By Thompson of Harris H.B. No. 1200
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to decedents' estates, multiple-party accounts, and
1-3 trusts.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 37A, Texas Probate Code, is amended to
1-6 read as follows:
1-7 Sec. 37A. Means of Evidencing Disclaimer or Renunciation of
1-8 Property or Interest Receivable From a Decedent. Any person, or
1-9 the personal representative of an incompetent, deceased, unborn or
1-10 unascertained, or minor person, with prior court approval of the
1-11 court having, or which would have, jurisdiction over such personal
1-12 representative, or any independent executor of a deceased person,
1-13 without prior court approval, who may be entitled to receive any
1-14 property as a beneficiary and who intends to effect disclaimer
1-15 irrevocably on or after September 1, 1977, of the whole or any part
1-16 of such property shall evidence same as herein provided. A
1-17 disclaimer evidenced as provided herein<,> shall be effective as of
1-18 the death of decedent and shall relate back for all purposes to the
1-19 death of the decedent and is not subject to the claims of any
1-20 creditor of the disclaimant. Unless the decedent's will provides
1-21 otherwise, the property subject to the disclaimer <and the property
1-22 subject thereof> shall pass as if the person disclaiming or on
1-23 whose behalf a disclaimer is made had predeceased the decedent and
1-24 a future interest that would otherwise take effect in possession or
2-1 enjoyment after the termination of the estate or interest that is
2-2 disclaimed takes effect as if the disclaiming beneficiary had
2-3 predeceased the decedent <unless decedent's will provides
2-4 otherwise>. Failure to comply with the provisions hereof shall
2-5 render such disclaimer ineffective except as an assignment of such
2-6 property to those who would have received same had the person
2-7 attempting the disclaimer died prior to the decedent. The term
2-8 "property" as used in this section shall include all legal and
2-9 equitable interests, powers, and property, whether present or
2-10 future, whether vested or contingent, and whether beneficial or
2-11 burdensome, in whole or in part. The term "disclaimer" as used in
2-12 this section shall include "renunciation." In this section
2-13 "beneficiary" includes a person who would have been entitled, if
2-14 the person had not made a disclaimer, to receive property as a
2-15 result of the death of another person by inheritance, under a will,
2-16 by an agreement between spouses for community property with a right
2-17 of survivorship, by a joint tenancy with a right of survivorship,
2-18 or by any other survivorship agreement, account, or interest in
2-19 which the interest of the decedent passes to a surviving
2-20 beneficiary, by an insurance, annuity, endowment, employment,
2-21 deferred compensation, or other contract or arrangement, or under a
2-22 pension, profit sharing, thrift, stock bonus, life insurance,
2-23 survivor income, incentive, or other plan or program providing
2-24 retirement, welfare, or fringe benefits with respect to an employee
2-25 or a self-employed individual. Nothing in this section shall be
2-26 construed to preclude a subsequent disclaimer by any person who
2-27 shall be entitled to property as a result of a disclaimer. The
3-1 following shall apply to such disclaimers:
3-2 (a) Written Memorandum of Disclaimer and Filing Thereof. In
3-3 the case of property receivable by a beneficiary, the disclaimer
3-4 shall be evidenced by a written memorandum, acknowledged before a
3-5 notary public or other person authorized to take acknowledgements
3-6 of conveyances of real estate. Unless the beneficiary is a
3-7 charitable organization or governmental agency of the state, a
3-8 written memorandum of disclaimer disclaiming a present interest
3-9 shall be filed not later than nine months after the death of the
3-10 decedent and a written memorandum of disclaimer disclaiming a
3-11 future interest may be filed not later than nine months after the
3-12 event determining that the taker of the property or interest is
3-13 finally ascertained and his interest is indefeasibly vested. If
3-14 the beneficiary is a charitable organization or a governmental
3-15 agency of the state, a written memorandum of disclaimer disclaiming
3-16 a present or future interest shall be filed not later than nine
3-17 months after the beneficiary receives the notice required by
3-18 Section 128A of this code. The written memorandum of disclaimer
3-19 shall be filed in the probate court in which the decedent's will
3-20 has been probated or in which proceedings have been commenced for
3-21 the administration of the decedent's estate or which has before it
3-22 an application for either of the same; provided, however, if the
3-23 administration of the decedent's estate is closed, or after the
3-24 expiration of one year following the date of the issuance of
3-25 letters testamentary in an independent administration, or if there
3-26 has been no will of the decedent probated or filed for probate, or
3-27 if no administration of the decedent's estate has been commenced,
4-1 or if no application for administration of the decedent's estate
4-2 has been filed, the written memorandum of disclaimer shall be filed
4-3 with the county clerk of the county of the decedent's residence,
4-4 or, if the decedent is not a resident of this state but real
4-5 property or an interest therein located in this state is
4-6 disclaimed, a written memorandum of disclaimer shall be filed with
4-7 the county clerk of the county in which such real property or
4-8 interest therein is located, and recorded by such county clerk in
4-9 the deed records of that county.
4-10 (b) Notice of Disclaimer. Unless the beneficiary is a
4-11 charitable organization or governmental agency of the state, copies
4-12 of any written memorandum of disclaimer shall be delivered in
4-13 person to, or shall be mailed by registered or certified mail to
4-14 and received by, the legal representative of the transferor of the
4-15 interest or the holder of legal title to the property to which the
4-16 disclaimer relates not later than nine months after the death of
4-17 the decedent or, if the interest is a future interest, not later
4-18 than nine months after the date the person who will receive the
4-19 property or interest is finally ascertained and the person's
4-20 interest is indefeasibly vested <date on which the transfer
4-21 creating the interest in the disclaiming person is made>. If the
4-22 beneficiary is a charitable organization or government agency of
4-23 the state, the notices required by this section shall be filed not
4-24 later than nine months after the beneficiary receives the notice
4-25 required by Section 128A of this code.
4-26 (c) Power to Provide for Disclaimer. Nothing herein shall
4-27 prevent a person from providing in a will, insurance policy,
5-1 employee benefit agreement, or other instrument for the making of
5-2 disclaimers by a beneficiary of an interest receivable under that
5-3 instrument and for the disposition of disclaimed property in a
5-4 manner different from the provisions hereof.
5-5 (d) Irrevocability of Disclaimer. Any disclaimer filed and
5-6 served under this section shall be irrevocable.
5-7 (e) Partial Disclaimer. Any person who may be entitled to
5-8 receive any property as a beneficiary may disclaim such property in
5-9 whole or in part, including but not limited to specific powers of
5-10 invasion, powers of appointment, and fee estate in favor of life
5-11 estates; and a partial disclaimer or renunciation, in accordance
5-12 with the provisions of this section, shall be effective whether the
5-13 property so renounced or disclaimed constitutes a portion of a
5-14 single, aggregate gift or constitutes part or all of a separate,
5-15 independent gift; provided, however, that a partial disclaimer
5-16 shall be effective only with respect to property expressly
5-17 described or referred to by category in such disclaimer; and
5-18 provided further, that a partial disclaimer of property which is
5-19 subject to a burdensome interest created by the decedent's will
5-20 shall not be effective unless such property constitutes a gift
5-21 which is separate and distinct from undisclaimed gifts.
5-22 (f) Partial Disclaimer by Spouse. Without limiting
5-23 Subsection (e) of this section, a disclaimer by the decedent's
5-24 surviving spouse of a transfer by the decedent is not a disclaimer
5-25 by the surviving spouse of all or any part of any other transfer
5-26 from the decedent to or for the benefit of the surviving spouse,
5-27 regardless of whether the property or interest that would have
6-1 passed under the disclaimed transfer passes because of the
6-2 disclaimer to or for the benefit of the surviving spouse by the
6-3 other transfer.
