A court may place litigation proceeds belonging to a minor or incapacitated person into a trust under Texas Property Code Section 142.005. The trust can protect the award without requiring an ordinary guardianship estate.
Frequently Asked Questions
When is Section 142 Trusts needed in Texas?
This commonly arises after a personal-injury, wrongful-death, or other settlement when the beneficiary cannot receive and manage the funds directly. The settlement structure must be planned before judgment or approval so the court receives a workable proposal.
How does Section 142 Trusts work in Texas?
The trust instrument, trustee qualifications, distribution standard, bond or security issues, fees, tax treatment, and public-benefit consequences should be addressed together. Counsel should compare a Section 142 trust with a guardianship management trust, special-needs trust, pooled trust, annuity, or court registry.
What are the limits of Section 142 Trusts in Texas?
The label does not guarantee Medicaid protection or eliminate court oversight. A commercial trustee’s minimum fees may be disproportionate for smaller awards, while a family trustee may lack the required qualifications or controls.
Questions to Consider
- What is the source, amount, and legal ownership of the funds?
- Does the beneficiary receive Medicaid, SSI, VA, housing, or another means-tested benefit?
- What level of court oversight, trustee service, liquidity, and reporting is practical?
Texas Law and Official Resources
Texas Property Code Section 142.005
Related Texas Resources
- Texas Guardianship Alternatives hub
- Trusts, Benefits & Settlements
- Guardianship Management Trusts in Texas
- Pooled Trust Subaccounts in Texas
- Special-Needs Trusts as an Alternative to Guardianship of the Estate
- Houston Estate Planning Attorney
Areas Served
The De Leon Law Firm advises Texas families on guardianship and its less restrictive alternatives throughout Sugar Land, Houston, Missouri City, Richmond, Rosenberg, Katy, Fulshear, and Cypress, and the surrounding Fort Bend and Harris County communities.
Talk With The De Leon Law Firm
A guardianship question is usually easier to answer after the legal problem is narrowed to a particular decision, asset, or period of incapacity. The De Leon Law Firm can review existing documents and identify whether a less restrictive Texas option may address the concern. Contact The De Leon Law Firm.