Houston, Texas - Whitney L. Thompson, a Houston trust attorney and founding attorney of The Law Office of Whitney L. Thompson, PLLC (https://www.wthompsonlaw.com/how-to-set-up-a-simple-trust/). has released a comprehensive, step-by-step resource explaining how to set up a simple trust in Texas. The guide outlines the legal framework under the Texas Trust Code, practical drafting considerations, and federal tax reporting points, giving families and fiduciaries a clear path from creation to ongoing administration.
A Houston trust attorney regularly advises that a “simple trust” is a non-grantor trust that distributes all income to beneficiaries annually, does not make principal distributions during the tax year, and does not make charitable gifts. Under federal rules, beneficiaries report the income on individual returns, while the trust files Form 1041 when required. Filing is generally triggered by any taxable income, or by gross income of at least 600 dollars, or by the presence of a nonresident alien beneficiary. The guide explains how capital gains are typically allocated to principal and taxed at the trust level unless the governing instrument or applicable law treats gains as income or includes them in distributable net income and pays them out.
The new material from the Houston trust attorney details why a simple trust may be appropriate for families seeking predictable income distributions while preserving principal for long-term goals. Investors holding dividend-paying stocks, bond ladders, or rental property may favor this structure because income can be measured and paid without discretionary judgments. The guide also addresses situations in which a different structure may be preferable, such as when beneficiaries need access to principal for education or health expenses, or when charitable planning is contemplated.
In addition to tax treatment, the Houston trust attorney’s guide breaks down key formation steps. It covers drafting the trust agreement with clear identification of grantor, trustee, and beneficiaries; defining what counts as income under the instrument; and stating any Texas-specific administrative provisions. It also presents a funding checklist: executing and recording deeds for Texas real property, retitling bank and investment accounts in the name of the trust, and documenting transfers of personal property. Common pitfalls are highlighted, including failure to retitle assets, incomplete transfers, and outdated beneficiary designations on life insurance or retirement accounts. The resource further notes trustee duties, recordkeeping, annual K-1 reporting to beneficiaries, and procedures for amendments consistent with Texas law.
The guide emphasizes practical administration. Trustees must prudently manage assets, keep accurate books, and make timely income distributions required by the instrument. Regular reviews following marriages, divorces, births, significant financial changes, or statutory updates help keep the instrument aligned with current goals. Clear communication among trustees and beneficiaries reduces disputes and supports smooth operations year after year.
About The Law Office of Whitney L. Thompson, PLLC:
The Law Office of Whitney L. Thompson, PLLC is a Houston-based firm serving Harris County and surrounding communities. The firm handles trusts and estates, wills, probate administration, guardianships, and related planning matters, including prenuptial agreements, medical powers of attorney, and HIPAA releases for college-age children. Led by attorney Whitney L. Thompson, the firm focuses on practical, plain-language guidance and diligent implementation from drafting through funding and administration. For consultations, call (281) 214-0173 or visit the firm’s website to schedule an appointment.
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Website: https://www.wthompsonlaw.com/
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Company Name: The Law Office of Whitney L. Thompson, PLLC
Contact Person: Whitney L. Thompson
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Phone: (281) 214-0173
Address:4201 Farm to Market 1960 Rd W Suite 360, Box #116B
City: Houston
State: Texas 77068
Country: United States
Website: https://www.wthompsonlaw.com/
