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House Bill 2913 |
House Author: Thompson, Senfronia |
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Effective: 9-1-13 |
Senate Sponsor: Rodriguez |
House Bill 2913 amends the Property Code relating to trusts. The bill adds property held in any digital or electronic medium to the definition of "property" for purposes of the Texas Trust Code. Regarding spendthrift trusts, the bill establishes that a settlor is not considered a beneficiary of a trust solely because the settlor's interest in the trust was created by the exercise of a power of appointment by a third party. Furthermore, the bill sets out the conditions under which assets contributed to specified trusts are not deemed to have been contributed by the original settlor and provides that a person who would otherwise be treated as a settlor may not be treated as a settlor under those conditions.
House Bill 2913 also adds a subchapter concerning the distribution of trust principal in further trust. The bill sets out provisions regarding distribution to a second trust when a trustee has full discretion and when a trustee has limited discretion to distribute trust principal. In either case, the bill requires a trustee to act in good faith, in accordance with the terms and purpose of the trust, and in the interest of the beneficiaries. The bill also requires an authorized trustee to provide written notice to certain beneficiaries in order to exercise the power of distribution without the consent of the settlor or beneficiaries of the first trust and without court approval. This requirement includes notice to the attorney general and to a guardian or conservator in certain circumstances. Among other provisions, the bill sets out exceptions to the power of distribution and tax-related limitations on distribution. The bill specifies that the subchapter does not create or imply a duty for an authorized trustee to exercise the power of distribution and prohibits a trustee from exercising the power solely to change trust provisions regarding the trustee's compensation, except under limited conditions. Finally, the bill permits an authorized trustee to petition the court to order a distribution and sets out procedures for a beneficiary or the attorney general to object to a proposed distribution.
Current law includes a tax savings provision that prevents a beneficiary who is also a trustee of a trust that confers a power on the trustee to make discretionary distributions to or for the trustee's personal benefit from exercising such a power unless the distributions are within an ascertainable standard. House Bill 2913 extends such protection to a person who is a beneficiary and a trustee affiliate or a discretionary power holder. The bill also modifies provisions regarding proper venue for certain trust proceedings.
House Bill 2913 amends the Tax Code to, among other things, make irrevocable trusts eligible for the residence homestead tax exemption and to impose the motor vehicle gift tax on transfers of vehicles to and from revocable trusts.