6-4 (g) <(f)> Disclaimer After Acceptance. No disclaimer shall
6-5 be effective after the acceptance of the property by the
6-6 beneficiary. For the purpose of this section, acceptance shall
6-7 occur only if the person making such disclaimer has previously
6-8 taken possession or exercised dominion and control of such property
6-9 in the capacity of beneficiary.
6-10 (h) <(g)> Interest in Trust Property. A beneficiary who
6-11 accepts an interest in a trust is not considered to have a direct
6-12 or indirect interest in trust property that relates to a licensed
6-13 or permitted business and over which the beneficiary exercises no
6-14 control. Direct or indirect beneficial ownership of not more than
6-15 five percent of any class of equity securities that is registered
6-16 under the Securities Exchange Act of 1934 shall not be deemed to be
6-17 an ownership interest in the business of the issuer of such
6-18 securities within the meaning of any statute, pursuant thereto.
6-19 SECTION 2. Section 24.002(12), Business & Commerce Code, is
6-20 amended to read as follows:
6-21 (12) "Transfer" means every mode, direct or indirect,
6-22 absolute or conditional, voluntary or involuntary, of disposing of
6-23 or parting with an asset or an interest in an asset, and includes
6-24 payment of money, release, lease, and creation of a lien or other
6-25 encumbrance. The term does not include a transfer under a
6-26 disclaimer filed under Section 37A, Texas Probate Code, or Section
6-27 112.010, Property Code.
7-1 SECTION 3. Section 112.010(d), Property Code, is amended to
7-2 read as follows:
7-3 (d) A disclaimer under this section is effective as of the
7-4 date of the transfer of the interest involved and relates back for
7-5 all purposes to the date of the transfer and is not subject to the
7-6 claims of any creditor of the disclaimant. Unless the terms of the
7-7 trust provide otherwise, <and> the interest that is the subject of
7-8 the disclaimer passes as if the person disclaiming had predeceased
7-9 the transfer and a future interest that would otherwise take effect
7-10 in possession or enjoyment after the termination of the estate or
7-11 interest that is disclaimed takes effect as if the disclaiming
7-12 beneficiary had predeceased the transfer. A disclaimer under this
7-13 section is irrevocable.
7-14 SECTION 4. Section 44, Texas Probate Code, is amended to
7-15 read as follows:
7-16 Sec. 44. ADVANCEMENTS <ADVANCEMENT BROUGHT INTO HOTCHPOTCH>.
7-17 (a) If a decedent dies intestate as to all or a portion of the
7-18 decedent's estate, property the decedent gave during the decedent's
7-19 lifetime to a person who, on the date of the decedent's death, is
7-20 the decedent's heir, or property received by a decedent's heir
7-21 under a nontestamentary transfer under Chapter XI of this code is
7-22 an advancement against the heir's intestate share only if:
7-23 (1) the decedent declared in a contemporaneous writing
7-24 or the heir acknowledged in writing that the gift or
7-25 nontestamentary transfer is an advancement; or
7-26 (2) the decedent's contemporaneous writing or the
7-27 heir's written acknowledgment otherwise indicates that the gift or
8-1 nontestamentary transfer is to be taken into account in computing
8-2 the division and distribution of the decedent's intestate estate.
8-3 (b) For purposes of Subsection (a) of this section, property
8-4 that is advanced is valued at the time the heir came into
8-5 possession or enjoyment of the property or at the time of the
8-6 decedent's death, whichever occurs first.
8-7 (c) If the recipient of the property fails to survive the
8-8 decedent, the property is not taken into account in computing the
8-9 division and distribution of the decedent's intestate estate,
8-10 unless the decedent's contemporaneous writing provides otherwise.
8-11 <Whether any of the heirs of a person dying intestate shall have
8-12 received from such intestate in his lifetime any real, personal or
8-13 mixed estate by way of advancement, and shall choose to come into
8-14 the partition and distribution of the estate with the other
8-15 distributees, such advancement shall be brought into hotchpotch
8-16 with the whole estate, and such party returning such advancement
8-17 shall thereupon be entitled to his proper portion of the whole
8-18 estate; provided that it shall be sufficient to account for the
8-19 value of the property so brought into hotchpotch at the time it was
8-20 advanced. Every gratuitous inter vivos transfer is deemed to be an
8-21 absolute gift and not an advancement unless proved to be an
8-22 advancement. If an advancee dies before the intestate, leaving a
8-23 lineal heir who takes from the intestate, the advancement shall be
8-24 taken into account in the same manner as if it had been directly to
8-25 such heir. If such heir is entitled to a lesser share in the
8-26 estate than the advancee would have been entitled to had he
8-27 survived the intestate, then the heir shall be charged only with
9-1 such portion of the advancement as the amount he would have
9-2 inherited, had there been no advancement, bears to the amount which
9-3 the advancee would have inherited had there been no advancement.>
9-4 SECTION 5. Section 47(d), Texas Probate Code, is amended to
9-5 read as follows:
9-6 (d) Joint Owners. If any real or personal property,
9-7 including community property with a right of survivorship, <stocks,
9-8 bonds, bank deposits, or other intangible property> shall be so
9-9 owned that one of two joint owners is entitled to the whole on the
9-10 death of the other, and neither survives the other by 120 hours,
9-11 these assets shall be distributed one-half as if one joint owner
9-12 had survived and the other one-half as if the other joint owner had
9-13 survived. If there are more than two joint owners and all have
9-14 died within a period of less than 120 hours, these assets shall be
9-15 divided into as many equal portions as there are joint owners and
9-16 these portions shall be distributed respectively to those who would
9-17 have taken in the event that each joint owner survived.
9-18 SECTION 6. Section 58, Texas Probate Code, is amended by
9-19 adding Subsections (c) and (d) to read as follows:
9-20 (c) A legacy of personal property does not include any
9-21 contents of the property unless the will directs that the contents
9-22 are included in the legacy. A devise of real property does not
9-23 include any personal property located on or associated with the
9-24 real property or any contents of property located on the real
9-25 property unless the will directs that the personal property or
9-26 contents are included in the devise.
9-27 (d) In this section:
10-1 (1) "Contents" means tangible personal property other
10-2 than titled personal property found inside of or on a specifically
10-3 bequested or devised item. The term includes clothing, pictures,
10-4 furniture, coin collections, and other items of tangible personal
10-5 property that do not require a formal transfer of title or that are
10-6 located in another item of tangible personal property such as a
10-7 cedar chest or furniture located on real property.
10-8 (2) "Titled personal property" includes all tangible
10-9 personal property represented by a certificate of title, written
10-10 label, marking, or designation that signifies ownership by a
10-11 person. The term includes a stock certificate, motor vehicle,
10-12 motor home, motorboat, or other similar property that requires a
10-13 formal transfer of title.
10-14 SECTION 7. Section 58a, Texas Probate Code, is amended to
10-15 read as follows:
10-16 Sec. 58a. DEVISES OR BEQUESTS TO TRUSTEES. (a) A testator
10-17 may validly devise or bequeath property in a will to the trustee of
10-18 a trust established or to be established:
10-19 (1) during the testator's lifetime by the testator, by
10-20 the testator and another person, or by another person, including a
10-21 funded or unfunded life insurance trust, in which the settlor has
10-22 reserved any or all rights of ownership of the insurance contracts;
10-23 or
10-24 (2) at the testator's death by the testator's devise
10-25 or bequest to the trustee, if the trust is identified in the
10-26 testator's will and its terms are in a written instrument, other
10-27 than a will, that is executed before, with, or after the execution
11-1 of the testator's will or in another person's will if that other
11-2 person has predeceased the testator, regardless of the existence,
11-3 size, or character of the corpus of the trust.
