1-1 By: Thompson of Harris (Senate Sponsor - Whitmire) H.B. No. 1200
1-2 (In the Senate - Received from the House April 13, 1993;
1-3 April 14, 1993, read first time and referred to Committee on
1-4 Jurisprudence; May 4, 1993, reported favorably, as amended, by the
1-5 following vote: Yeas 5, Nays 0; May 4, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Henderson x
1-9 Harris of Tarrant x
1-10 Brown x
1-11 Harris of Dallas x
1-12 Luna x
1-13 Parker x
1-14 West x
1-15 COMMITTEE AMENDMENT NO. 1 By: Whitmire
1-16 SECTION 5. Section 45, Texas Probate Code, is amended to
1-17 read as follows:
1-18 Sec. 45. COMMUNITY ESTATE. (a) On the intestate death of
1-19 one of the spouses to a marriage, the community property estate of
1-20 the deceased spouse passes to the surviving spouse if:
1-21 (1) no child or other descendant of the deceased
1-22 spouse survives the deceased spouse; or
1-23 (2) all surviving children and descendants of the
1-24 deceased spouse are also children or descendants of the surviving
1-25 spouse.
1-26 (b) On the intestate death of one of the spouses to a
1-27 marriage, if a child or other descendant of the deceased spouse
1-28 survives the deceased spouse and the child or descendant is not a
1-29 child or descendant of the surviving spouse, one-half of the
1-30 community estate is retained by the surviving spouse and the other
1-31 one-half passes to the children or descendants of the deceased
1-32 spouse. The <Upon the dissolution of the marriage relation by
1-33 death, all property belonging to the community estate of the
1-34 husband and wife shall go to the survivor, if there be no child or
1-35 children of the deceased or their descendants; but if there be a
1-36 child or children of the deceased, or descendants of such child or
1-37 children, then the survivor shall be entitled to one half of said
1-38 property, and the other half shall pass to such child or children,
1-39 or their descendants. But such> descendants shall inherit only such
1-40 portion of said property to which they would be entitled under
1-41 Section 43 of this code. In every case, the community estate
1-42 passes charged with the debts against it.
1-43 COMMITTEE AMENDMENT NO. 2 By: Henderson
1-44 Amend H.B. 1200 by adding the following as Section and
1-45 renumbering original sections accordingly:
1-46 SECTION 34. DUTIES OF A LIFE TENANT. (a) Subject to the
1-47 provisions of subsection (2), if the life tenant of any legal life
1-48 estate is given the power to sell and reinvest any life tenancy
1-49 property then such life tenant shall, with respect to the sale and
1-50 reinvestment of such property, be subject to all of the fiduciary
1-51 duties of a trustee imposed by either the Texas Trust Code or the
1-52 common law of Texas.
1-53 (b) A life tenant may retain, as life tenancy property, any
1-54 real property originally conveyed to such life tenant without being
1-55 subject to the fiduciary duties of a trustee; such person shall,
1-56 however, be subject to the common law duties of a life tenant.
1-57 A BILL TO BE ENTITLED
1-58 AN ACT
1-59 relating to decedents' estates, multiple-party accounts, and
1-60 trusts.
1-61 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-62 SECTION 1. Section 37A, Texas Probate Code, is amended to
1-63 read as follows:
1-64 Sec. 37A. Means of Evidencing Disclaimer or Renunciation of
1-65 Property or Interest Receivable From a Decedent. Any person, or
1-66 the personal representative of an incompetent, deceased, unborn or
1-67 unascertained, or minor person, with prior court approval of the
1-68 court having, or which would have, jurisdiction over such personal
2-1 representative, or any independent executor of a deceased person,
2-2 without prior court approval, who may be entitled to receive any
2-3 property as a beneficiary and who intends to effect disclaimer
2-4 irrevocably on or after September 1, 1977, of the whole or any part
2-5 of such property shall evidence same as herein provided. A
2-6 disclaimer evidenced as provided herein<,> shall be effective as of
2-7 the death of decedent and shall relate back for all purposes to the
2-8 death of the decedent and is not subject to the claims of any
2-9 creditor of the disclaimant. Unless the decedent's will provides
2-10 otherwise, the property subject to the disclaimer <and the property
2-11 subject thereof> shall pass as if the person disclaiming or on
2-12 whose behalf a disclaimer is made had predeceased the decedent and
2-13 a future interest that would otherwise take effect in possession or
2-14 enjoyment after the termination of the estate or interest that is
2-15 disclaimed takes effect as if the disclaiming beneficiary had
2-16 predeceased the decedent <unless decedent's will provides
2-17 otherwise>. Failure to comply with the provisions hereof shall
2-18 render such disclaimer ineffective except as an assignment of such
2-19 property to those who would have received same had the person
2-20 attempting the disclaimer died prior to the decedent. The term
2-21 "property" as used in this section shall include all legal and
2-22 equitable interests, powers, and property, whether present or
2-23 future, whether vested or contingent, and whether beneficial or
2-24 burdensome, in whole or in part. The term "disclaimer" as used in
2-25 this section shall include "renunciation." In this section
2-26 "beneficiary" includes a person who would have been entitled, if
2-27 the person had not made a disclaimer, to receive property as a
2-28 result of the death of another person by inheritance, under a will,
2-29 by an agreement between spouses for community property with a right
2-30 of survivorship, by a joint tenancy with a right of survivorship,
2-31 or by any other survivorship agreement, account, or interest in
2-32 which the interest of the decedent passes to a surviving
2-33 beneficiary, by an insurance, annuity, endowment, employment,
2-34 deferred compensation, or other contract or arrangement, or under a
2-35 pension, profit sharing, thrift, stock bonus, life insurance,
2-36 survivor income, incentive, or other plan or program providing
2-37 retirement, welfare, or fringe benefits with respect to an employee
2-38 or a self-employed individual. Nothing in this section shall be
2-39 construed to preclude a subsequent disclaimer by any person who
2-40 shall be entitled to property as a result of a disclaimer. The
2-41 following shall apply to such disclaimers:
2-42 (a) Written Memorandum of Disclaimer and Filing Thereof. In
2-43 the case of property receivable by a beneficiary, the disclaimer
2-44 shall be evidenced by a written memorandum, acknowledged before a
2-45 notary public or other person authorized to take acknowledgements
