Management Trusts

Statutory Trusts Under Texas Estates Code Chapter 1301

Texas Estates Code Chapter 1301 authorizes the creation of a statutory trust—often referred to as a 1301 Trust—which is a court-created special needs trust for the benefit of a minor or an incapacitated adult.

Purpose and Use

A 1301 Trust is typically established when a minor or ward is legally incapacitated and unable to manage financial assets. In the case of minors, the incapacity is presumed by law due to age. These trusts are most often used when the individual is set to receive funds from an inheritance, settlement, or as a named beneficiary.

Application Process

To establish a 1301 Trust, an application must be filed with the court, following the same service and notice requirements as a guardianship proceeding. The applicant must provide evidence of the ward’s or minor's inability to manage their finances.

Trustee Appointment

In most cases, the court will appoint a corporate fiduciary—such as a bank or financial institution—to serve as the trustee. This ensures professional management of the trust assets in accordance with the ward's or minor's best interests.

Key Differences from Guardianship

While guardianships and management trusts share similarities, there are key distinctions: 

• Unlike guardianships, 1301 Trusts do not need to be registered with the Texas Judicial Branch Certification Commission (JBCC).
• Trustees are not required to undergo a background check

However, the trust does remain under court supervision, and the trustee is required to file annual accountings with the court to report on the trust’s activity.

Duration of the Trust

If the trust is established for a minor, it typically remains in effect until the minor reaches the age of 25, unless otherwise ordered by the court. Trusts that are established for those that are incapacitated last until the ward passes or a court order closes the trust.

Work With Experienced Texas Guardianship Attorneys

Managing assets on behalf of a loved one is a serious responsibility, and a 1301 Trust can provide both structure and protection. The guardianship attorneys at Hammerle Morris can guide you through the application process, explain how these trusts differ from guardianship, and help you determine the best approach for your family’s circumstances.