11-4 (b) A devise or bequest is not invalid because the trust is
11-5 amendable or revocable or because the trust was amended after the
11-6 execution of the will or the testator's death.
11-7 (c) Unless the testator's will provides otherwise, property
11-8 devised or bequeathed to a trust described by Subsection (a) of
11-9 this section is not held under a testamentary trust of the
11-10 testator. The property becomes a part of the trust to which it is
11-11 devised or bequeathed and must be administered and disposed of in
11-12 accordance with the provisions of the instrument establishing the
11-13 trust, including any amendments to the instrument made before or
11-14 after the testator's death.
11-15 (d) Unless the testator's will provides otherwise, a
11-16 revocation or termination of the trust before the testator's death
11-17 causes the devise or bequest to lapse. <By a will duly executed
11-18 pursuant to the provisions of this Code, a testator may devise or
11-19 bequeath property to the trustee of any trust (including an
11-20 unfunded life insurance trust, even though the trustor has reserved
11-21 any or all rights of ownership in the insurance contracts) the
11-22 terms of which are evidenced by a written instrument in existence
11-23 before or concurrently with the execution of such will and which is
11-24 identified in such will, even though such trust is subject to
11-25 amendment, modification, revocation or termination. The property
11-26 so devised or bequeathed shall be added to the corpus of such trust
11-27 to be administered as a part thereof and shall thereafter be
12-1 governed by the terms and provisions of the instrument establishing
12-2 such trust, including written amendments or modifications thereto
12-3 made before the death of the testator. An entire revocation of the
12-4 trust prior to the testator's death shall cause the devise or
12-5 bequest to lapse.>
12-6 SECTION 8. Section 67, Texas Probate Code, is amended by
12-7 amending Subsection (a) and adding Subsection (d) to read as
12-8 follows:
12-9 (a) Whenever a pretermitted child is not mentioned in the
12-10 testator's will, provided for in the testator's will, or otherwise
12-11 provided for by the testator <of a testator, as herein defined, is
12-12 neither provided for nor in any way mentioned in the testator's
12-13 will>, the pretermitted child shall succeed to a portion of the
12-14 testator's estate as provided by Subsection (a)(1) or (a)(2) of
12-15 this section. <herein provided:>
12-16 (1) If the testator has one or more children living
12-17 when he executes his last will, and:
12-18 (A) No provision is made therein for any such
12-19 child, a pretermitted child succeeds to the portion of the
12-20 testator's separate and community estate to which the pretermitted
12-21 child would have been entitled pursuant to Section 38(a) of this
12-22 code had the testator died intestate without a surviving spouse
12-23 owning only that portion of his estate not devised or bequeathed to
12-24 the parent of the pretermitted child.
12-25 (B) Provision is made therein for one or more of
12-26 such children, a pretermitted child is entitled to share in the
12-27 testator's estate as follows:
13-1 (i) The portion of the testator's estate
13-2 to which the pretermitted child is entitled is limited to the
13-3 disposition made to children under the will.
13-4 (ii) The pretermitted child shall receive
13-5 such share of the testator's estate, as limited in Subparagraph
13-6 (i), as he would have received had the testator included all
13-7 pretermitted children with the children upon whom benefits were
13-8 conferred under the will, and given an equal share of such benefits
13-9 to each such child.
13-10 (iii) To the extent that it is feasible,
13-11 the interest of the pretermitted child in the testator's estate
13-12 shall be of the same character, whether an equitable or legal life
13-13 estate or in fee, as the interest that the testator conferred upon
13-14 his children under the will.
13-15 (2) If the testator has no child living when he
13-16 executes his last will, the pretermitted child succeeds to the
13-17 portion of the testator's separate and community estate to which
13-18 the pretermitted child would have been entitled pursuant to Section
13-19 38(a) of this code had the testator died intestate without a
13-20 surviving spouse owning only that portion of his estate not devised
13-21 or bequeathed to the parent of the pretermitted child.
13-22 (d) For the purposes of this section, a child is provided
13-23 for or a provision is made for a child if a disposition of property
13-24 to or for the benefit of the pretermitted child, whether vested or
13-25 contingent, is made:
13-26 (1) in the testator's will, including a devise or
13-27 bequest to a trustee as authorized by Section 58(a) of this code;
14-1 or
14-2 (2) outside the testator's will and is intended to
14-3 take effect at the testator's death.
14-4 SECTION 9. Sections 68(a) and (e), Texas Probate Code, are
14-5 amended to read as follows:
14-6 (a) If a devisee who is a descendant of the testator or a
14-7 descendant of a testator's parent is deceased at the time of the
14-8 execution of the will, fails to survive the testator, or is treated
14-9 as if the devisee predeceased the testator by Section 47 of this
14-10 code or otherwise, the descendants of the devisee who survived the
14-11 testator by 120 hours take the devised property in place of the
14-12 devisee. The property shall be divided into as many shares as
14-13 there are surviving descendants in the nearest <same> degree of
14-14 kinship to the devisee and <or surviving descendants of> deceased
14-15 persons in the same degree whose descendants survived <as> the
14-16 testator. Each<, with each> surviving descendant in the nearest
14-17 degree receives <receiving> one share, and the share of each
14-18 deceased person in the same degree is divided among his descendants
14-19 by representation <in the same manner>. For purposes of this
14-20 section, a person who would have been a devisee under a class gift
14-21 if the person had survived the testator is treated as a devisee
14-22 unless the person died before the date the will was executed.
14-23 (e) This section applies unless the testator's last will and
14-24 testament provides otherwise. For example, a devise or bequest in
14-25 the testator's will such as "to my surviving children" or "to such
14-26 of my children as shall survive me" prevents the application of
14-27 Subsection (a) of this section.
15-1 SECTION 10. Chapter IV, Texas Probate Code, is amended by
15-2 adding Section 70A to read as follows:
15-3 Sec. 70A. INCREASE IN SECURITIES; ACCESSIONS. (a) Unless
15-4 the will clearly provides otherwise, a devise of securities that
15-5 are owned by the testator on the date of execution of the will
15-6 includes the following additional securities subsequently acquired
15-7 by the testator as a result of the testator's ownership of the
15-8 devised securities:
15-9 (1) securities of the same organization acquired
15-10 because of action initiated by the organization or any successor,
15-11 related, or acquiring organization, including stock splits, stock
15-12 dividends, and new issues of stock acquired in a reorganization,
15-13 redemption, or exchange, other than securities acquired through the
15-14 exercise of purchase options or through a plan of reinvestment; and
15-15 (2) securities of another organization acquired as a
15-16 result of a merger, consolidation, reorganization, or other
15-17 distribution by the organization or any successor, related, or
15-18 acquiring organization, including stock splits, stock dividends,
15-19 and new issues of stock acquired in a reorganization, redemption,
15-20 or exchange, other than securities acquired through the exercise of
15-21 purchase options or through a plan of reinvestment.
15-22 (b) Unless the will clearly provides otherwise, a devise of
15-23 securities does not include a cash distribution relating to the
15-24 securities and accruing before death, whether or not the
15-25 distribution is paid before death.