2-46 of conveyances of real estate. Unless the beneficiary is a
2-47 charitable organization or governmental agency of the state, a
2-48 written memorandum of disclaimer disclaiming a present interest
2-49 shall be filed not later than nine months after the death of the
2-50 decedent and a written memorandum of disclaimer disclaiming a
2-51 future interest may be filed not later than nine months after the
2-52 event determining that the taker of the property or interest is
2-53 finally ascertained and his interest is indefeasibly vested. If
2-54 the beneficiary is a charitable organization or a governmental
2-55 agency of the state, a written memorandum of disclaimer disclaiming
2-56 a present or future interest shall be filed not later than nine
2-57 months after the beneficiary receives the notice required by
2-58 Section 128A of this code. The written memorandum of disclaimer
2-59 shall be filed in the probate court in which the decedent's will
2-60 has been probated or in which proceedings have been commenced for
2-61 the administration of the decedent's estate or which has before it
2-62 an application for either of the same; provided, however, if the
2-63 administration of the decedent's estate is closed, or after the
2-64 expiration of one year following the date of the issuance of
2-65 letters testamentary in an independent administration, or if there
2-66 has been no will of the decedent probated or filed for probate, or
2-67 if no administration of the decedent's estate has been commenced,
2-68 or if no application for administration of the decedent's estate
2-69 has been filed, the written memorandum of disclaimer shall be filed
2-70 with the county clerk of the county of the decedent's residence,
3-1 or, if the decedent is not a resident of this state but real
3-2 property or an interest therein located in this state is
3-3 disclaimed, a written memorandum of disclaimer shall be filed with
3-4 the county clerk of the county in which such real property or
3-5 interest therein is located, and recorded by such county clerk in
3-6 the deed records of that county.
3-7 (b) Notice of Disclaimer. Unless the beneficiary is a
3-8 charitable organization or governmental agency of the state, copies
3-9 of any written memorandum of disclaimer shall be delivered in
3-10 person to, or shall be mailed by registered or certified mail to
3-11 and received by, the legal representative of the transferor of the
3-12 interest or the holder of legal title to the property to which the
3-13 disclaimer relates not later than nine months after the death of
3-14 the decedent or, if the interest is a future interest, not later
3-15 than nine months after the date the person who will receive the
3-16 property or interest is finally ascertained and the person's
3-17 interest is indefeasibly vested <date on which the transfer
3-18 creating the interest in the disclaiming person is made>. If the
3-19 beneficiary is a charitable organization or government agency of
3-20 the state, the notices required by this section shall be filed not
3-21 later than nine months after the beneficiary receives the notice
3-22 required by Section 128A of this code.
3-23 (c) Power to Provide for Disclaimer. Nothing herein shall
3-24 prevent a person from providing in a will, insurance policy,
3-25 employee benefit agreement, or other instrument for the making of
3-26 disclaimers by a beneficiary of an interest receivable under that
3-27 instrument and for the disposition of disclaimed property in a
3-28 manner different from the provisions hereof.
3-29 (d) Irrevocability of Disclaimer. Any disclaimer filed and
3-30 served under this section shall be irrevocable.
3-31 (e) Partial Disclaimer. Any person who may be entitled to
3-32 receive any property as a beneficiary may disclaim such property in
3-33 whole or in part, including but not limited to specific powers of
3-34 invasion, powers of appointment, and fee estate in favor of life
3-35 estates; and a partial disclaimer or renunciation, in accordance
3-36 with the provisions of this section, shall be effective whether the
3-37 property so renounced or disclaimed constitutes a portion of a
3-38 single, aggregate gift or constitutes part or all of a separate,
3-39 independent gift; provided, however, that a partial disclaimer
3-40 shall be effective only with respect to property expressly
3-41 described or referred to by category in such disclaimer; and
3-42 provided further, that a partial disclaimer of property which is
3-43 subject to a burdensome interest created by the decedent's will
3-44 shall not be effective unless such property constitutes a gift
3-45 which is separate and distinct from undisclaimed gifts.
3-46 (f) Partial Disclaimer by Spouse. Without limiting
3-47 Subsection (e) of this section, a disclaimer by the decedent's
3-48 surviving spouse of a transfer by the decedent is not a disclaimer
3-49 by the surviving spouse of all or any part of any other transfer
3-50 from the decedent to or for the benefit of the surviving spouse,
3-51 regardless of whether the property or interest that would have
3-52 passed under the disclaimed transfer passes because of the
3-53 disclaimer to or for the benefit of the surviving spouse by the
3-54 other transfer.
3-55 (g) <(f)> Disclaimer After Acceptance. No disclaimer shall
3-56 be effective after the acceptance of the property by the
3-57 beneficiary. For the purpose of this section, acceptance shall
3-58 occur only if the person making such disclaimer has previously
3-59 taken possession or exercised dominion and control of such property
3-60 in the capacity of beneficiary.
3-61 (h) <(g)> Interest in Trust Property. A beneficiary who
3-62 accepts an interest in a trust is not considered to have a direct
3-63 or indirect interest in trust property that relates to a licensed
3-64 or permitted business and over which the beneficiary exercises no
3-65 control. Direct or indirect beneficial ownership of not more than
3-66 five percent of any class of equity securities that is registered
3-67 under the Securities Exchange Act of 1934 shall not be deemed to be
3-68 an ownership interest in the business of the issuer of such
3-69 securities within the meaning of any statute, pursuant thereto.
3-70 SECTION 2. Section 24.002(12), Business & Commerce Code, is
4-1 amended to read as follows:
4-2 (12) "Transfer" means every mode, direct or indirect,
4-3 absolute or conditional, voluntary or involuntary, of disposing of
4-4 or parting with an asset or an interest in an asset, and includes
4-5 payment of money, release, lease, and creation of a lien or other
4-6 encumbrance. The term does not include a transfer under a
4-7 disclaimer filed under Section 37A, Texas Probate Code, or Section
4-8 112.010, Property Code.
