Management Trusts for a Child's Settlement in Texas

By the FigureMyTax Editorial Team · How we calculate

A Texas court may direct a child's settlement funds to a financial institution under a management trust. The trustee may disburse for the child's health, education, support or maintenance, and for a child who is not disabled the trust ends on death, at an age stated in it, or by the 25th birthday.

The trust

Tex. Prop. Code 142.005 lets a court of record, on application and a finding that a trust is in the beneficiary's best interests, direct the clerk to deliver funds from a judgment to a financial institution. The child must be the sole beneficiary, the trustee disburses in its discretion for health, education, support or maintenance, undistributed income goes into principal, and a trustee that is a financial institution serves without bond.

When it ends

For a minor who is not disabled under the federal definition, the trust ends on the child's death, on an age stated in the trust, or on the 25th birthday, whichever is first. The trust may make distributions at stated ages and percentages, or to a guardian or custodian. The court keeps supervisory power.

Who can be trustee

If the principal is $50,000 or less, the court may appoint someone other than a financial institution only if that is in the child's best interests. Above $50,000, only if no financial institution is willing and it is in the child's best interests.

What we did not find

We did not read the rules on structured settlements, or local rules on trusts. Read why a judge must approve and what we found about attorney fees, and see what is left in the Texas minor's settlement calculator.

This is general information, not legal advice, and the state comparisons above are illustrative, not an exhaustive survey. Confirm how Texas's rules apply to your specific case with a licensed Texas attorney.