A Texas trust, including a Texas gun trust, may not exist where a single trustee is also the sole beneficiary. When this occurs the legal title and the beneficial interest merge. The trustee/beneficiary holds the property free of trust. “[O]ne of the most fundamental requirements for the creation of a trust is that the legal and equitable interests in the trust’s property be vested in different people.” Denton v. Seals, 169 B.R. 612,615 (Bkrtcy. W.D. Tex. 1994). This law has been codified in the Texas Property Code which provides that:
§ 112.034. MERGER.
(a) If a settlor transfers both the legal title and all equitable interests in property to the same person or retains both the legal title and all equitable interests in property in himself as both the sole trustee and the sole beneficiary, a trust is not created and the transferee holds the property as his own. This subtitle does not invalidate a trust account validly created and in effect under Chapter XI, Texas Probate Code. [click to continue…]