4-9 SECTION 3. Section 112.010(d), Property Code, is amended to
4-10 read as follows:
4-11 (d) A disclaimer under this section is effective as of the
4-12 date of the transfer of the interest involved and relates back for
4-13 all purposes to the date of the transfer and is not subject to the
4-14 claims of any creditor of the disclaimant. Unless the terms of the
4-15 trust provide otherwise, <and> the interest that is the subject of
4-16 the disclaimer passes as if the person disclaiming had predeceased
4-17 the transfer and a future interest that would otherwise take effect
4-18 in possession or enjoyment after the termination of the estate or
4-19 interest that is disclaimed takes effect as if the disclaiming
4-20 beneficiary had predeceased the transfer. A disclaimer under this
4-21 section is irrevocable.
4-22 SECTION 4. Section 44, Texas Probate Code, is amended to
4-23 read as follows:
4-24 Sec. 44. ADVANCEMENTS <ADVANCEMENT BROUGHT INTO HOTCHPOTCH>.
4-25 (a) If a decedent dies intestate as to all or a portion of the
4-26 decedent's estate, property the decedent gave during the decedent's
4-27 lifetime to a person who, on the date of the decedent's death, is
4-28 the decedent's heir, or property received by a decedent's heir
4-29 under a nontestamentary transfer under Chapter XI of this code is
4-30 an advancement against the heir's intestate share only if:
4-31 (1) the decedent declared in a contemporaneous writing
4-32 or the heir acknowledged in writing that the gift or
4-33 nontestamentary transfer is an advancement; or
4-34 (2) the decedent's contemporaneous writing or the
4-35 heir's written acknowledgment otherwise indicates that the gift or
4-36 nontestamentary transfer is to be taken into account in computing
4-37 the division and distribution of the decedent's intestate estate.
4-38 (b) For purposes of Subsection (a) of this section, property
4-39 that is advanced is valued at the time the heir came into
4-40 possession or enjoyment of the property or at the time of the
4-41 decedent's death, whichever occurs first.
4-42 (c) If the recipient of the property fails to survive the
4-43 decedent, the property is not taken into account in computing the
4-44 division and distribution of the decedent's intestate estate,
4-45 unless the decedent's contemporaneous writing provides otherwise.
4-46 <Whether any of the heirs of a person dying intestate shall have
4-47 received from such intestate in his lifetime any real, personal or
4-48 mixed estate by way of advancement, and shall choose to come into
4-49 the partition and distribution of the estate with the other
4-50 distributees, such advancement shall be brought into hotchpotch
4-51 with the whole estate, and such party returning such advancement
4-52 shall thereupon be entitled to his proper portion of the whole
4-53 estate; provided that it shall be sufficient to account for the
4-54 value of the property so brought into hotchpotch at the time it was
4-55 advanced. Every gratuitous inter vivos transfer is deemed to be an
4-56 absolute gift and not an advancement unless proved to be an
4-57 advancement. If an advancee dies before the intestate, leaving a
4-58 lineal heir who takes from the intestate, the advancement shall be
4-59 taken into account in the same manner as if it had been directly to
4-60 such heir. If such heir is entitled to a lesser share in the
4-61 estate than the advancee would have been entitled to had he
4-62 survived the intestate, then the heir shall be charged only with
4-63 such portion of the advancement as the amount he would have
4-64 inherited, had there been no advancement, bears to the amount which
4-65 the advancee would have inherited had there been no advancement.>
4-66 SECTION 5. Section 47(d), Texas Probate Code, is amended to
4-67 read as follows:
4-68 (d) Joint Owners. If any real or personal property,
4-69 including community property with a right of survivorship, <stocks,
4-70 bonds, bank deposits, or other intangible property> shall be so
5-1 owned that one of two joint owners is entitled to the whole on the
5-2 death of the other, and neither survives the other by 120 hours,
5-3 these assets shall be distributed one-half as if one joint owner
5-4 had survived and the other one-half as if the other joint owner had
5-5 survived. If there are more than two joint owners and all have
5-6 died within a period of less than 120 hours, these assets shall be
5-7 divided into as many equal portions as there are joint owners and
5-8 these portions shall be distributed respectively to those who would
5-9 have taken in the event that each joint owner survived.
5-10 SECTION 6. Section 58, Texas Probate Code, is amended by
5-11 adding Subsections (c) and (d) to read as follows:
5-12 (c) A legacy of personal property does not include any
5-13 contents of the property unless the will directs that the contents
5-14 are included in the legacy. A devise of real property does not
5-15 include any personal property located on or associated with the
5-16 real property or any contents of property located on the real
5-17 property unless the will directs that the personal property or
5-18 contents are included in the devise.
5-19 (d) In this section:
5-20 (1) "Contents" means tangible personal property other
5-21 than titled personal property found inside of or on a specifically
5-22 bequested or devised item. The term includes clothing, pictures,
5-23 furniture, coin collections, and other items of tangible personal
5-24 property that do not require a formal transfer of title or that are
5-25 located in another item of tangible personal property such as a
5-26 cedar chest or furniture located on real property.
5-27 (2) "Titled personal property" includes all tangible
5-28 personal property represented by a certificate of title, written
5-29 label, marking, or designation that signifies ownership by a
5-30 person. The term includes a stock certificate, motor vehicle,
5-31 motor home, motorboat, or other similar property that requires a
5-32 formal transfer of title.
5-33 SECTION 7. Section 58a, Texas Probate Code, is amended to
5-34 read as follows:
5-35 Sec. 58a. DEVISES OR BEQUESTS TO TRUSTEES. (a) A testator
5-36 may validly devise or bequeath property in a will to the trustee of
5-37 a trust established or to be established:
5-38 (1) during the testator's lifetime by the testator, by
5-39 the testator and another person, or by another person, including a
5-40 funded or unfunded life insurance trust, in which the settlor has
5-41 reserved any or all rights of ownership of the insurance contracts;
5-42 or
5-43 (2) at the testator's death by the testator's devise
5-44 or bequest to the trustee, if the trust is identified in the
5-45 testator's will and its terms are in a written instrument, other
5-46 than a will, that is executed before, with, or after the execution
5-47 of the testator's will or in another person's will if that other
5-48 person has predeceased the testator, regardless of the existence,
5-49 size, or character of the corpus of the trust.
