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Can a Trustee Be a Beneficiary of a Trust in Texas? Understanding the Legal Implications

When setting up a trust, one of the most important decisions is who to name as the trustee—the person responsible for managing the trust—and who will be the beneficiaries—those who benefit from it. But can one person wear both hats?

The answer is: Yes, a trustee can also be a beneficiary of a trust in Texas. However, this arrangement brings added complexity, fiduciary duties, and the potential for conflicts of interest.

At The Lange Firm, we help families and individuals in Sugar Land and across Texas structure trusts with clarity, legality, and confidence. In this article, we explain what it means for a trustee to also be a beneficiary, when it makes sense, and how to avoid common legal pitfalls.

What Is a Trustee?

A trustee is the person or entity appointed to manage and administer the trust in accordance with its terms. Their responsibilities include:

• Managing trust assets
  
  
• Making investments
  
  
• Paying taxes and expenses
  
  
• Distributing assets to beneficiaries
  
  
• Keeping accurate records
  
  
• Acting in the best interest of the beneficiaries
  
  

A trustee is bound by a fiduciary duty, meaning they must act honestly, prudently, and in good faith.

What Is a Beneficiary?

A beneficiary is the person (or people) who receive the benefits of the trust. This may include:

• Income from trust investments
  
  
• Real estate use or proceeds
  
  
• Final asset distributions (in a revocable or testamentary trust)
  
  

Beneficiaries may be current (receiving benefits now) or remainder (receiving assets later).

So, Can a Trustee Also Be a Beneficiary?

Yes—Texas law allows a trustee to also be a beneficiary of the same trust. This is common in family trusts, especially when:

• A parent names an adult child as both trustee and beneficiary
  
  
• A spouse sets up a revocable trust and acts in both roles
  
  
• A surviving spouse manages and benefits from a marital trust
  
  

But just because it’s legal doesn’t mean it’s always simple.

Risks of a Trustee Also Being a Beneficiary

While dual roles are allowed, they can create potential conflicts of interest and legal risks, including:

❌ Self-Dealing

A trustee cannot act in a way that benefits themselves at the expense of other beneficiaries. For example:

• Making investment decisions that favor themselves
  
  
• Taking early or excessive distributions
  
  
• Charging unreasonable trustee fees
  
  

❌ Breach of Fiduciary Duty

If the trustee fails to act in the best interests of all beneficiaries—or prioritizes their own interests—they can be sued for breach of fiduciary duty.

❌ Family Conflict

In blended families or multi-generational trusts, one sibling acting as both trustee and beneficiary can lead to tension or accusations of favoritism.

How to Protect a Trust When the Trustee Is a Beneficiary

To reduce risk and prevent disputes, consider the following safeguards:

✅ Clearly Written Trust Terms

The trust should clearly define:

• Distribution rules
  
  
• When and how the trustee can take a distribution
  
  
• Whether the trustee can benefit immediately or only in certain situations
  
  

✅ Co-Trustees or Backup Trustees

Adding a neutral co-trustee (such as an attorney or corporate fiduciary) can balance power and oversight.

✅ Periodic Accountings

A trustee should provide annual accountings to other beneficiaries to ensure transparency.

✅ Waivers or Acknowledgments

Other beneficiaries can sign a waiver acknowledging the trustee’s dual role, reducing the chance of future disputes.

When Is It a Good Idea?

Having a trustee also serve as a beneficiary can work well when:

• Trust is strong among family members
  
  
• The trustor wants a beneficiary to stay involved in asset management
  
  
• The trustor seeks simplicity and cost savings by avoiding corporate trustees
  
  

✅ The Lange Firm can help draft trust documents that legally and fairly address these arrangements.

When Should You Avoid It?

This setup may not be ideal when:

• There are multiple beneficiaries with competing interests
  
  
• The trustee has a history of poor money management
  
  
• You want professional management for complex assets
  
  
• Family dynamics are already strained
  
  

In those cases, a neutral third-party trustee may be a better solution.

What Happens If There’s a Dispute?

If other beneficiaries believe the trustee-beneficiary is abusing their power, they can:

• Request a formal accounting
  
  
• Ask the court to remove the trustee
  
  
• File a lawsuit for breach of fiduciary duty
  
  

📞 If you’re facing any of these issues, The Lange Firm can step in to resolve disputes or represent your interests in court.

How The Lange Firm Helps

At The Lange Firm, we help Texans:

• Draft custom trusts where a trustee may also be a beneficiary
  
  
• Avoid conflicts of interest through precise legal language
  
  
• Advise trustees on their fiduciary responsibilities
  
  
• Handle trust disputes and beneficiary claims
  
  
• Structure revocable, irrevocable, and testamentary trusts properly
  
  

Our goal is to protect families, preserve assets, and maintain peace through smart planning.

Final Thoughts

So, can a trustee be a beneficiary of a trust? Yes—but it must be handled with care. Legal, but not always simple, this dual role demands transparency, good faith, and smart planning to work effectively.

✅ Whether you’re setting up a trust, acting as a trustee, or concerned about your rights as a beneficiary, The Lange Firm is here to guide you through Texas trust law with clarity and confidence.

📞 Contact us today for a consultation and get the support you need to protect your trust, your family, and your future.