art. 2, § 2, eff. Jan. 1, 1984. Amended by Acts 1997, 75th Leg., ch. 109, § 1, eff. Sept. 1, 1997; Acts 2005, 79th Leg., ch. 148, § 5, eff. Jan. 1, 2006.

Section:  Previous  112.008  112.009  112.010  112.031  112.032  112.033  112.034  112.035  112.036  112.037  112.051  112.052  112.053  112.054  112.055  Next

Speak with a Lawyer in Texas

Last modified: August 11, 2007