5-50 (b) A devise or bequest is not invalid because the trust is
5-51 amendable or revocable or because the trust was amended after the
5-52 execution of the will or the testator's death.
5-53 (c) Unless the testator's will provides otherwise, property
5-54 devised or bequeathed to a trust described by Subsection (a) of
5-55 this section is not held under a testamentary trust of the
5-56 testator. The property becomes a part of the trust to which it is
5-57 devised or bequeathed and must be administered and disposed of in
5-58 accordance with the provisions of the instrument establishing the
5-59 trust, including any amendments to the instrument made before or
5-60 after the testator's death.
5-61 (d) Unless the testator's will provides otherwise, a
5-62 revocation or termination of the trust before the testator's death
5-63 causes the devise or bequest to lapse. <By a will duly executed
5-64 pursuant to the provisions of this Code, a testator may devise or
5-65 bequeath property to the trustee of any trust (including an
5-66 unfunded life insurance trust, even though the trustor has reserved
5-67 any or all rights of ownership in the insurance contracts) the
5-68 terms of which are evidenced by a written instrument in existence
5-69 before or concurrently with the execution of such will and which is
5-70 identified in such will, even though such trust is subject to
6-1 amendment, modification, revocation or termination. The property
6-2 so devised or bequeathed shall be added to the corpus of such trust
6-3 to be administered as a part thereof and shall thereafter be
6-4 governed by the terms and provisions of the instrument establishing
6-5 such trust, including written amendments or modifications thereto
6-6 made before the death of the testator. An entire revocation of the
6-7 trust prior to the testator's death shall cause the devise or
6-8 bequest to lapse.>
6-9 SECTION 8. Section 67, Texas Probate Code, is amended by
6-10 amending Subsection (a) and adding Subsection (d) to read as
6-11 follows:
6-12 (a) Whenever a pretermitted child is not mentioned in the
6-13 testator's will, provided for in the testator's will, or otherwise
6-14 provided for by the testator <of a testator, as herein defined, is
6-15 neither provided for nor in any way mentioned in the testator's
6-16 will>, the pretermitted child shall succeed to a portion of the
6-17 testator's estate as provided by Subsection (a)(1) or (a)(2) of
6-18 this section. <herein provided:>
6-19 (1) If the testator has one or more children living
6-20 when he executes his last will, and:
6-21 (A) No provision is made therein for any such
6-22 child, a pretermitted child succeeds to the portion of the
6-23 testator's separate and community estate to which the pretermitted
6-24 child would have been entitled pursuant to Section 38(a) of this
6-25 code had the testator died intestate without a surviving spouse
6-26 owning only that portion of his estate not devised or bequeathed to
6-27 the parent of the pretermitted child.
6-28 (B) Provision is made therein for one or more of
6-29 such children, a pretermitted child is entitled to share in the
6-30 testator's estate as follows:
6-31 (i) The portion of the testator's estate
6-32 to which the pretermitted child is entitled is limited to the
6-33 disposition made to children under the will.
6-34 (ii) The pretermitted child shall receive
6-35 such share of the testator's estate, as limited in Subparagraph
6-36 (i), as he would have received had the testator included all
6-37 pretermitted children with the children upon whom benefits were
6-38 conferred under the will, and given an equal share of such benefits
6-39 to each such child.
6-40 (iii) To the extent that it is feasible,
6-41 the interest of the pretermitted child in the testator's estate
6-42 shall be of the same character, whether an equitable or legal life
6-43 estate or in fee, as the interest that the testator conferred upon
6-44 his children under the will.
6-45 (2) If the testator has no child living when he
6-46 executes his last will, the pretermitted child succeeds to the
6-47 portion of the testator's separate and community estate to which
6-48 the pretermitted child would have been entitled pursuant to Section
6-49 38(a) of this code had the testator died intestate without a
6-50 surviving spouse owning only that portion of his estate not devised
6-51 or bequeathed to the parent of the pretermitted child.
6-52 (d) For the purposes of this section, a child is provided
6-53 for or a provision is made for a child if a disposition of property
6-54 to or for the benefit of the pretermitted child, whether vested or
6-55 contingent, is made:
6-56 (1) in the testator's will, including a devise or
6-57 bequest to a trustee as authorized by Section 58(a) of this code;
6-58 or
6-59 (2) outside the testator's will and is intended to
6-60 take effect at the testator's death.
6-61 SECTION 9. Sections 68(a) and (e), Texas Probate Code, are
6-62 amended to read as follows:
6-63 (a) If a devisee who is a descendant of the testator or a
6-64 descendant of a testator's parent is deceased at the time of the
6-65 execution of the will, fails to survive the testator, or is treated
6-66 as if the devisee predeceased the testator by Section 47 of this
6-67 code or otherwise, the descendants of the devisee who survived the
6-68 testator by 120 hours take the devised property in place of the
6-69 devisee. The property shall be divided into as many shares as
6-70 there are surviving descendants in the nearest <same> degree of
7-1 kinship to the devisee and <or surviving descendants of> deceased
7-2 persons in the same degree whose descendants survived <as> the
7-3 testator. Each<, with each> surviving descendant in the nearest
7-4 degree receives <receiving> one share, and the share of each
7-5 deceased person in the same degree is divided among his descendants
7-6 by representation <in the same manner>. For purposes of this
7-7 section, a person who would have been a devisee under a class gift
7-8 if the person had survived the testator is treated as a devisee
7-9 unless the person died before the date the will was executed.
7-10 (e) This section applies unless the testator's last will and
7-11 testament provides otherwise. For example, a devise or bequest in
7-12 the testator's will such as "to my surviving children" or "to such
7-13 of my children as shall survive me" prevents the application of
7-14 Subsection (a) of this section.
