[ Tax Law Manual - TOC ] [ Ch 1 - Employing Unit ] [ Ch 2 - Employment ] [ Ch 3 - Employer ] [ Ch 4 - Taxes ] [ Ch 5 - Reports & Records ]
[ 1.1 - Definition ] [ 1.2 - General Discussion ] [ 1.3 - Individual ] [ 1.4 - Corporation ] [ 1.5 - Limited Liability Company ] [ 1.6 - Association ] [ 1.7 - General Partnership ] [ 1.8 - Joint Venture ] [ 1.9 - Limited Partnership ] [ 1.10 - Registered Limited Liability Partnership ] [ 1.11 - Joint Stock Company ] [ 1.12 - Trust ] [ 1.13 - Successor of a Deceased Person ] [ 1.14 - Trustee in Bankruptcy ] [ 1.15 - Other Related Items ] [ Ch 1 - Index ]
Chapter 1: Employing Unit	comments to: Tax Department

1.12 Trust

[ 1.12.1 - In General ] [ 1.12.2 - Investigation ]

This section discusses the aspects of the law that specifically apply to trusts.

1.12.1 In General

A trust is created through a written instrument transferring property to one person for the benefit of another person. Legal title and control of the property vests in the trustee, with equitable title to the property passing to the other person(s) known as the beneficiary or cestui que (pronounced set'-i-kuh) trust. The person transferring the property and creating the trust is usually referred to as the donor. The trustee usually has complete control of the property by reason of the trustee's legal title. The beneficiaries of the trust have equitable title, which is a right to have the legal title to the property transferred to them upon the performance of specified conditions. The trust agreement usually describes the rights of both the trustee and beneficiary, the conditions for transfer of legal title to the beneficiary and states whether the trust is revocable or irrevocable by the donor. Under the language of the Act, the "trust" is the employing unit.

1.12.2 Investigation

When it is represented on behalf of a business that it is owned and operated by a trust, the representation should be accepted and reports should be prepared in that manner. When the employing unit is a "trust," the records of the Commission should show the names of the trustees since all responsibility for management of the business is fixed in these people. The names of the beneficiaries of the trust need not be included in the Status Report. Individuals engaged by a trust company to perform services in connection with trust property are employees of the trust.

1.13 Successor of a Deceased Person

[ 1.13.1 - In General ] [ 1.13.2 - Investigation ]

This section discusses the aspects of the law that specifically apply to successors of deceased persons.

1.13.1 In General

The definition of "employing unit" names in the alternative the estate and the legal representative of a deceased person as the employing unit. Both types of employing units are considered separate employing units from the predecessor. The Commission will establish a new account under a new account number for an estate or for a legal representative of a deceased person who is a successor employing unit. Commission accounting with respect to such a successor employing unit is accomplished by styling the account to show both the name of the estate and the name of the legal representative of the estate. Since an estate has equitable interest it will always acquire the rate from the predecessor.

1.13.2 Investigation

Following the death of an "individual" employer, any one of several situations can exist. At the time of an investigation which occurs sometime after the death, more than one of these situations may have existed during the period between the death of the individual and the time of the investigation. Listed below are several possible situations.

The individual may have died intestate without administration of the estate.

Texas law provides that whenever a person dies intestate, the person's estate shall vest immediately in the heirs at law, but with the exception that the estate shall be liable and subject in the hands of the heirs to the payment of debts of the intestate.
The above statutory provision should be construed to have reference only to vesting of ownership in the business immediately after the death of the intestate. One cannot necessarily conclude that, immediately after the death of the individual, the business has been operated by and for the benefit of all the heirs. It is entirely possible that, by some agreement or settlement between the heirs, only a part of the heirs have come to be the owners and operators of the business. It might be represented that only a part of the heirs have been interested in the operation of the business.

The individual may have died intestate with administration of the estate.

As set out in item "a" above, the estate of the deceased individual vests immediately in the heirs. However, upon the issuance of letters of administration upon the estate, the administrator has the right to the possession of the estate and management of the affairs of the estate, subject to direction and control of the court which appointed him. The administrator cannot dispose of real estate without authorization by the court.
Letters of administration are issued by the clerk of the court after the court has entered an order finding that there is a necessity for an administration of the estate and the court has appointed an administrator. After the order of the court, the letters of administration are not issued to the administrator until the administrator has qualified by making the necessary bond, etc. The administrator can be construed to be the employing unit only after qualifying to receive letters of administration. To determine the date that the administrator qualified, the Probate Court file on the estate can be examined in the County Clerk's Office; particular attention should be given to the copy of the letters of administration.
It may be found that the letters of administration were issued very soon after the death of the individual employer. If the interim between the date of death and the date of letters of administration is a brief period, there should be no objection to showing the administrator as the immediate successor to the deceased individual. If this interim period extends over any considerable length of time, it may be necessary to recognize the heirs as the immediate successor to the deceased individual with a later acquisition by the administrator from the heirs. Should this possibility seem important, the facts will be submitted to the State Office for a decision.

The deceased individual had a will which has been probated but the letters of testamentary have not been issued.

Immediately upon filing of an application for probate of a will in the County Court, the estate vests in the legatees or devisees under the will. These persons will be recognized as composing the employing unit in the absence of a representation that, in fact, the business is and has been operated by less than all of those persons. This possibility is the same as described above.
The deceased individual had a will which has been probated and letters testamentary have been issued. The executor or administrator under the will takes possession of the estate and assumes control of the business as executor as of the date letters testamentary are issued. The executor or administrator under the will can be considered the employing unit as of the date letters testamentary are issued or as of the date of death if only a brief period of time has elapsed between the date of the death and the date of the letters. Should there be any extended period between the two dates, it may be necessary to recognize the devisees and/or legatees as composing the employing unit. Should this possibility seem important, the facts will be submitted to the State Office for a decision.
An executor (executrix), i.e., one not designated in the will as an independent executor (executrix), is required to post bond with the court. He (or she) must obtain permission of the court to either sell or obligate the assets of the estate.

An independent executor (executrix) must be so designated in the will. He (or she) posts bond only if so directed by the will. The executor operates free from control by the court except that an inventory and appraisal of assets of the estate must be filed. An independent executor may either sell or operate the business at will.
The Commission will recognize the sole heir, such as a surviving spouse, as the employing unit succeeding a subject individual employer if:

A representation is made to that effect, and
The employer died intestate and there has been no administration of the estate other than the filing of an affidavit of heirship, or
The employer died testate, the sole heir was named as independent executor (executrix), and there has been no probate proceedings other than the filing of an inventory and appraisal of assets with the court.

Texas Workforce Commission | Unemployment Tax