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A BILL TO BE ENTITLED
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AN ACT
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relating to trusts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 41.0021(a), Property Code, is amended to |
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read as follows: |
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(a) In this section, "qualifying trust" means an express |
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trust: |
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(1) in which the instrument or court order creating |
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the express trust, an instrument transferring property to the |
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trust, or any other agreement that is binding on the trustee |
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provides that a settlor or beneficiary of the trust has the right |
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to: |
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(A) revoke the trust without the consent of |
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another person other than a spouse who is also a settlor of the |
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trust; |
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(B) exercise an inter vivos general power of |
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appointment over the property that qualifies for the homestead |
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exemption, either alone or when aggregated with property subject to |
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an inter vivos general power of appointment held by a spouse who is |
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also a settlor of the trust; or |
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(C) use and occupy the residential property as |
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the settlor's or beneficiary's principal residence at no cost, or |
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rent free and without charge, except for [to the settlor or |
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beneficiary, other than payment of] taxes and other costs and |
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expenses specified in the instrument or court order: |
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(i) for the life of the settlor or |
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beneficiary; |
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(ii) for the shorter of the life of the |
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settlor or beneficiary or a term of years specified in the |
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instrument or court order; or |
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(iii) until the date the trust is revoked or |
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terminated by an instrument or court order that describes the |
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property with sufficient certainty to identify the property and |
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that is recorded in the real property records of the county in which |
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the property is located [and that describes the property with |
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sufficient certainty to identify the property]; and |
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(2) the trustee of which acquires the property in an |
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instrument of title or under a court order that: |
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(A) describes the property with sufficient |
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certainty to identify the property and the interest acquired; and |
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(B) is recorded in the real property records of |
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the county in which the property is located. |
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SECTION 2. Section 112.035, Property Code, is amended by |
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adding Subsections (f-1), (f-2), and (f-3) to read as follows: |
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(f-1) A beneficiary of the trust or the estate of a |
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beneficiary of the trust may not be considered to be a settlor |
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merely because the beneficiary, in any capacity: |
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(1) held or exercised a testamentary power of |
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appointment other than a general power of appointment; |
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(2) held a testamentary general power of appointment; |
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or |
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(3) exercised a testamentary general power of |
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appointment in favor of or for the benefit of the takers in default |
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of the appointive assets. |
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(f-2) If a beneficiary of the trust exercised a testamentary |
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general power of appointment in favor of or for the benefit of any |
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appointee other than the takers in default of the appointive |
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assets, the appointive assets are: |
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(1) subject to the claims of creditors of the |
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beneficiary, but only to the extent the beneficiary's own property |
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is insufficient to meet the beneficiary's debts; and |
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(2) unless appointed to the beneficiary's estate, not |
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subject to: |
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(A) administration as a part of the beneficiary's |
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estate; |
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(B) recovery by the personal representative of |
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the beneficiary's estate, except as provided by Section 2207B, |
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Internal Revenue Code of 1986; or |
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(C) the payment of taxes or administration |
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expenses of the beneficiary's estate. |
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(f-3) For the purposes of Subsections (f-1) and (f-2), |
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"general power of appointment" has the meaning assigned by Section |
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2041(b)(1), Internal Revenue Code of 1986. |
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SECTION 3. Sections 112.036(b) and (c), Property Code, are |
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amended to read as follows: |
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(b) For purposes of this section, the effective date [of a |
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trust] is the date the governing instrument creating an interest in |
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the trust becomes irrevocable with respect to that interest. If an |
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interest in one trust is distributed to another trust with a |
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different effective date, the effective date of that interest in |
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the second trust becomes the earlier of the effective dates of the |
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two trusts. |
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(c) An interest in a trust must vest, if at all: |
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(1) [not later than 300 years after the effective date |
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of the trust,] if the effective date [of the trust] is on or after |
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September 1, 2021, not later than the later of: |
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(A) 300 years after the effective date; or |
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(B) 21 years after some life in being at the time |
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of the effective date, plus a period of gestation; or |
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(2) if the effective date is before September 1, 2021, |
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except as provided by Subsection (d), not later than 21 years after |
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some life in being at the time of the effective date [creation of |
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the interest], plus a period of gestation [, if the effective date |
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of the trust is before September 1, 2021]. |
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SECTION 4. Sections 112.0715(a) and (b), Property Code, are |
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amended to read as follows: |
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(a) A second trust may be created by a distribution of |
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principal under Section 112.072 or 112.073 to a second trust that |
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retains the name used by the first trust. The second trust may |
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retain, subject to applicable federal law, the tax identification |
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number of the first trust [created under the same trust instrument |
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as the first trust from which the principal is distributed or to a |
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trust created under a different trust instrument]. |
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(b) If a second trust is created by a distribution of |
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principal under Section 112.072 or 112.073 to a trust that retains |
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[created under] the name of [same trust instrument as] the first |
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trust [from which the principal is distributed], the property is |
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not required to be retitled. |
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SECTION 5. Section 115.014(b), Property Code, is amended to |
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read as follows: |
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(b) At any point in a proceeding a court may appoint an |
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attorney ad litem to represent any interest that the court |
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considers necessary, including an attorney ad litem to defend an |
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action under Section 114.083 for a beneficiary of the trust who is a |
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minor or who has been adjudged incompetent, if the court determines |
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that representation of the interest otherwise would be inadequate. |
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SECTION 6. Section 112.0715(c), Property Code, is repealed. |
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SECTION 7. Sections 112.0715(a) and (b), Property Code, as |
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amended by this Act, are intended by the legislature to be a |
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codification of the common law of this state in effect immediately |
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before the effective date of this Act. |
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SECTION 8. Except as otherwise provided by this Act, the |
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changes in law made by this Act apply to a trust created before, on, |
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or after the effective date of this Act. |
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SECTION 9. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2023. |
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* * * * * |