15-26 (c) In this section:
15-27 (1) "Securities" has the meaning assigned by Section
16-1 4, The Securities Act (Article 581-4, Vernon's Texas Civil
16-2 Statutes), and its subsequent amendments.
16-3 (2) "Stock" means securities.
16-4 SECTION 11. Section 89, Texas Probate Code, is amended to
16-5 read as follows:
16-6 Sec. 89. Action of Court on Probated Will. Upon the
16-7 completion of hearing of an application for the probate of a will,
16-8 if the Court be satisfied that such will should be admitted to
16-9 probate, an order to that effect shall be entered. Certified
16-10 copies of such will and the order <probate of the same>, or of the
16-11 record thereof, and the record of testimony, may be recorded in
16-12 other counties, and may be used in evidence, as the original might
16-13 be, on the trial of the same matter in any other court, when taken
16-14 there by appeal or otherwise.
16-15 <Probate of Wills as Muniments of Title. In each instance
16-16 where the Court is satisfied that a will should be admitted to
16-17 probate, and where the Court is further satisfied that there are no
16-18 unpaid debts owing by the estate of the testator, excluding debts
16-19 secured by liens on real estate, or for other reason finds that
16-20 there is no necessity for administration upon such estate, the
16-21 Court may admit such will to probate as a Muniment of Title.>
16-22 <The order admitting a will to probate as a Muniment of Title
16-23 shall constitute sufficient legal authority to all persons owing
16-24 any money, having custody of any property, or acting as registrar
16-25 or transfer agent of any evidence of interest, indebtedness,
16-26 property, or right belonging to the estate, and to persons
16-27 purchasing from or otherwise dealing with the estate, for payment
17-1 or transfer to the persons described in such will as entitled to
17-2 receive the particular asset without administration. The person or
17-3 persons entitled to property under the provisions of such wills
17-4 shall be entitled to deal and treat with the properties to which
17-5 they are so entitled in the same manner as if the record of title
17-6 thereof were vested in their names.>
17-7 <Unless waived by the Court, before the 181st day, or such
17-8 later day as may be extended by the Court, after the date a will is
17-9 admitted to probate as a Muniment of Title, the applicant for
17-10 probate of the will shall file with the clerk of the Court a sworn
17-11 affidavit stating specifically the terms of the will that have been
17-12 fulfilled and the terms of the will that have been unfulfilled.
17-13 Failure of the applicant for probate of the will to file such
17-14 affidavit shall not otherwise affect title to property passing
17-15 under the terms of the will.>
17-16 SECTION 12. Part 1, Chapter V, Texas Probate Code, is
17-17 amended by adding Section 89A to read as follows:
17-18 Sec. 89A. PROBATE OF WILLS AS MUNIMENTS OF TITLE. (a) In
17-19 each instance where the court is satisfied that a will should be
17-20 admitted to probate, and where the court is further satisfied that
17-21 there are no unpaid debts owing by the estate of the testator,
17-22 excluding debts secured by liens on real estate, or for other
17-23 reason finds that there is no necessity for administration upon
17-24 such estate, the court may admit such will to probate as a muniment
17-25 of title.
17-26 (b) If a person who is entitled to property under the
17-27 provisions of the will cannot be ascertained solely by reference to
18-1 the will or if a question of construction of the will exists, on
18-2 proper application and notice as provided by Chapter 37, Civil
18-3 Practice and Remedies Code, the court may hear evidence and include
18-4 in the order probating the will as a muniment of title a
18-5 declaratory judgment construing the will or determining those
18-6 persons who are entitled to receive property under the will and the
18-7 persons' shares or interests in the estate. The judgment is
18-8 conclusive in any suit between any person omitted from the judgment
18-9 and a bona fide purchaser for value who has purchased real or
18-10 personal property after entry of the judgment without actual notice
18-11 of the claim of the omitted person to an interest in the estate.
18-12 Any person who has delivered property of the decedent to a person
18-13 declared to be entitled to the property under the judgment or has
18-14 engaged in any other transaction with the person in good faith
18-15 after entry of the judgment is not liable to any person for actions
18-16 taken in reliance on the judgment.
18-17 (c) The order admitting a will to probate as a muniment of
18-18 title shall constitute sufficient legal authority to all persons
18-19 owing any money to the estate of the decedent, having custody of
18-20 any property, or acting as registrar or transfer agent of any
18-21 evidence of interest, indebtedness, property, or right belonging to
18-22 the estate, and to persons purchasing from or otherwise dealing
18-23 with the estate, for payment or transfer, without liability, to the
18-24 persons described in such will as entitled to receive the
18-25 particular asset without administration. The person or persons
18-26 entitled to property under the provisions of such wills shall be
18-27 entitled to deal with and treat the properties to which they are so
19-1 entitled in the same manner as if the record of title thereof were
19-2 vested in their names.
19-3 (d) Unless waived by the court, before the 181st day, or
19-4 such later day as may be extended by the court, after the date a
19-5 will is admitted to probate as a muniment of title, the applicant
19-6 for probate of the will shall file with the clerk of the court a
19-7 sworn affidavit stating specifically the terms of the will that
19-8 have been fulfilled and the terms of the will that have been
19-9 unfulfilled. Failure of the applicant for probate of the will to
19-10 file such affidavit shall not otherwise affect title to property
19-11 passing under the terms of the will.
19-12 SECTION 13. Section 110, Texas Probate Code, is amended to
19-13 read as follows:
19-14 Sec. 110. Persons Disqualified to Serve as Guardians. (a)
19-15 The following persons shall not be appointed guardians:
19-16 (1) <(a)> Minors.
19-17 (2) <(b)> Persons whose conduct is notoriously bad.
19-18 (3) <(c)> Incompetents.
19-19 (4) <(d)> Those who are themselves parties, or whose
19-20 father or mother is a party to a lawsuit on the result of which the
19-21 welfare of the person for whom, or for whose estate, a guardian is
19-22 to be appointed, may depend, unless the court:
19-23 (A) determines, in its discretion, that the
19-24 lawsuit claim of the party applying for guardianship is not in
19-25 conflict with the claim of the party who is the subject of the
19-26 guardianship; or
19-27 (B) appoints a guardian ad litem, if necessary,
20-1 to separately and independently represent the interest of the party
20-2 who is the subject of the guardianship throughout the litigation
20-3 process.
20-4 (5) <(e)> Those who are indebted to the person for
20-5 whom or for whose estate a guardian is to be appointed, unless they
20-6 pay the debt prior to the appointment, or who are asserting any
20-7 claim to any property, real or personal, adverse to the person for
20-8 whom, or for whose estate, the appointment is sought.
20-9 (6) <(g)> Those who by reason of inexperience or lack
20-10 of education, or for other good reason, are shown to be incapable
20-11 of properly and prudently managing and controlling the ward or his
20-12 estate.
20-13 (b) If an ad litem is appointed under Subsection (a) of this
20-14 section, the fees and expenses of the guardian ad litem shall be
20-15 taxed as costs of the litigation proceeding that made the ad
20-16 litem's appointment necessary. In the interest of judicial
20-17 economy, the guardian ad litem may be the same person who has been
20-18 appointed attorney ad litem under Section 113A or 131(c) of this
20-19 code or may be a person who is serving as an ad litem for the
20-20 benefit of the ward in any other proceeding.
20-21 (c) A spouse, parent, or child who has been disqualified
20-22 from serving as guardian because of a litigation conflict under
20-23 Subsection (a)(4) of this section and who is otherwise qualified as
20-24 a guardian may be appointed as successor guardian on the removal of
20-25 any conflict causing the initial disqualification.