7-15 SECTION 10. Chapter IV, Texas Probate Code, is amended by
7-16 adding Section 70A to read as follows:
7-17 Sec. 70A. INCREASE IN SECURITIES; ACCESSIONS. (a) Unless
7-18 the will clearly provides otherwise, a devise of securities that
7-19 are owned by the testator on the date of execution of the will
7-20 includes the following additional securities subsequently acquired
7-21 by the testator as a result of the testator's ownership of the
7-22 devised securities:
7-23 (1) securities of the same organization acquired
7-24 because of action initiated by the organization or any successor,
7-25 related, or acquiring organization, including stock splits, stock
7-26 dividends, and new issues of stock acquired in a reorganization,
7-27 redemption, or exchange, other than securities acquired through the
7-28 exercise of purchase options or through a plan of reinvestment; and
7-29 (2) securities of another organization acquired as a
7-30 result of a merger, consolidation, reorganization, or other
7-31 distribution by the organization or any successor, related, or
7-32 acquiring organization, including stock splits, stock dividends,
7-33 and new issues of stock acquired in a reorganization, redemption,
7-34 or exchange, other than securities acquired through the exercise of
7-35 purchase options or through a plan of reinvestment.
7-36 (b) Unless the will clearly provides otherwise, a devise of
7-37 securities does not include a cash distribution relating to the
7-38 securities and accruing before death, whether or not the
7-39 distribution is paid before death.
7-40 (c) In this section:
7-41 (1) "Securities" has the meaning assigned by Section
7-42 4, The Securities Act (Article 581-4, Vernon's Texas Civil
7-43 Statutes), and its subsequent amendments.
7-44 (2) "Stock" means securities.
7-45 SECTION 11. Section 89, Texas Probate Code, is amended to
7-46 read as follows:
7-47 Sec. 89. Action of Court on Probated Will. Upon the
7-48 completion of hearing of an application for the probate of a will,
7-49 if the Court be satisfied that such will should be admitted to
7-50 probate, an order to that effect shall be entered. Certified
7-51 copies of such will and the order <probate of the same>, or of the
7-52 record thereof, and the record of testimony, may be recorded in
7-53 other counties, and may be used in evidence, as the original might
7-54 be, on the trial of the same matter in any other court, when taken
7-55 there by appeal or otherwise.
7-56 <Probate of Wills as Muniments of Title. In each instance
7-57 where the Court is satisfied that a will should be admitted to
7-58 probate, and where the Court is further satisfied that there are no
7-59 unpaid debts owing by the estate of the testator, excluding debts
7-60 secured by liens on real estate, or for other reason finds that
7-61 there is no necessity for administration upon such estate, the
7-62 Court may admit such will to probate as a Muniment of Title.>
7-63 <The order admitting a will to probate as a Muniment of Title
7-64 shall constitute sufficient legal authority to all persons owing
7-65 any money, having custody of any property, or acting as registrar
7-66 or transfer agent of any evidence of interest, indebtedness,
7-67 property, or right belonging to the estate, and to persons
7-68 purchasing from or otherwise dealing with the estate, for payment
7-69 or transfer to the persons described in such will as entitled to
7-70 receive the particular asset without administration. The person or
8-1 persons entitled to property under the provisions of such wills
8-2 shall be entitled to deal and treat with the properties to which
8-3 they are so entitled in the same manner as if the record of title
8-4 thereof were vested in their names.>
8-5 <Unless waived by the Court, before the 181st day, or such
8-6 later day as may be extended by the Court, after the date a will is
8-7 admitted to probate as a Muniment of Title, the applicant for
8-8 probate of the will shall file with the clerk of the Court a sworn
8-9 affidavit stating specifically the terms of the will that have been
8-10 fulfilled and the terms of the will that have been unfulfilled.
8-11 Failure of the applicant for probate of the will to file such
8-12 affidavit shall not otherwise affect title to property passing
8-13 under the terms of the will.>
8-14 SECTION 12. Part 1, Chapter V, Texas Probate Code, is
8-15 amended by adding Section 89A to read as follows:
8-16 Sec. 89A. PROBATE OF WILLS AS MUNIMENTS OF TITLE. (a) In
8-17 each instance where the court is satisfied that a will should be
8-18 admitted to probate, and where the court is further satisfied that
8-19 there are no unpaid debts owing by the estate of the testator,
8-20 excluding debts secured by liens on real estate, or for other
8-21 reason finds that there is no necessity for administration upon
8-22 such estate, the court may admit such will to probate as a muniment
8-23 of title.
8-24 (b) If a person who is entitled to property under the
8-25 provisions of the will cannot be ascertained solely by reference to
8-26 the will or if a question of construction of the will exists, on
8-27 proper application and notice as provided by Chapter 37, Civil
8-28 Practice and Remedies Code, the court may hear evidence and include
8-29 in the order probating the will as a muniment of title a
8-30 declaratory judgment construing the will or determining those
8-31 persons who are entitled to receive property under the will and the
8-32 persons' shares or interests in the estate. The judgment is
8-33 conclusive in any suit between any person omitted from the judgment
8-34 and a bona fide purchaser for value who has purchased real or
8-35 personal property after entry of the judgment without actual notice
8-36 of the claim of the omitted person to an interest in the estate.
8-37 Any person who has delivered property of the decedent to a person
8-38 declared to be entitled to the property under the judgment or has
8-39 engaged in any other transaction with the person in good faith
8-40 after entry of the judgment is not liable to any person for actions
8-41 taken in reliance on the judgment.
8-42 (c) The order admitting a will to probate as a muniment of
8-43 title shall constitute sufficient legal authority to all persons
8-44 owing any money to the estate of the decedent, having custody of
8-45 any property, or acting as registrar or transfer agent of any
8-46 evidence of interest, indebtedness, property, or right belonging to
8-47 the estate, and to persons purchasing from or otherwise dealing
8-48 with the estate, for payment or transfer, without liability, to the
8-49 persons described in such will as entitled to receive the
8-50 particular asset without administration. The person or persons
8-51 entitled to property under the provisions of such wills shall be
8-52 entitled to deal with and treat the properties to which they are so
8-53 entitled in the same manner as if the record of title thereof were
8-54 vested in their names.
