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Trustee vs Trustor: Understanding the Key Roles in a Texas Trust

When setting up or managing a trust in Texas, it’s essential to understand the two primary roles involved: the trustee and the trustor. These roles are foundational to how trusts function, and knowing their differences is critical if you’re planning your estate, managing assets, or named in a trust document.

At The Lange Firm, we help Texas families and professionals build, administer, and protect trusts. This article will break down the trustee vs trustor distinction, explore their legal responsibilities, and explain how these roles operate in both revocable and irrevocable trusts.

What Is a Trust?

A trust is a legal arrangement in which one party holds and manages property for the benefit of another. Trusts are commonly used for:

• Avoiding probate

• Protecting assets

• Reducing estate taxes

• Providing for minor children

• Managing long-term care or special needs plans

Every trust involves at least three parties:

• The Trustor (also called Grantor or Settlor)

• The Trustee

• The Beneficiary

Understanding each role helps clarify the function and legality of the trust agreement.

Who Is the Trustor?

The trustor is the person who creates the trust. This individual:

• Contributes property to the trust

• Sets the rules and terms under which the trust operates

• Chooses the trustee and beneficiaries

• Retains some rights (in revocable trusts)

In revocable living trusts, the trustor often serves as their own trustee during life and names a successor trustee upon death or incapacity.

Common alternate terms for trustor include:

• Grantor

• Settlor

• Creator

Example: A mother who sets up a trust to hold her home and savings for her children after she passes is the trustor.

Who Is the Trustee?

The trustee is the person (or institution) who manages the trust according to its terms. Responsibilities include:

• Administering assets

• Filing taxes

• Making distributions to beneficiaries

• Ensuring legal compliance

• Protecting the trust’s value

The trustee has a fiduciary duty—meaning they must act in the best interests of the beneficiaries and follow the terms of the trust precisely.

Trustees can be:

• A trusted family member or friend

• A financial advisor

• An attorney

• A corporate trustee or bank trust department

The Lange Firm offers guidance to both individual and corporate trustees to avoid breaches of fiduciary duty.

Trustee vs Trustor: Key Differences

What Happens If the Trustor and Trustee Are the Same Person?

In revocable living trusts, it’s common for the trustor and trustee to be the same individual—usually the person setting up the trust.

For example:
John sets up a living trust, names himself as trustee, and places his house and savings in the trust. Upon his death, his daughter becomes the successor trustee.

This structure gives the trustor full control over their assets during life while allowing for a smooth transfer after death.

However, in irrevocable trusts, the trustor generally cannot serve as trustee because:

• The trustor must relinquish control

• Trust assets no longer belong to the trustor

• Doing so could nullify tax or asset protection benefits

Trustee vs Trustor in Irrevocable Trusts

In irrevocable trusts, the differences between trustee and trustor are more legally significant. Once the trust is established:

• The trustor gives up control of the assets

• The trustee must manage the assets strictly according to the trust terms

• The trustor cannot make changes to the trust or reclaim assets

• The trustee must often act independently to preserve trust validity

These are common in:

• Medicaid planning

• Asset protection

• Special needs trusts

• Life insurance trusts (ILITs)

Insert backlink here to: “Does a Trust Protect Assets?”

Can You Remove or Replace a Trustee?

Yes, under certain conditions:

• The trust may allow the trustor (or beneficiaries) to remove a trustee

• A court can remove a trustee for misconduct, incapacity, or failure to perform

• In revocable trusts, the trustor can typically replace the trustee at any time

It’s important that trust documents clearly outline the procedure for trustee resignation or removal.

Can a Trustee Also Be a Beneficiary?

Yes. In many family trusts, a trustee is also a beneficiary. For example:

• A parent creates a trust for three children

• One child is named trustee

• All three children are equal beneficiaries

This is legal as long as the trustee still acts fairly and does not favor themselves over other beneficiaries.

To minimize conflict, many clients appoint neutral third-party trustees—especially in blended families or high-value estates.

Why the Difference Between Trustee and Trustor Matters

Failing to distinguish these roles can lead to:

• Conflicts of interest

• Invalid trusts

• Tax complications

• Improper asset transfers

• Probate litigation

The Lange Firm helps clients draft trust documents that clearly define the roles, rights, and duties of everyone involved.

How The Lange Firm Supports Texas Trust Clients

We work with:

• Individuals setting up revocable or irrevocable trusts

• Families with special needs or blended dynamics

• Trustees managing complex asset portfolios

• Beneficiaries disputing mismanagement

• Professionals serving as fiduciaries

Our team ensures your trust works as intended—now and in the future.

Final Thoughts: Trustee vs Trustor in Texas Estate Planning

Understanding the roles of trustee vs trustor is essential for anyone creating, administering, or benefiting from a trust. Whether you’re managing a trust today or planning for tomorrow, clarity in these roles ensures smoother administration and fewer legal surprises.

📞 Contact The Lange Firm today for a free consultation about creating or managing a Texas trust the right way.