20-26 SECTION 14. Section 111, Texas Probate Code, as amended by
20-27 Section 2, Chapter 330, and Section 1, Chapter 1164, Acts of the
21-1 71st Legislature, Regular Session, 1989, is amended to read as
21-2 follows:
21-3 Sec. 111. Application for Appointment of Permanent Guardian.
21-4 <(a)> A proceeding for the appointment of a guardian shall be
21-5 begun by written application filed in the court of the county
21-6 having venue thereof. Any person may make such application. Such
21-7 application shall be sworn and must state:
21-8 (1) The name, sex, date of birth, and residence, of
21-9 the person for whom the appointment of a guardian is sought;
21-10 (2) If a minor, the names of the parents and next of
21-11 kin of such persons, and whether either or both of the parents are
21-12 deceased;
21-13 (3) If a minor, a statement of whether the minor has
21-14 been the subject of a legal or conservatorship proceeding within
21-15 the preceding two-year period, and if so, the court involved, the
21-16 nature of the proceeding, and the final disposition, if any, of the
21-17 proceeding;
21-18 (4) If a person 60 years of age or older, the name and
21-19 address, to the best of the applicant's knowledge, of the person's
21-20 spouse, brother, sister, and children;
21-21 (5) A general description of the property comprising
21-22 such person's estate, if guardianship of the estate is sought;
21-23 (6) The facts which require that a guardian be
21-24 appointed;
21-25 (7) The name, relationship, and address of the person
21-26 whom the applicant desires to have appointed as guardian;
21-27 (8) Whether guardianship of the person and estate, or
22-1 of the person or of the estate, is sought;
22-2 (9) The social security number of the applicant and of
22-3 the person for whom the appointment of a guardian is sought; and
22-4 (10) Such other facts as show that the court has venue
22-5 over the proceeding.
22-6 <(b) The portion of the application stating the information
22-7 required by Subsection (a)(3) of this section shall be sworn to by
22-8 the applicant.>
22-9 SECTION 15. Section 145(q), Texas Probate Code, is amended
22-10 to read as follows:
22-11 (q) Absent proof of fraud or collusion on the part of a
22-12 judge, no judge may be held civilly liable for the commission of
22-13 misdeeds or the omission of any required act of any person, firm,
22-14 or corporation designated as an independent executor or independent
22-15 administrator under Subsections (c), (d), and (e) of the section.
22-16 Section 36 of this code does not apply to the appointment of an
22-17 independent executor or administrator under Subsection (c), (d), or
22-18 (e) of this section.
22-19 SECTION 16. Section 154A, Texas Probate Code, is amended by
22-20 adding Subsection (i) to read as follows:
22-21 (i) Absent proof of fraud or collusion on the part of a
22-22 judge, the judge may not be held civilly liable for the commission
22-23 of misdeeds or the omission of any required act of any person,
22-24 firm, or corporation designated as a successor independent executor
22-25 under this section. Section 36 of this code does not apply to an
22-26 appointment of a successor independent executor under this section.
22-27 SECTION 17. Section 160, Texas Probate Code, is amended to
23-1 read as follows:
23-2 Sec. 160. Powers of Surviving Spouse When No Administration
23-3 is Pending. (a) When no one has qualified as executor or
23-4 administrator of the estate of a deceased spouse, the surviving
23-5 spouse, whether the husband or wife, as the surviving partner of
23-6 the marital partnership, without qualifying as community
23-7 administrator as hereinafter provided, has power to sue and be sued
23-8 for the recovery of community property; to sell, mortgage, lease,
23-9 and otherwise dispose of community property for the purpose of
23-10 paying community debts; to collect claims due to the community
23-11 estate; and has such other powers as shall be necessary to preserve
23-12 the community property, discharge community obligations, and wind
23-13 up community affairs.
23-14 (b) If an affidavit stating that the affiant is the
23-15 surviving spouse and that no one has qualified as executor or
23-16 administrator of the estate of the deceased spouse is furnished to
23-17 a person owing money to the community estate for current wages at
23-18 the time of the death of the deceased spouse, the person making
23-19 payment or delivering to the affiant the deceased spouse's final
23-20 paycheck for wages, including unpaid sick pay or vacation pay, if
23-21 any, is released from liability to the same extent as if the
23-22 payment or delivery was made to a personal representative of the
23-23 deceased spouse. The person is not required to inquire into the
23-24 truth of the affidavit. The affiant to whom the payment or
23-25 delivery is made is answerable to any person having a prior right
23-26 and is accountable to any personal representative who is appointed.
23-27 The affiant is liable for any damage or loss to any person that
24-1 arises from a payment or delivery made in reliance on the
24-2 affidavit.
24-3 (c) This section does not affect the disposition of the
24-4 property of the deceased spouse.
24-5 SECTION 18. Section 271, Texas Probate Code, is amended to
24-6 read as follows:
24-7 Sec. 271. Exempt Property to Be Set Apart. (a) Unless an
24-8 affidavit is filed under Subsection (b) of this section,
24-9 immediately <Immediately> after the inventory, appraisement, and
24-10 list of claims have been approved, the court shall, by order, set
24-11 apart for the use and benefit of the surviving spouse and minor
24-12 children and unmarried children remaining with the family of the
24-13 deceased, all such property of the estate as is exempt from
24-14 execution or forced sale by the constitution and laws of the state.
24-15 (b) Before the approval of the inventory, appraisement, and
24-16 list of claims, a surviving spouse, any person who is authorized to
24-17 act on behalf of minor children of the deceased, or any unmarried
24-18 children remaining with the family of the deceased may apply to the
24-19 court to have exempt property set aside by filing an application
24-20 and a verified affidavit listing all of the property that the
24-21 applicant claims is exempt. The applicant bears the burden of
24-22 proof by a preponderance of the evidence at any hearing on the
24-23 application. The court shall set aside property of the decedent's
24-24 estate that the court finds is exempt.
24-25 SECTION 19. Section 273, Texas Probate Code, is amended to
24-26 read as follows:
24-27 Sec. 273. Allowance in Lieu of Exempt Property. In case
25-1 there should not be among the effects of the deceased all or any of
25-2 the specific articles exempted from execution or forced sale by the
25-3 Constitution and laws of this state, the court shall make a
25-4 reasonable allowance in lieu thereof, to be paid to such surviving
25-5 spouse and children, or such of them as there are, as hereinafter
25-6 provided. The allowance in lieu of a homestead shall in no case
25-7 exceed $15,000 <Ten Thousand Dollars> and the allowance for other
25-8 exempted property shall in no case exceed $5,000 <One Thousand
25-9 Dollars>, exclusive of the allowance for the support of the
25-10 surviving spouse and minor children which is hereinafter provided
25-11 for.
25-12 SECTION 20. Section 286, Texas Probate Code, is amended to
25-13 read as follows:
25-14 Sec. 286. Family Allowance to Surviving Spouses and Minors.
25-15 (a) Unless an affidavit is filed under Subsection (b) of this
25-16 section, immediately <Immediately> after the inventory,
25-17 appraisement, and list of claims have been approved, the court
25-18 shall fix a family allowance for the support of the surviving
25-19 spouse and minor children of the deceased.