8-55 (d) Unless waived by the court, before the 181st day, or
8-56 such later day as may be extended by the court, after the date a
8-57 will is admitted to probate as a muniment of title, the applicant
8-58 for probate of the will shall file with the clerk of the court a
8-59 sworn affidavit stating specifically the terms of the will that
8-60 have been fulfilled and the terms of the will that have been
8-61 unfulfilled. Failure of the applicant for probate of the will to
8-62 file such affidavit shall not otherwise affect title to property
8-63 passing under the terms of the will.
8-64 SECTION 13. Section 110, Texas Probate Code, is amended to
8-65 read as follows:
8-66 Sec. 110. Persons Disqualified to Serve as Guardians.
8-67 (a) The following persons shall not be appointed guardians:
8-68 (1) <(a)> Minors.
8-69 (2) <(b)> Persons whose conduct is notoriously bad.
8-70 (3) <(c)> Incompetents.
9-1 (4) <(d)> Those who are themselves parties, or whose
9-2 father or mother is a party to a lawsuit on the result of which the
9-3 welfare of the person for whom, or for whose estate, a guardian is
9-4 to be appointed, may depend, unless the court:
9-5 (A) determines, in its discretion, that the
9-6 lawsuit claim of the party applying for guardianship is not in
9-7 conflict with the claim of the party who is the subject of the
9-8 guardianship; or
9-9 (B) appoints a guardian ad litem, if necessary,
9-10 to separately and independently represent the interest of the party
9-11 who is the subject of the guardianship throughout the litigation
9-12 process.
9-13 (5) <(e)> Those who are indebted to the person for
9-14 whom or for whose estate a guardian is to be appointed, unless they
9-15 pay the debt prior to the appointment, or who are asserting any
9-16 claim to any property, real or personal, adverse to the person for
9-17 whom, or for whose estate, the appointment is sought.
9-18 (6) <(g)> Those who by reason of inexperience or lack
9-19 of education, or for other good reason, are shown to be incapable
9-20 of properly and prudently managing and controlling the ward or his
9-21 estate.
9-22 (b) If an ad litem is appointed under Subsection (a) of this
9-23 section, the fees and expenses of the guardian ad litem shall be
9-24 taxed as costs of the litigation proceeding that made the ad
9-25 litem's appointment necessary. In the interest of judicial
9-26 economy, the guardian ad litem may be the same person who has been
9-27 appointed attorney ad litem under Section 113A or 131(c) of this
9-28 code or may be a person who is serving as an ad litem for the
9-29 benefit of the ward in any other proceeding.
9-30 (c) A spouse, parent, or child who has been disqualified
9-31 from serving as guardian because of a litigation conflict under
9-32 Subsection (a)(4) of this section and who is otherwise qualified as
9-33 a guardian may be appointed as successor guardian on the removal of
9-34 any conflict causing the initial disqualification.
9-35 SECTION 14. Section 111, Texas Probate Code, as amended by
9-36 Section 2, Chapter 330, and Section 1, Chapter 1164, Acts of the
9-37 71st Legislature, Regular Session, 1989, is amended to read as
9-38 follows:
9-39 Sec. 111. Application for Appointment of Permanent Guardian.
9-40 <(a)> A proceeding for the appointment of a guardian shall be
9-41 begun by written application filed in the court of the county
9-42 having venue thereof. Any person may make such application. Such
9-43 application shall be sworn and must state:
9-44 (1) The name, sex, date of birth, and residence, of
9-45 the person for whom the appointment of a guardian is sought;
9-46 (2) If a minor, the names of the parents and next of
9-47 kin of such persons, and whether either or both of the parents are
9-48 deceased;
9-49 (3) If a minor, a statement of whether the minor has
9-50 been the subject of a legal or conservatorship proceeding within
9-51 the preceding two-year period, and if so, the court involved, the
9-52 nature of the proceeding, and the final disposition, if any, of the
9-53 proceeding;
9-54 (4) If a person 60 years of age or older, the name and
9-55 address, to the best of the applicant's knowledge, of the person's
9-56 spouse, brother, sister, and children;
9-57 (5) A general description of the property comprising
9-58 such person's estate, if guardianship of the estate is sought;
9-59 (6) The facts which require that a guardian be
9-60 appointed;
9-61 (7) The name, relationship, and address of the person
9-62 whom the applicant desires to have appointed as guardian;
9-63 (8) Whether guardianship of the person and estate, or
9-64 of the person or of the estate, is sought;
9-65 (9) The social security number of the applicant and of
9-66 the person for whom the appointment of a guardian is sought; and
9-67 (10) Such other facts as show that the court has venue
9-68 over the proceeding.
9-69 <(b) The portion of the application stating the information
9-70 required by Subsection (a)(3) of this section shall be sworn to by
10-1 the applicant.>
10-2 SECTION 15. Section 145(q), Texas Probate Code, is amended
10-3 to read as follows:
10-4 (q) Absent proof of fraud or collusion on the part of a
10-5 judge, no judge may be held civilly liable for the commission of
10-6 misdeeds or the omission of any required act of any person, firm,
10-7 or corporation designated as an independent executor or independent
10-8 administrator under Subsections (c), (d), and (e) of the section.
10-9 Section 36 of this code does not apply to the appointment of an
10-10 independent executor or administrator under Subsection (c), (d), or
10-11 (e) of this section.
10-12 SECTION 16. Section 154A, Texas Probate Code, is amended by
10-13 adding Subsection (i) to read as follows:
10-14 (i) Absent proof of fraud or collusion on the part of a
10-15 judge, the judge may not be held civilly liable for the commission
10-16 of misdeeds or the omission of any required act of any person,
10-17 firm, or corporation designated as a successor independent executor
10-18 under this section. Section 36 of this code does not apply to an
10-19 appointment of a successor independent executor under this section.
10-20 SECTION 17. Section 160, Texas Probate Code, is amended to
10-21 read as follows:
10-22 Sec. 160. Powers of Surviving Spouse When No Administration
10-23 is Pending. (a) When no one has qualified as executor or
10-24 administrator of the estate of a deceased spouse, the surviving
10-25 spouse, whether the husband or wife, as the surviving partner of
10-26 the marital partnership, without qualifying as community
10-27 administrator as hereinafter provided, has power to sue and be sued
10-28 for the recovery of community property; to sell, mortgage, lease,
10-29 and otherwise dispose of community property for the purpose of
10-30 paying community debts; to collect claims due to the community
10-31 estate; and has such other powers as shall be necessary to preserve
10-32 the community property, discharge community obligations, and wind
10-33 up community affairs.
