Imagine a couple signs a trust agreement. Their attorney explains that the house, investment account, and business interest will eventually be managed for their children. Everyone leaves the meeting feeling that the plan is finished.
But years later, when the family needs the trust to operate, someone asks a deceptively simple question:
What property was actually transferred to the trust?
That question sits at the center of a recent Texas Business Court opinion, Preston Hollow Capital, LLC v. Truist Bank, issued August 14, 2026. The dispute involved a bond-financing arrangement rather than a family estate plan, but the court’s reasoning carries an important lesson for anyone using a revocable living trust or another trust-based plan.
The hidden mechanism
The Texas Trust Code applies to an “express trust.” Under Texas Property Code section 112.002, a trust is created only when the settlor manifests an intention to create one. But intent is only part of the structure.
The court explained that, when a settlor transfers property to another person as trustee, the transfer must be effective. Texas law also recognizes a property owner’s declaration that the owner holds property as trustee. In Preston Hollow, the documents repeatedly used the word “trust” and identified a trustee. But the court concluded that the documents did not transfer legal title in the way required to create an express trust.
The court also relied on section 111.003 of the Texas Property Code, which distinguishes an express trust from arrangements such as a mortgage, deed of trust, or other security instrument.
The result was significant: the documents did not create the statutory trust relationship the plaintiff claimed. The trustee’s duties were instead governed primarily by the contracts themselves.
This was a Business Court opinion about commercial financing - not a ruling about a family’s revocable living trust. Still, the structural point is highly relevant to estate planning:
A trust is not created merely because a document uses trust terminology. The legal relationship depends on the document’s terms and the property actually placed into the trust.
Why funding matters
Suppose a trust agreement says that a trustee will manage a residence for the benefit of a couple’s children. If the deed still names the parents individually and no effective transfer is completed, the trust may not control that residence during administration.
The same issue can arise with:
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- Bank and investment accounts
- Closely held business interests
- Mineral interests
- Rental properties
- Life-insurance and retirement-account beneficiary designations
- Personal property that requires a separate assignment or title document
A carefully drafted trust that is never funded may function more like an instruction than an operating ownership structure.
That does not mean every asset must be transferred into every trust. Some assets are intentionally handled through beneficiary designations, joint ownership, transfer-on-death instruments, or other planning tools. The point is that each asset needs a deliberate decision.
A practical review
Families reviewing a trust-based estate plan should ask:
- What assets are supposed to be owned by the trust?
- Is there a deed, account registration, assignment, or other transfer document?
- Do the current title and beneficiary records match the plan?
- Are any assets intentionally outside the trust?
- Who is responsible for confirming that transfers were completed?
- Has the plan been reviewed after a move, refinancing, business change, marriage, divorce, or major purchase?
The strongest estate plans are not just signed. They are coordinated across the documents, the asset titles, and the family’s real-world changes.
The takeaway
Preston Hollow does not invalidate properly created Texas trusts. Instead, it reinforces a basic drafting principle: legal labels do not replace legal structure.
For estate planning, the signature ceremony is only one milestone. The more important question may come afterward: did the intended property actually move into the intended plan?
WG Law can help families review whether their documents, titles, and beneficiary designations work together as intended.
This article provides general legal information, not legal advice, and does not create an attorney-client relationship. Texas law and individual circumstances can affect the result.