1-1 By: Marchant (Senate Sponsor - Rosson) H.B. No. 840
1-2 (In the Senate - Received from the House March 30, 1993;
1-3 March 31, 1993, read first time and referred to Committee on
1-4 Economic Development; April 15, 1993, reported favorably by the
1-5 following vote: Yeas 7, Nays 0; April 15, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to multiple-party accounts and trust accounts at a credit
1-22 union.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Section 6.05(a), Texas Credit Union Act (Article
1-25 2461-6.05, Vernon's Texas Civil Statutes), is amended to read as
1-26 follows:
1-27 (a) A member, including a member of a federal credit union
1-28 doing business in this state, may designate any person or persons,
1-29 including organizations, associations, corporations, or
1-30 partnerships, to own share or deposit accounts with the member
1-31 jointly, with or without the right of survivorship, or in a
1-32 multiple-party account as that term is defined by the Texas Probate
1-33 Code. One or more or all of the parties to an account may make
1-34 payments on share accounts and deposit accounts and make
1-35 withdrawals subject to the terms of the account agreements accepted
1-36 by the credit union. Subject to a policy adopted by the board of
1-37 directors, a member by written notice to the credit union may
1-38 change or cancel a designation, change the form of the account, or
1-39 stop or vary payment under the terms of the account. No party,
1-40 unless also a member, may vote, obtain loans, or hold office in the
1-41 credit union. Payment of part or all of an account to any one or
1-42 more of the parties discharges, to the extent of the payment, the
1-43 liability of the credit union to all.
1-44 SECTION 2. Section 6.07, Texas Credit Union Act (Article
1-45 2461-6.07, Vernon's Texas Civil Statutes), is amended to read as
1-46 follows:
1-47 Sec. 6.07. TRUST ACCOUNTS. (a) A credit union may issue
1-48 shares or receive deposits:
1-49 (1) in a revocable trust, if:
1-50 (A) a settlor is a member; or
1-51 (B) a trustee or beneficiary is a member, and a
1-52 settlor is a member of the trustee's or beneficiary's family as
1-53 that term is defined by the board of directors in written board
1-54 policy; or
1-55 (2) in an irrevocable trust, if a settlor, trustee, or
1-56 beneficiary is a member.
1-57 (b) On opening a trust account, the names of the
1-58 beneficiaries must be disclosed to the credit union. Unless a
1-59 beneficiary is a member, the beneficiary may not vote, obtain a
1-60 loan, or hold office and is not required to pay an entrance fee.
1-61 Subject to limitations imposed by this Act or a rule adopted under
1-62 this Act, a credit union may make a fully secured loan to a
1-63 nonmember trustee to enable or assist the trustee in performing the
1-64 trustee's fiduciary responsibilities.
1-65 (c) Payment of part or all of the shares and deposits to a
1-66 trustee or other person authorized to request present payment, to
1-67 the extent of the payment, discharges the liability of the credit
1-68 union to any settlor, trustee, and beneficiary. The credit union
2-1 does not have a duty to inquire of a trustee the reason for a
2-2 transaction or the intended use for which funds are withdrawn or
2-3 borrowed.
2-4 (d) On termination of the trust, the credit union shall pay
2-5 funds remaining in a trust account as:
2-6 (1) directed by the trustee;
2-7 (2) prescribed by the trust agreement; or
2-8 (3) provided by applicable law, in the absence of
2-9 direction from the trustee or by the trust agreement.
2-10 (e) The death of a trustee does not affect the ownership or
2-11 disposition of a trust account unless:
2-12 (1) the trust agreement provides otherwise;
2-13 (2) the account is a trust account subject to Chapter
2-14 XI, Texas Probate Code, as amended, and there is not a surviving
2-15 trustee; or
2-16 (3) there is not a surviving trustee and written
2-17 evidence of the terms of the trust does not exist.
2-18 (f) On the death of a trustee for a trust account described
2-19 by Subdivision (1), (2), or (3) of Subsection (e) of this section,
2-20 the credit union may pay out the funds:
2-21 (1) in accordance with the trust agreement; or
2-22 (2) in the absence of written evidence of the terms of
2-23 the trust, to a beneficiary or any other person authorized by law
2-24 to request or receive payment. <A credit union may issue shares or
2-25 hold deposits in the name of a member in trust for a beneficiary,
2-26 including a minor, but no beneficiary, unless the beneficiary is
2-27 also a member, may vote, obtain loans, hold office, or be required
2-28 to pay an entrance fee. Payment of part or all of the shares or
2-29 deposits to a member shall, to the extent of the payment, discharge
2-30 the liability of the credit union to the member and the
2-31 beneficiary, and the credit union shall be under no further
2-32 obligation. If a member to or for whom shares or deposits are
2-33 issued or held in trust dies, and the credit union has no other
2-34 written evidence of the existence or terms of any trust, the credit
2-35 union may pay the shares or deposits and any dividends or interest
2-36 to the beneficiary or to the legal representative of the
2-37 beneficiary. Such a payment discharges the liability of the credit
2-38 union to the extent of the payment. If the credit union has
2-39 written evidence of the terms of the trust, the credit union shall
2-40 administer and distribute the shares or deposits so issued or held
2-41 under the provisions of the trust agreement, a copy of which must
2-42 remain on file with the credit union until termination of the
2-43 trust. If the credit union does not have written evidence of the
2-44 termination or other disposition of the trust, the credit union may
2-45 distribute the shares or deposits so issued or held under the
2-46 provisions of the trust agreement. Such a distribution discharges
2-47 the liability of the credit union to the extent of the
2-48 distribution.>
2-49 SECTION 3. The change in law made by Section 2 of this Act
2-50 applies to a credit union trust account created on or after the
2-51 effective date of this Act. A credit union trust account created
2-52 before the effective date of this Act is governed by the law then
2-53 in effect, and the former law is continued for that purpose.
2-54 SECTION 4. The importance of this legislation and the
2-55 crowded condition of the calendars in both houses create an
2-56 emergency and an imperative public necessity that the
2-57 constitutional rule requiring bills to be read on three several
2-58 days in each house be suspended, and this rule is hereby suspended,
2-59 and that this Act take effect and be in force from and after its
2-60 passage, and it is so enacted.
2-61 * * * * *
2-62 Austin,
2-63 Texas
2-64 April 15, 1993
2-65 Hon. Bob Bullock
2-66 President of the Senate
2-67 Sir:
2-68 We, your Committee on Economic Development to which was referred
2-69 H.B. No. 840, have had the same under consideration, and I am
2-70 instructed to report it back to the Senate with the recommendation
3-1 that it do pass and be printed.
3-2 Parker,
3-3 Chairman
3-4 * * * * *
3-5 WITNESSES
3-6 FOR AGAINST ON
3-7 ___________________________________________________________________
3-8 Name: Jeff Huffman x
3-9 Representing: Tx Credit Union League
3-10 City: Dallas
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