10-34 (b) If an affidavit stating that the affiant is the
10-35 surviving spouse and that no one has qualified as executor or
10-36 administrator of the estate of the deceased spouse is furnished to
10-37 a person owing money to the community estate for current wages at
10-38 the time of the death of the deceased spouse, the person making
10-39 payment or delivering to the affiant the deceased spouse's final
10-40 paycheck for wages, including unpaid sick pay or vacation pay, if
10-41 any, is released from liability to the same extent as if the
10-42 payment or delivery was made to a personal representative of the
10-43 deceased spouse. The person is not required to inquire into the
10-44 truth of the affidavit. The affiant to whom the payment or
10-45 delivery is made is answerable to any person having a prior right
10-46 and is accountable to any personal representative who is appointed.
10-47 The affiant is liable for any damage or loss to any person that
10-48 arises from a payment or delivery made in reliance on the
10-49 affidavit.
10-50 (c) This section does not affect the disposition of the
10-51 property of the deceased spouse.
10-52 SECTION 18. Section 271, Texas Probate Code, is amended to
10-53 read as follows:
10-54 Sec. 271. Exempt Property to Be Set Apart. (a) Unless an
10-55 affidavit is filed under Subsection (b) of this section,
10-56 immediately <Immediately> after the inventory, appraisement, and
10-57 list of claims have been approved, the court shall, by order, set
10-58 apart for the use and benefit of the surviving spouse and minor
10-59 children and unmarried children remaining with the family of the
10-60 deceased, all such property of the estate as is exempt from
10-61 execution or forced sale by the constitution and laws of the state.
10-62 (b) Before the approval of the inventory, appraisement, and
10-63 list of claims, a surviving spouse, any person who is authorized to
10-64 act on behalf of minor children of the deceased, or any unmarried
10-65 children remaining with the family of the deceased may apply to the
10-66 court to have exempt property set aside by filing an application
10-67 and a verified affidavit listing all of the property that the
10-68 applicant claims is exempt. The applicant bears the burden of
10-69 proof by a preponderance of the evidence at any hearing on the
10-70 application. The court shall set aside property of the decedent's
11-1 estate that the court finds is exempt.
11-2 SECTION 19. Section 273, Texas Probate Code, is amended to
11-3 read as follows:
11-4 Sec. 273. Allowance in Lieu of Exempt Property. In case
11-5 there should not be among the effects of the deceased all or any of
11-6 the specific articles exempted from execution or forced sale by the
11-7 Constitution and laws of this state, the court shall make a
11-8 reasonable allowance in lieu thereof, to be paid to such surviving
11-9 spouse and children, or such of them as there are, as hereinafter
11-10 provided. The allowance in lieu of a homestead shall in no case
11-11 exceed $15,000 <Ten Thousand Dollars> and the allowance for other
11-12 exempted property shall in no case exceed $5,000 <One Thousand
11-13 Dollars>, exclusive of the allowance for the support of the
11-14 surviving spouse and minor children which is hereinafter provided
11-15 for.
11-16 SECTION 20. Section 286, Texas Probate Code, is amended to
11-17 read as follows:
11-18 Sec. 286. Family Allowance to Surviving Spouses and Minors.
11-19 (a) Unless an affidavit is filed under Subsection (b) of this
11-20 section, immediately <Immediately> after the inventory,
11-21 appraisement, and list of claims have been approved, the court
11-22 shall fix a family allowance for the support of the surviving
11-23 spouse and minor children of the deceased.
11-24 (b) Before the approval of the inventory, appraisement, and
11-25 list of claims, a surviving spouse or any person who is authorized
11-26 to act on behalf of minor children of the deceased may apply to the
11-27 court to have the court fix the family allowance by filing an
11-28 application and a verified affidavit describing the amount
11-29 necessary for the maintenance of the surviving spouse and minor
11-30 children for one year after the date of the death of the decedent
11-31 and describing the spouse's separate property and any property that
11-32 minor children have in their own right. The applicant bears the
11-33 burden of proof by a preponderance of the evidence at any hearing
11-34 on the application. The court shall fix a family allowance for the
11-35 support of the surviving spouse and minor children of the deceased.
11-36 SECTION 21. Section 333, Texas Probate Code, is amended to
11-37 read as follows:
11-38 Sec. 333. Certain Personal Property to Be Sold. (a) The
11-39 representative of an estate, after approval of inventory and
11-40 appraisement, shall promptly apply for an order of the court to
11-41 sell at public auction or privately, for cash or on credit not
11-42 exceeding six months, all of the estate that is liable to perish,
11-43 waste, or deteriorate in value, or that will be an expense or
11-44 disadvantage to the estate if kept. Property <Bonds, securities,
11-45 or other personal property deemed by the court not to be so liable,
11-46 property> exempt from forced sale, specific legacies, and personal
11-47 property necessary to carry on a farm, ranch, factory, or any other
11-48 business which it is thought best to operate, shall not be included
11-49 in such sales.
11-50 (b) In determining whether to order the sale of an asset
11-51 under Subsection (a) of this section, the court shall consider:
11-52 (1) the representative's duty to take care of and
11-53 manage the estate as a person of ordinary prudence, discretion, and
11-54 intelligence would exercise in the management of the person's own
11-55 affairs; and
11-56 (2) whether the asset constitutes an asset that a
11-57 trustee is authorized to invest under Section 113.056 or Subchapter
11-58 F, Chapter 113, Property Code.
11-59 SECTION 22. Section 389, Texas Probate Code, is amended to
11-60 read as follows:
11-61 Sec. 389. Investments without Court Order. (a) The
11-62 guardian of the estate may retain, without regard to
11-63 diversification of investments and without liability for any
11-64 depreciation or loss resulting from the retention, any property
11-65 received into a guardianship estate at its inception or added to
11-66 the estate by gift, devise, or inheritance or by mutation or
11-67 increase. A guardian of the estate is not relieved from the duty
11-68 to take care of and manage the estate as a person of ordinary
11-69 prudence, discretion, and intelligence would exercise in the
11-70 management of the person's own affairs.
