Texas Trust Administration: Managing a Trust After the Grantor Dies

When someone who created a revocable living trust — the grantor — passes away, the trust does not go through probate. Instead, the successor trustee steps in to manage and distribute the trust assets according to the trust document. This process is called trust administration, and it is governed in Texas by the Texas Trust Code, found in Texas Property Code Chapter 112.

If you have just been named successor trustee, this guide explains what you need to do, what your legal duties are, and how the process works from start to finish.

Trust Administration vs. Probate: The Key Difference

Probate is a court-supervised process for distributing a deceased person's estate. Trust administration, by contrast, is primarily private and out-of-court. There is no probate filing required for assets held in the trust. The successor trustee administers the trust under the terms of the trust document, with no routine court involvement.

This is the main reason people use revocable living trusts — to avoid the time, cost, and public nature of probate. Trust administration is typically faster and less expensive than probate, though it still requires careful work by the trustee.

A trust does not replace a will entirely. Most people with a trust also have a pour-over will that directs any assets outside the trust to "pour over" into the trust at death. Assets that were not properly transferred into the trust during the grantor's lifetime may still require a probate proceeding. See our revocable living trust guide for more on trust funding.

Your First Steps as Successor Trustee

When the grantor dies, the successor trustee's authority activates automatically. Your first steps:

1. Locate and Review the Trust Document

Find the original trust document and all amendments (called "restatements" or "amendments"). Read it thoroughly. The trust document is your rulebook — it tells you who the beneficiaries are, what they receive, when and how distributions are made, and what powers you have.

2. Obtain Certified Copies of the Death Certificate

You will need multiple certified copies (typically 6–10) of the death certificate to transfer assets. See our Texas death certificates guide for how to order them.

3. Notify Beneficiaries

Under Texas Property Code § 113.060, the trustee must notify beneficiaries of the trust's existence and their right to receive information. You should send written notice to all beneficiaries promptly after taking over as trustee, informing them that the grantor has died, that you are serving as successor trustee, and that they are beneficiaries of the trust.

4. Obtain a New Tax ID Number (EIN)

A revocable living trust uses the grantor's Social Security number during their lifetime. When the grantor dies, the trust becomes irrevocable and needs its own Employer Identification Number (EIN) from the IRS. Apply online at IRS.gov. The process takes minutes.

5. Open a Trust Checking Account

You will need a dedicated bank account in the trust's name (using the new EIN) to receive estate income, pay trust expenses, and make distributions. Do not mix trust funds with your personal funds.

Core Trustee Duties Under Texas Law

Texas Property Code Chapter 113 sets out the trustee's legal duties. These are not suggestions — they are legal obligations. Breaching them can result in personal liability.

Duty of Loyalty (§ 113.057)

The trustee must administer the trust solely in the interest of the beneficiaries. Self-dealing is prohibited. You cannot:

Buy trust assets for yourself (unless the trust document expressly allows it)
Borrow from the trust
Pay yourself excessive fees
Favor your own interests over the beneficiaries' interests

If you are also a beneficiary, you must be especially careful. Decisions must be based on what is good for all beneficiaries collectively, not just your own share.

Duty of Prudent Investor (§ 117.004)

The Texas Uniform Prudent Investor Act governs how a trustee invests trust assets. As trustee, you must:

Invest as a prudent investor would, considering the trust's purposes, terms, and beneficiaries' needs
Diversify investments unless it is clearly prudent not to
Consider risk and return together
Review the investment portfolio regularly

This means you should not let cash sit idle in a checking account for months if the trust is long-term. You also should not make speculative or highly concentrated investments. For large trusts, consider engaging a professional investment manager and document your decision.

Duty to Keep Separate

Trust property must be kept separate from your personal property. Do not commingle trust funds with your own. Maintain separate accounts clearly titled in the trust's name.

Duty to Inform Beneficiaries (§ 113.060)

You have an ongoing obligation to keep beneficiaries reasonably informed about the trust and its administration. Beneficiaries have the right to request information about the trust's assets and your actions as trustee. Be transparent and responsive.

Duty of Impartiality

If the trust has multiple beneficiaries — for example, an income beneficiary (receives earnings during their lifetime) and remainder beneficiaries (receive the principal when the income beneficiary dies) — you must balance their competing interests. Investing everything in high-income, low-growth assets may favor the income beneficiary at the expense of remainder beneficiaries, and vice versa.

Identifying and Transferring Trust Assets

What Is Already in the Trust

Property that was properly funded into the trust during the grantor's lifetime — real estate deeded to the trust, bank accounts titled in the trust's name — is already part of the trust estate. List all trust assets and gather documentation (deeds, account statements, brokerage records).

Real Property

Real estate in the trust transfers to beneficiaries by trustee's deed — a deed you sign as successor trustee conveying the property from the trust to the beneficiary (or to yourself as new trustee if the trust continues). You will need to record this deed in the county where the property is located.

Financial Accounts

Contact each financial institution, present the death certificate and a certification of trust (a short document certifying the trust's existence and your authority), and complete the institution's procedures for transferring the account.

Retirement Accounts and Life Insurance

These pass by beneficiary designation, not through the trust, unless the trust is named as beneficiary. Process them separately through the financial institution or insurance company.