25-20 (b) Before the approval of the inventory, appraisement, and
25-21 list of claims, a surviving spouse or any person who is authorized
25-22 to act on behalf of minor children of the deceased may apply to the
25-23 court to have the court fix the family allowance by filing an
25-24 application and a verified affidavit describing the amount
25-25 necessary for the maintenance of the surviving spouse and minor
25-26 children for one year after the date of the death of the decedent
25-27 and describing the spouse's separate property and any property that
26-1 minor children have in their own right. The applicant bears the
26-2 burden of proof by a preponderance of the evidence at any hearing
26-3 on the application. The court shall fix a family allowance for the
26-4 support of the surviving spouse and minor children of the deceased.
26-5 SECTION 21. Section 333, Texas Probate Code, is amended to
26-6 read as follows:
26-7 Sec. 333. Certain Personal Property to Be Sold. (a) The
26-8 representative of an estate, after approval of inventory and
26-9 appraisement, shall promptly apply for an order of the court to
26-10 sell at public auction or privately, for cash or on credit not
26-11 exceeding six months, all of the estate that is liable to perish,
26-12 waste, or deteriorate in value, or that will be an expense or
26-13 disadvantage to the estate if kept. Property <Bonds, securities,
26-14 or other personal property deemed by the court not to be so liable,
26-15 property> exempt from forced sale, specific legacies, and personal
26-16 property necessary to carry on a farm, ranch, factory, or any other
26-17 business which it is thought best to operate, shall not be included
26-18 in such sales.
26-19 (b) In determining whether to order the sale of an asset
26-20 under Subsection (a) of this section, the court shall consider:
26-21 (1) the representative's duty to take care of and
26-22 manage the estate as a person of ordinary prudence, discretion, and
26-23 intelligence would exercise in the management of the person's own
26-24 affairs; and
26-25 (2) whether the asset constitutes an asset that a
26-26 trustee is authorized to invest under Section 113.056 or Subchapter
26-27 F, Chapter 113, Property Code.
27-1 SECTION 22. Section 389, Texas Probate Code, is amended to
27-2 read as follows:
27-3 Sec. 389. Investments without Court Order. (a) The
27-4 guardian of the estate may retain, without regard to
27-5 diversification of investments and without liability for any
27-6 depreciation or loss resulting from the retention, any property
27-7 received into a guardianship estate at its inception or added to
27-8 the estate by gift, devise, or inheritance or by mutation or
27-9 increase. A guardian of the estate is not relieved from the duty
27-10 to take care of and manage the estate as a person of ordinary
27-11 prudence, discretion, and intelligence would exercise in the
27-12 management of the person's own affairs.
27-13 (b) If, at any time, the guardian of the estate shall have
27-14 on hand money belonging to the ward beyond that which may be
27-15 necessary for the education and maintenance of such ward or wards,
27-16 he shall invest such money as follows:
27-17 (1) <(a)> In bonds or other obligations of the United
27-18 States; <or>
27-19 (2) <(b)> In tax-supported bonds of the State of
27-20 Texas; <or>
27-21 (3) <(c)> In tax-supported bonds of any county,
27-22 district, political subdivision, or incorporated city or town in
27-23 the State of Texas; provided, that the bonds of counties,
27-24 districts, subdivisions, cities, and towns may be purchased only
27-25 subject to the following restrictions: the net funded debt of said
27-26 issuing unit shall not exceed ten per cent of the assessed value of
27-27 taxable property therein, "net funded debt" meaning the total
28-1 funded debt less sinking funds on hand; and further, in the case of
28-2 cities or towns, less that part of the debt incurred for
28-3 acquisition or improvement of revenue-producing utilities, the
28-4 revenues of which are not pledged to support other obligations;
28-5 provided, however, that these restrictions shall not apply to bonds
28-6 issued for road purposes in this state under authority of Section
28-7 52 of Article III of the Constitution of Texas, which bonds are
28-8 supported by a tax unlimited as to rate or amount; <or>
28-9 (4) <(d)> In shares or share accounts of any building
28-10 and loan association organized under the laws of this state,
28-11 provided the payment of such shares or share accounts is insured by
28-12 the Federal Savings & Loan Insurance Corporation; <or>
28-13 (5) <(e)> In the shares or share accounts of any
28-14 federal savings and loan association domiciled in this state, where
28-15 the payment of such shares or share accounts is insured by the
28-16 Federal Savings & Loan Insurance Corporation; <or>
28-17 (6) <(f)> In collateral bonds of companies
28-18 incorporated under the laws of the State of Texas, having a paid-in
28-19 capital of One Million Dollars or more, when such bonds are a
28-20 direct obligation of the company issuing them, and are specifically
28-21 secured by first mortgage real estate notes or other securities
28-22 pledged with a trustee; or<.>
28-23 (7) <(g)> In interest-bearing time deposits which may
28-24 be withdrawn on or before one year after demand in any bank doing
28-25 business in Texas where the payment of such time deposits is
28-26 insured by the Federal Deposit Insurance Corporation.
28-27 SECTION 23. The heading of Section 389A, Texas Probate Code,
29-1 is amended to read as follows:
29-2 Sec. 389A. <Other> Investments With Court Order
29-3 SECTION 24. Part 8, Chapter VIII, Texas Probate Code, is
29-4 amended by adding Section 378B to read as follows:
29-5 Sec. 378B. ALLOCATION OF INCOME AND EXPENSES DURING
29-6 ADMINISTRATION OF DECEDENT'S ESTATE. (a) Except as provided by
29-7 Subsection (b) of this section and unless the will provides
29-8 otherwise, all expenses incurred in connection with the settlement
29-9 of a decedent's estate, including debts, funeral expenses, estate
29-10 taxes, interest and penalties relating to estate taxes, and family
29-11 allowances, shall be charged against the principal of the estate.
29-12 Fees and expenses of an attorney, accountant, or other professional
29-13 advisor, commissions and expenses of a personal representative,
29-14 court costs, and all other similar fees or expenses relating to the
29-15 administration of the estate shall be allocated between the income
29-16 and principal of the estate as the executor determines in its
29-17 discretion to be just and equitable.
29-18 (b) Unless the will provides otherwise, income from the
29-19 assets of a decedent's estate that accrues after the death of the
29-20 testator and before distribution, including income from property
29-21 used to discharge liabilities, shall be determined according to the
29-22 rules applicable to a trustee under the Texas Trust Code (Subtitle
29-23 B, Title 9, Property Code) and distributed as provided by
29-24 Subsections (c), (d), and (e) of this section.
29-25 (c) The income from the property bequeathed or devised to a
29-26 specific devisee shall be distributed to the devisee after
29-27 reduction for property taxes, ordinary repairs, insurance premiums,
30-1 interest accrued after the death of the testator, other expenses of
30-2 management and operation of the property, and other taxes,
30-3 including the taxes imposed on the income that accrues during the
30-4 period of administration and that is payable to the devisee.
30-5 (d) Except as provided by Subsection (f) of this section,
30-6 the balance of the net income shall be distributed to all other
30-7 devisees after reduction for the balance of property taxes,
30-8 ordinary repairs, insurance premiums, interest accrued, including
30-9 interest accruing as provided by Subsection (f) of this section
30-10 after the death of the testator, other expenses of management and
30-11 operation of all property from which the estate is entitled to
30-12 income, and taxes imposed on income that accrues during the period
30-13 of administration and that is payable or allocable to the devisees,
30-14 in proportion to the devisees' respective interests in the
30-15 undistributed assets of the estate.
30-16 (e) If a charitable organization is entitled to receive
30-17 income under Subsection (b) of this section, any amount allowed as
30-18 a tax deduction to the estate for income payable to the charitable
30-19 organization shall be paid, without reduction for taxes, to the
30-20 charitable organization.
