Bill > HB4058

This bill establishes a comprehensive legal framework for self-settled asset protection trusts (APTs) in Texas, which are trusts where the person who creates the trust (the settlor) can also be a beneficiary while protecting the trust assets from the settlor's creditors. The bill creates detailed requirements for establishing such a trust, including that it must be irrevocable, cannot be intended to defraud creditors, and must have at least one trustee who is a Texas resident, trust company, or financial institution. The trust can have various complex provisions, such as allowing the settlor to hold certain powers like removing trustees or directing investments, but cannot allow the settlor to directly distribute money to themselves. The bill provides strong protections against creditor claims, including time limitations on when creditors can challenge transfers to the trust (generally within two years of the transfer) and requiring creditors to prove by "clear and convincing evidence" that a transfer was fraudulent. The trust can benefit the settlor's spouse, children, or dependents, but they must be specifically named in the trust document. Importantly, the bill includes a specific carve-out that these protections do not apply to court-ordered child support obligations if the beneficiary is more than 30 days behind in payments. The legislation will take effect on September 1, 2025, and applies to trusts created on or after that date.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB4058