Pour-Over Assets

Any assets that were outside the trust and must now "pour in" through the pour-over will require a probate proceeding. See our Texas probate guide for how to handle those assets.

Trust Accounting

Even though trust administration is not court-supervised, you must still keep accurate records and provide accountings to beneficiaries.

What to Record

Keep records of:

All assets at the time you took over as trustee (inventory)
All income received (interest, dividends, rent)
All expenses paid (trustee fees, taxes, property maintenance, professional fees)
All distributions made to beneficiaries
All investment transactions

Providing Accountings to Beneficiaries

Beneficiaries have the right to request a formal accounting under Texas Property Code § 113.151. When distributing the trust or periodically during long-term trust administration, provide beneficiaries with a clear accounting showing what came in, what went out, and what remains.

A good accounting protects you as trustee. It demonstrates you acted correctly and gives beneficiaries a chance to raise concerns before you close the trust.

Taxes During Trust Administration

Trust Income Tax Return

If the trust holds income-producing assets (rental property, dividends, interest), the trust will need to file its own income tax return — Form 1041 (U.S. Income Tax Return for Estates and Trusts) — for the year of death and for each year thereafter until the trust is fully distributed. Consult a CPA or tax attorney.

Final Income Tax Return for the Grantor

You may also need to coordinate with the grantor's family about filing the grantor's final Form 1040 for the year of death, covering income up to the date of death.

Estate Tax

Texas has no state estate tax. Federal estate tax only applies to estates exceeding the federal exemption (approximately $15 million per person in 2026). Most estates do not owe federal estate tax.

Step-Up in Basis

Assets held in a revocable living trust receive a step-up in tax basis at the grantor's death, just like assets that pass through probate. This means the beneficiary's cost basis for capital gains purposes is reset to the fair market value at date of death, often eliminating capital gains taxes on appreciation that occurred during the grantor's lifetime. See our step-up in basis guide for details, including the important community property advantage.

Distributing Trust Assets

When the trust's administration is complete — debts and taxes paid, assets transferred — you can distribute the remaining assets to beneficiaries as directed by the trust document.

Simple Distribution (Immediate Distribution Trust)

Many revocable living trusts are designed to distribute assets outright to beneficiaries as soon as administration is complete — similar to distributing an estate under a will. Once you have resolved all debts and taxes and transferred all assets, you make distributions and close the trust.

Ongoing Trust Administration (Continuing Trust)

Some trusts are designed to continue after the grantor's death — for example:

A trust that holds assets for minor beneficiaries until they reach a certain age
A trust that provides income to a surviving spouse for life, with principal passing to children afterward (a "marital trust" or "A/B trust")
A trust for a beneficiary with a disability

If the trust continues, you administer it on an ongoing basis — investing assets prudently, making distributions as directed by the trust document, filing annual tax returns, and providing regular accountings to beneficiaries.

Modifying or Terminating a Trust After Death

Once the grantor dies, the revocable trust becomes irrevocable. You generally cannot change its terms. However, limited modifications are possible:

Non-judicial modification: Under Texas Property Code § 112.054, a court can modify an irrevocable trust for certain reasons (changed circumstances, purpose impossible to achieve, modification consistent with settlor's intent)
Trustee and beneficiary agreement: In some circumstances, all beneficiaries and the trustee can agree to modify the trust
Decanting: Texas allows a trustee with broad distribution authority to "decant" — pour assets from one trust into a new trust with modified terms (Texas Property Code § 112.0715)

These are complex, attorney-assisted procedures. If you believe the trust terms are outdated, impractical, or harmful to beneficiaries, consult a trust attorney before taking any action.

Trustee Compensation

Texas Property Code § 114.061 provides that a trustee is entitled to reasonable compensation for services. What is "reasonable" depends on the complexity of the trust, the trustee's time and expertise, and local practice. Many professional trustees charge 0.5%–1% of trust assets annually. Individual trustees often charge less or take no fee when they are also beneficiaries.

Common Mistakes Trustees Make

Delaying too long. Beneficiaries expect reasonable progress. Allowing assets to sit uninvested or claims unresolved for months frustrates everyone.

Not opening a separate trust account. Commingling trust funds with personal funds is a serious breach of duty.

Distributing assets before taxes are settled. Distribute only after confirming there are no outstanding tax liabilities. The IRS can hold the trustee personally responsible for trust tax debts.

Ignoring a dissatisfied beneficiary. If a beneficiary has concerns, address them in writing and promptly. Unresolved disputes escalate into litigation.

Acting without authority. Read the trust document carefully before taking any action. Not all trustees have all powers. When in doubt, consult a trust attorney.

Related Guides

Sources:

"Texas Property Code Chapter 112, Trusts in General," Texas Legislature, 2025, https://statutes.capitol.texas.gov/Docs/PR/htm/PR.112.htm
"Texas Property Code Chapter 113, Administration," Texas Legislature, 2025, https://statutes.capitol.texas.gov/Docs/PR/htm/PR.113.htm
"Texas Uniform Prudent Investor Act," Texas Property Code Chapter 117, Texas Legislature, 2025, https://statutes.capitol.texas.gov/Docs/PR/htm/PR.117.htm

This guide provides general information about Texas trust administration. Consult with a Texas trust attorney for advice specific to your trust and situation.