Form 11-2

[Caption. See § 3 of the Introduction in this manual.]

Management Trust

This agreement establishes the terms of a management trust created for the benefit of [name of beneficiary], Beneficiary, in accordance with the order of the [designation] Court of [county] County, Texas, under the authority of chapter 1301 of the Texas Estates Code.

1.Trustee.      The trustee of the trust will be [name of trustee], Trustee. Trustee’s address is [address, city, county] County, Texas. On receipt of the funds constituting the cor­pus of the Trust, Trustee’s duties will begin in accordance with the terms of the trust. No bond or other security is required of Trustee or any successor trustee. However, Trustee currently maintains a financial institution bond in the amount of $[amount]. Trustee hereby agrees to maintain that bond or a similar bond subject to the reasonable commercial availability of such bonds. Trustee agrees to notify the Court within five days of learning that a bond is no longer available.

2.Beneficiary.      The sole beneficiary of the trust is Beneficiary, who was born on [date of birth]. Beneficiary currently resides at [address, city, county] County, Texas.

3.Trust Estate.      The trust will be funded with cash in the sum of $[amount] [describe funding, e.g., , which will be awarded to the trust on behalf of Beneficiary as a result of a judgment in Cause No. [number], styled “[style of case],” in the [designation] Court of [county] County, Texas]. This money will constitute the initial principal of the trust, which, together with all other properties acquired by the trust and all income therefrom, will consti­tute the trust estate of the trust.

4.Distributions from the Trust.      Trustee will pay to or apply for the benefit of Ben­eficiary such amounts out of the net income and principal (if income is insufficient) of the trust as are in the sole discretion of Trustee reasonably necessary to provide for the health, education, support, or maintenance of Beneficiary, subject to any applicable Texas Estates Code provisions. Any income not distributed will be added to the principal of the trust.

In making any discretionary payments to Beneficiary, Trustee will consider (a) the standard of living to which Beneficiary was accustomed before the creation of the trust, (b) any known resources of Beneficiary, (c) the ability of any person who is legally obligated to support Beneficiary to do so, and (d) any present or future Texas Estates Code provisions gov­erning the use and expenditure of funds held in management trusts.

Trustee may make any distribution required or permitted under the trust, without the intervention of any guardian or other legal representative, in any of the following ways: (a) to the legal or natural guardian of Beneficiary or to any person who has physical custody of Ben­eficiary; (b) to any person furnishing care, education, support, or maintenance to Beneficiary; or (c) by using the distribution directly for the benefit of Beneficiary.

No distribution from the trust may be made to or for the benefit of Beneficiary to satisfy any obligation if that obligation would otherwise be met from any federal or state assistance program if the trust had not been created. Trustee will not be responsible for making such a determination nor will Trustee be held liable for any distribution made in good faith that results in the loss of any federal or state assistance or for any distribution made pursuant to an order of any state agency requiring distribution for the benefit of Beneficiary.

Trustee is specifically authorized to pay accounting fees for preparation of Benefi­ciary’s personal income tax return and to pay any income tax owed by Beneficiary or the trust that is attributable to income generated by the trust.

5.Termination.      The trust will terminate when [Beneficiary turns [age]/the Court determines Beneficiary to be no longer incapacitated or on the death of Beneficiary]. On ter­mination, Trustee will pay all of the remaining trust estate of the Trust to Beneficiary, free of any further trust or, if Beneficiary is then deceased, to the personal representative of Benefi­ciary’s estate.

6.Revocability.      This trust may not be amended, altered, or revoked by Beneficiary or any guardian or other legal representative of Beneficiary but remains subject to amend­ment, modification, or revocation by the Court at any time before the termination of the Trust.

7.Spendthrift Provision.      Before the actual receipt of any distribution of any por­tion of the trust estate by Beneficiary, no property (whether income or principal) of the trust will be subject to anticipation or assignment by Beneficiary or to attachment by or the inter­ference or control of any creditor or assignee of Beneficiary or be taken or reached by any legal or equitable process in satisfaction of any debt or liability of Beneficiary. Any attempted transfer or encumbrance of any interest in the trust estate by Beneficiary before its actual dis­tribution will be void. In addition to being applicable to Beneficiary, this paragraph also applies to anyone other than Beneficiary who may be entitled to any portion of the trust estate on termination of the trust.

8.Trustee’s Investment Authority.      Trustee will invest the trust estate in accordance with the standards in chapter 113 of title nine of the Texas Property Code as amended or with any subsequent applicable law. Trustee may also invest all or any part of the trust estate in a common trust fund now or hereafter established by Trustee pursuant to the Texas Trust Code. The investments must be in federally insured, interest-bearing time or deposit accounts or obligations backed by the United States government or its agencies or instrumentalities or in mutual funds composed primarily of securities issued by the United States government or its agencies or instrumentalities and managed by investment management organizations having in excess of $10 billion in assets under management.