30-21 (f) A devisee of a pecuniary bequest, whether or not in
30-22 trust, shall be paid interest on the bequest at the legal rate of
30-23 interest as provided by Article 1.03, Revised Statutes (Article
30-24 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
30-25 amendments, beginning one year after the date the court grants
30-26 letters testamentary or letters of administration.
30-27 (g) Income received by a trustee under this section shall be
31-1 treated as income of the trust as provided by Section 113.103,
31-2 Property Code.
31-3 (h) In this section, "undistributed assets" includes funds
31-4 used to pay debts, administration expenses, and federal and state
31-5 estate, inheritance, succession, and generation-skipping transfer
31-6 taxes until the date of payment of the debts, expenses, and taxes.
31-7 Except as required by Sections 2055 and 2056 of the Internal
31-8 Revenue Code of 1986 (26 U.S.C. Secs. 2055 and 2056), and its
31-9 subsequent amendments, the frequency and method of determining the
31-10 beneficiaries' respective interests in the undistributed assets of
31-11 the estate shall be in the executor's sole and absolute discretion.
31-12 The executor may consider all relevant factors, including
31-13 administrative convenience and expense and the interests of the
31-14 various beneficiaries of the estate in order to reach a fair and
31-15 equitable result among beneficiaries.
31-16 SECTION 25. Sections 436(3) and (5), Texas Probate Code, are
31-17 amended to read as follows:
31-18 (3) "Financial institution" means an organization
31-19 authorized to do business under state or federal laws relating to
31-20 financial institutions, including, without limitation, banks and
31-21 trust companies, savings banks, building and loan associations,
31-22 savings and loan companies or associations, <and> credit unions,
31-23 and brokerage firms that deal in the sales and purchases of stocks,
31-24 bonds, and other types of securities.
31-25 (5) "Multiple-party account" means a joint account, a
31-26 convenience account, a P.O.D. account, or a trust account. It does
31-27 not include accounts established for deposit of funds of a
32-1 partnership, joint venture, or other association for business
32-2 purposes, or accounts controlled by one or more persons as the duly
32-3 authorized agent or trustee for a corporation, unincorporated
32-4 association, charitable or civic organization, or a regular
32-5 fiduciary or trust account where the relationship is established
32-6 other than by deposit agreement.
32-7 SECTION 26. Sections 439(b) and (c), Texas Probate Code, are
32-8 amended to read as follows:
32-9 (b) If the account is a P.O.D. account and there is a
32-10 written agreement signed by the original payee or payees, on the
32-11 death of the original payee or on the death of the survivor of two
32-12 or more original payees, any sums remaining on deposit belong to
32-13 the P.O.D. payee or payees if surviving, or to the survivor of them
32-14 if one or more P.O.D. payees die before the original payee. If two
32-15 or more P.O.D. payees survive, there is no right of survivorship in
32-16 event of death of a P.O.D. payee thereafter unless the terms of the
32-17 account or deposit agreement expressly provide for survivorship
32-18 between them.
32-19 (c) If the account is a trust account and there is a written
32-20 agreement signed by the trustee or trustees, on death of the
32-21 trustee or the survivor of two or more trustees, any sums remaining
32-22 on deposit belong to the person or persons named as beneficiaries,
32-23 if surviving, or to the survivor of them if one or more
32-24 beneficiaries die before the trustee dies<, unless there is clear
32-25 and convincing evidence of a contrary intent>. If two or more
32-26 beneficiaries survive, there is no right of survivorship in event
32-27 of death of any beneficiary thereafter unless the terms of the
33-1 account or deposit agreement expressly provide for survivorship
33-2 between them.
33-3 SECTION 27. Part 1, Chapter XI, Texas Probate Code, is
33-4 amended by adding Section 438A to read as follows:
33-5 Sec. 438A. CONVENIENCE ACCOUNT. (a) If an account is
33-6 established at a financial institution by a party in the names of
33-7 the party and a co-signer and the terms of the account provide that
33-8 the sums on deposit are paid or delivered to the party or to the
33-9 co-signer "for the convenience" of the party, the account is a
33-10 convenience account.
33-11 (b) The making of a deposit in a convenience account does
33-12 not affect the title to the deposit.
33-13 (c) The party to a convenience account is not considered to
33-14 have made a gift of one-half of the deposit or of any additions or
33-15 accruals to the deposit to the co-signer.
33-16 (d) On the death of the party, the co-signer shall have no
33-17 right of survivorship in the account and ownership of the account
33-18 remains in the party.
33-19 (e) If an addition is made to the account by anyone other
33-20 than the party, the addition and accruals to the addition are
33-21 considered to have been made by the party.
33-22 (f) All deposits to a convenience account and additions and
33-23 accruals to the deposits may be paid to the party or to the
33-24 co-signer. The financial institution is completely released from
33-25 liability for a payment made from the account before the financial
33-26 institution receives notice in writing signed by the party not to
33-27 make the payment in accordance with the terms of the account.
34-1 After receipt of the notice from the party, the financial
34-2 institution may require the party to approve any further payments
34-3 from the account.
34-4 (g) If the financial institution makes a payment of the sums
34-5 on deposit in a convenience account to the co-signer after the
34-6 death of the party and before the financial institution has
34-7 received written notice of the party's death, the financial
34-8 institution is completely released from liability for the payment.
34-9 If a financial institution makes payment to the personal
34-10 representative of the deceased party's estate after the death of
34-11 the party and before service on the financial institution of a
34-12 court order prohibiting payment, the financial institution is
34-13 released to the extent of the payment from liability to any person
34-14 claiming a right to the funds. The receipt by the representative
34-15 to whom payment is made is a complete release and discharge of the
34-16 financial institution.
34-17 SECTION 28. Section 111.004, Property Code, is amended by
34-18 adding Subdivision (24) to read as follows:
34-19 (24) "Environmental law" means any federal, state, or
34-20 local law, rule, regulation, or ordinance relating to protection of
34-21 the environment.
34-22 SECTION 29. Subchapter A, Chapter 113, Property Code, is
34-23 amended by adding Section 113.025 to read as follows:
34-24 Sec. 113.025. POWERS OF TRUSTEE REGARDING ENVIRONMENTAL
34-25 LAWS. (a) A trustee or a potential trustee may inspect,
34-26 investigate, cause to be inspected, or cause to be investigated
34-27 trust property, property that the trustee or potential trustee has
35-1 been asked to hold, or property owned or operated by an entity in
35-2 which the trustee or potential trustee holds or has been asked to
35-3 hold any interest or for the purpose of determining the potential
35-4 application of environmental law with respect to the property.
35-5 This subsection does not grant any person the right of access to
35-6 any property. The taking of any action under this subsection with
35-7 respect to a trust or an addition to a trust is not evidence that a
35-8 person has accepted the trust or the addition to the trust.
35-9 (b) A trustee may take on behalf of the trust any action
35-10 before or after the initiation of an enforcement action or other
35-11 legal proceeding that the trustee reasonably believes will help to
35-12 prevent, abate, or otherwise remedy any actual or potential
35-13 violation of any environmental law affecting property held directly
35-14 or indirectly by the trustee.
35-15 SECTION 30. Section 114.001, Property Code, is amended by
35-16 adding Subsection (d) to read as follows:
35-17 (d) The trustee is not liable to the beneficiary for a loss
35-18 or depreciation in value of the trust property or for acting or
35-19 failing to act under Section 113.025 or under any other provision
35-20 of this subtitle if the action or failure to act relates to
35-21 compliance with an environmental law and if there is no gross
35-22 negligence or bad faith on the part of the trustee. The provision
35-23 of any instrument governing trustee liability does not increase the
35-24 liability of the trustee as provided by this section unless the
35-25 settlor expressly makes reference to this subsection.