9.Trustee’s Compensation and Expenses.      Trustee will be entitled to be paid a fair and reasonable compensation for its services out of the trust assets, either annually, quarterly, or monthly, at its option. Compensation will be in accordance with customary and prevailing charges for similar services charged by corporate fiduciaries in [city, county] County, Texas and in compliance with the existing guardianship compensation statutes. Trustee’s compensa­tion will not exceed Trustee’s then-published fee schedule. Trustee will be entitled to recover from the trust all reasonable expenses incurred by Trustee in administration of the trust. Trustee’s initial fee and expense schedule has been attached to this trust agreement and approved by the Court at the inception of the trust, but the Court will review all trustee fees and expenses incurred and paid annually and will consider such paid fees in light of the then-prevailing charges for similar services by corporate fiduciaries in [city, county] County, Texas. The Court may, on its own motion or at the request of Trustee or any other party inter­ested in the welfare of Beneficiary, take any action it deems proper with respect to such fees and expenses.

Trustee’s fee schedule attached to this trust agreement constitutes the basis for Trustee’s compensation, subject only to review by the Court on an annual basis.

10.Administrative Provisions.      In the administration of the trust, Trustee will be authorized and empowered—

a.to exercise all the powers now or hereafter granted to trustees of express trusts by the Texas Trust Code or any corresponding statutes, except that in any instance in which the Texas Trust Code, the provisions applicable to management trusts created under the Texas Estates Code, or other statutory provision may conflict with the express provisions of this trust agreement, the provisions of this trust agreement will control; and

b.to adjust, arbitrate, compromise, abandon, sue on, defend, or otherwise deal with and settle all claims in favor of or against the trust and to engage and retain attorneys or accountants at any time reasonably necessary to provide for the prudent management and preservation of the trust.

11.Miscellaneous.      The trust also will be held and administered under the following terms and conditions:

a.The Trust will be governed in all respects by the laws of the state of Texas; jurisdiction and venue will lie in Texas in all matters involving the trust and those persons acting in connection with the trust.

b.Trustee will keep account books for the trust and all transactions involving the Trust and will furnish Beneficiary, or the person having the care and cus­tody of Beneficiary if Beneficiary is then under a legal disability, statements at least quarterly showing receipts and disbursements of income and corpus of the trust and a list of assets held by the trust. Trustee will prepare and file with the Court regular annual accounts and, on the termination of the trust, a final account. All accounts will be prepared and filed in the same manner and form required of a guardian under title 3 of the Texas Estates Code. Trustee will provide copies of all accounts to any then-serving guardian of Benefi­ciary’s person and any then-serving guardian of Beneficiary’s estate. All accounts are subject to court review and approval in the same manner as pro­vided in the Texas Estates Code. Trustee will not be responsible or liable to Beneficiary or any other person on account of any actions that Trustee may take or fail to take in Trustee’s good-faith reliance on any order or proceeding of the Court.

c.No person or entity dealing with Trustee under the trust will be obligated to see to the application of any money or property paid or delivered to Trustee, and no such person or entity will be obligated to inquire into the expediency or propriety of any transaction or the authority of Trustee to enter into and consummate any such transaction on terms Trustee may deem reasonably appropriate.

d.Trustee may not resign as trustee of the trust, nor may another trustee be sub­stituted in place of Trustee, without receiving prior authority from the Court to do so. If the trusteeship should become vacant, or on Trustee’s submission of an application to resign, the power to appoint a successor will be exercis­able by the Court alone.

e.The headings in this trust agreement are for convenience only and do not define or limit the scope or intent of the provisions to which they refer.

f.If any portion of this trust agreement is contrary to any applicable law or to the applicable rules and regulations of any authority regulating the activities of Trustee, the conflicting provision will be deemed deleted, and a provision as nearly alike in tenor, effect, and reading as will comply with such laws, rules, and regulations will be substituted in its place.

12.Inception of the Trust.      This trust becomes effective on the entry of the order to which this trust agreement is attached and the transfer of the above-described money to Trustee.

SIGNED on [date].

   
[Name of trustee]
Trustee
By:
[Name]
[Title]

The form and content of this trust instrument are hereby approved.

   
[Name of guardian]
Guardian

This instrument was acknowledged before me on [date] by [name of representative], as [capacity] of [name of trustee] as trustee, a state trust corporation, on behalf of the corpora­tion.

   
Notary Public, State of Texas