35-26 SECTION 31. Section 114.063, Property Code, is amended to
35-27 read as follows:
36-1 Sec. 114.063. General Right to Reimbursement. (a) A
36-2 trustee may discharge or reimburse himself from trust principal or
36-3 income or partly from both for:
36-4 (1) advances made for the convenience, benefit, or
36-5 protection of the trust or its property; <and>
36-6 (2) expenses incurred while administering or
36-7 protecting the trust or because of the trustee's holding or owning
36-8 any of the trust property; and
36-9 (3) expenses incurred for any action taken under
36-10 Section 113.025.
36-11 (b) The trustee has a lien against trust property to secure
36-12 reimbursement under Subsection (a) <of this section>.
36-13 (c) A potential trustee is entitled to reimbursement from
36-14 trust principal or income or partly from both for reasonable
36-15 expenses incurred for any action taken under Section 113.025(a) if:
36-16 (1) a court orders reimbursement or the potential
36-17 trustee has entered into a written agreement providing for
36-18 reimbursement with the personal representative of the estate, the
36-19 trustee of the trust, the settlor, the settlor's attorney-in-fact,
36-20 the settlor's personal representative, or the person or entity
36-21 designated in the trust instrument or will to appoint a trustee;
36-22 and
36-23 (2) the potential trustee has been appointed trustee
36-24 under the terms of the trust instrument or will or has received a
36-25 written request to accept the trust from the settlor, the settlor's
36-26 attorney-in-fact, the settlor's personal representative, or the
36-27 person or entity designated in the trust instrument or will to
37-1 appoint a trustee.
37-2 SECTION 32. Section 113.109, Property Code, is amended to
37-3 read as follows:
37-4 Sec. 113.109. PROPERTY OTHER THAN NATURAL RESOURCES SUBJECT
37-5 TO DEPLETION. (a) If the principal of a trust includes a deferred
37-6 payment right, the proceeds of the right, on receipt, are income up
37-7 to five percent of the inventory value of the right, determined
37-8 separately for each year following the year in which the right
37-9 first becomes subject to the trust. The remainder of the proceeds
37-10 is principal. The allocation to income is computed in the same
37-11 manner in which interest under a loan of the initial inventory
37-12 amount would be computed, at five percent interest compounded
37-13 annually, if periodic payments are made by the borrower to the
37-14 lender.
37-15 (b) For the first year, inventory value is determined as
37-16 provided by this subtitle. For each year after the first year, the
37-17 inventory value is:
37-18 (1) reduced to the extent that proceeds of the right
37-19 were allocated to principal during the preceding year; and
37-20 (2) increased to the extent that the proceeds received
37-21 during the preceding year were less than five percent of the
37-22 inventory value for that year.
37-23 (c) While the deferred payment right is under administration
37-24 in a decedent's estate, income and principal are determined by
37-25 using the fiscal year of the estate and ending on the date the
37-26 trust is funded with the right. After the administration of the
37-27 estate, the fiscal year of the trust is used. The five percent
38-1 allocation to income is prorated for a year that is less than 12
38-2 months.
38-3 (d) The proceeds of a deferred payment right include all
38-4 receipts relating to the right, whether or not the receipts are
38-5 periodic. After the proceeds are received by the trustee and
38-6 allocated, this section does not apply to the proceeds, except to
38-7 the extent the proceeds include a deferred payment right.
38-8 (e) In this section:
38-9 (1) "Deferred payment right" means a depletable asset,
38-10 other than natural resources or timber, consisting of the right to
38-11 property under a contract, account, or other arrangement that is
38-12 payable not earlier than 12 months after the date the right becomes
38-13 subject to the trust. A deferred payment right includes the right
38-14 to receive a periodic, annuity, installment, or single sum future
38-15 payment:
38-16 (A) under a leasehold, patent, copyright, or
38-17 royalty;
38-18 (B) of income in respect of a decedent under
38-19 Section 691 of the Internal Revenue Code of 1986 (26 U.S.C. Sec.
38-20 691);
38-21 (C) of death benefits;
38-22 (D) of benefits under a nonqualified plan of
38-23 deferred compensation or similar arrangement; or
38-24 (E) under an employee's trust, a retirement
38-25 account, a plan described by Section 403 of the Internal Revenue
38-26 Code of 1986 (26 U.S.C. Sec. 403), or an employee benefit plan.
38-27 (2) "Employee benefit plan" means an employee benefit
39-1 plan as defined by Section 1002, Employee Retirement Income
39-2 Security Act of 1974 (ERISA) (29 U.S.C. Sec. 1002), a plan that
39-3 does not meet the requirements of an employee benefit plan under
39-4 ERISA because the plan does cover common law employees, or a plan
39-5 that is similar to an employee benefit plan under ERISA whether or
39-6 not the plan is covered under Subchapter I of ERISA.
39-7 (3) "Year" means the fiscal year for federal income
39-8 tax reporting purposes. <If part of the principal consists of
39-9 property other than natural resources or timber that is depletable,
39-10 such as a leasehold, patent, copyright, royalty, or right to
39-11 receive payments on a contract for deferred compensation, and the
39-12 trustee does not have a duty to change the form of the investment,
39-13 the return from the property is income, but if the trustee has a
39-14 duty under existing law or the instrument creating the trust to
39-15 change the form of the investment, as soon as it may be done
39-16 without sacrifice of value, the return from the property is income
39-17 up to five percent a year of the inventory value of the property,
39-18 and the remainder is principal.>
39-19 SECTION 33. (a) The changes in law made by Sections 1, 2,
39-20 and 3 of this Act apply only to a disclaimer made on or after the
39-21 effective date of this Act. A disclaimer made before the effective
39-22 date of this Act is covered by the law in effect when the
39-23 disclaimer was made, and the former law is continued in effect for
39-24 that purpose.
39-25 (b) The changes in law made by Sections 4, 5, 6, 7, 8, 9,
39-26 10, 11, 12, and 24 of this Act apply only to the estates of persons
39-27 who die on or after the effective date of this Act. The estate of
40-1 a person who dies before the effective date of this Act is covered
40-2 by the law in effect when the person died, and the former law is
40-3 continued in effect for that purpose.
40-4 (c) The changes in law made by Section 13 of this Act apply
40-5 only to a guardian appointed on or after the effective date of this
40-6 Act. A guardian appointed before the effective date of this Act is
40-7 covered by the law in effect when the guardian was appointed, and
40-8 the former law is continued in effect for that purpose.
40-9 (d) The changes in law made by Section 26 of this Act apply
40-10 only to an account created on or after the effective date of this
40-11 Act. An account created before the effective date of this Act is
40-12 covered by the law in effect when the account was created, and the
40-13 former law is continued in effect for that purpose.
40-14 (e) The changes in law made by Section 32 of this Act apply
40-15 only to property that becomes subject to a trust on or after the
40-16 effective date of this Act. Property that becomes subject to a
40-17 trust before the effective date of this Act is covered by the law
40-18 in effect when the property became subject to the trust, and the
40-19 former law is continued in effect for that purpose.
40-20 SECTION 34. This Act takes effect September 1, 1993.
40-21 SECTION 35. The importance of this legislation and the
40-22 crowded condition of the calendars in both houses create an
40-23 emergency and an imperative public necessity that the
40-24 constitutional rule requiring bills to be read on three several
40-25 days in each house be suspended, and this rule is hereby suspended.