12-1 (b) If, at any time, the guardian of the estate shall have
12-2 on hand money belonging to the ward beyond that which may be
12-3 necessary for the education and maintenance of such ward or wards,
12-4 he shall invest such money as follows:
12-5 (1) <(a)> In bonds or other obligations of the United
12-6 States; <or>
12-7 (2) <(b)> In tax-supported bonds of the State of
12-8 Texas; <or>
12-9 (3) <(c)> In tax-supported bonds of any county,
12-10 district, political subdivision, or incorporated city or town in
12-11 the State of Texas; provided, that the bonds of counties,
12-12 districts, subdivisions, cities, and towns may be purchased only
12-13 subject to the following restrictions: the net funded debt of said
12-14 issuing unit shall not exceed ten per cent of the assessed value of
12-15 taxable property therein, "net funded debt" meaning the total
12-16 funded debt less sinking funds on hand; and further, in the case of
12-17 cities or towns, less that part of the debt incurred for
12-18 acquisition or improvement of revenue-producing utilities, the
12-19 revenues of which are not pledged to support other obligations;
12-20 provided, however, that these restrictions shall not apply to bonds
12-21 issued for road purposes in this state under authority of Section
12-22 52 of Article III of the Constitution of Texas, which bonds are
12-23 supported by a tax unlimited as to rate or amount; <or>
12-24 (4) <(d)> In shares or share accounts of any building
12-25 and loan association organized under the laws of this state,
12-26 provided the payment of such shares or share accounts is insured by
12-27 the Federal Savings & Loan Insurance Corporation; <or>
12-28 (5) <(e)> In the shares or share accounts of any
12-29 federal savings and loan association domiciled in this state, where
12-30 the payment of such shares or share accounts is insured by the
12-31 Federal Savings & Loan Insurance Corporation; <or>
12-32 (6) <(f)> In collateral bonds of companies
12-33 incorporated under the laws of the State of Texas, having a paid-in
12-34 capital of One Million Dollars or more, when such bonds are a
12-35 direct obligation of the company issuing them, and are specifically
12-36 secured by first mortgage real estate notes or other securities
12-37 pledged with a trustee; or<.>
12-38 (7) <(g)> In interest-bearing time deposits which may
12-39 be withdrawn on or before one year after demand in any bank doing
12-40 business in Texas where the payment of such time deposits is
12-41 insured by the Federal Deposit Insurance Corporation.
12-42 SECTION 23. The heading of Section 389A, Texas Probate Code,
12-43 is amended to read as follows:
12-44 Sec. 389A. <Other> Investments With Court Order
12-45 SECTION 24. Part 8, Chapter VIII, Texas Probate Code, is
12-46 amended by adding Section 378B to read as follows:
12-47 Sec. 378B. ALLOCATION OF INCOME AND EXPENSES DURING
12-48 ADMINISTRATION OF DECEDENT'S ESTATE. (a) Except as provided by
12-49 Subsection (b) of this section and unless the will provides
12-50 otherwise, all expenses incurred in connection with the settlement
12-51 of a decedent's estate, including debts, funeral expenses, estate
12-52 taxes, interest and penalties relating to estate taxes, and family
12-53 allowances, shall be charged against the principal of the estate.
12-54 Fees and expenses of an attorney, accountant, or other professional
12-55 advisor, commissions and expenses of a personal representative,
12-56 court costs, and all other similar fees or expenses relating to the
12-57 administration of the estate shall be allocated between the income
12-58 and principal of the estate as the executor determines in its
12-59 discretion to be just and equitable.
12-60 (b) Unless the will provides otherwise, income from the
12-61 assets of a decedent's estate that accrues after the death of the
12-62 testator and before distribution, including income from property
12-63 used to discharge liabilities, shall be determined according to the
12-64 rules applicable to a trustee under the Texas Trust Code (Subtitle
12-65 B, Title 9, Property Code) and distributed as provided by
12-66 Subsections (c), (d), and (e) of this section.
12-67 (c) The income from the property bequeathed or devised to a
12-68 specific devisee shall be distributed to the devisee after
12-69 reduction for property taxes, ordinary repairs, insurance premiums,
12-70 interest accrued after the death of the testator, other expenses of
13-1 management and operation of the property, and other taxes,
13-2 including the taxes imposed on the income that accrues during the
13-3 period of administration and that is payable to the devisee.
13-4 (d) Except as provided by Subsection (f) of this section,
13-5 the balance of the net income shall be distributed to all other
13-6 devisees after reduction for the balance of property taxes,
13-7 ordinary repairs, insurance premiums, interest accrued, including
13-8 interest accruing as provided by Subsection (f) of this section
13-9 after the death of the testator, other expenses of management and
13-10 operation of all property from which the estate is entitled to
13-11 income, and taxes imposed on income that accrues during the period
13-12 of administration and that is payable or allocable to the devisees,
13-13 in proportion to the devisees' respective interests in the
13-14 undistributed assets of the estate.
13-15 (e) If a charitable organization is entitled to receive
13-16 income under Subsection (b) of this section, any amount allowed as
13-17 a tax deduction to the estate for income payable to the charitable
13-18 organization shall be paid, without reduction for taxes, to the
13-19 charitable organization.
13-20 (f) A devisee of a pecuniary bequest, whether or not in
13-21 trust, shall be paid interest on the bequest at the legal rate of
13-22 interest as provided by Article 1.03, Revised Statutes (Article
13-23 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
13-24 amendments, beginning one year after the date the court grants
13-25 letters testamentary or letters of administration.
13-26 (g) Income received by a trustee under this section shall be
13-27 treated as income of the trust as provided by Section 113.103,
13-28 Property Code.
13-29 (h) In this section, "undistributed assets" includes funds
13-30 used to pay debts, administration expenses, and federal and state
13-31 estate, inheritance, succession, and generation-skipping transfer
13-32 taxes until the date of payment of the debts, expenses, and taxes.
13-33 Except as required by Sections 2055 and 2056 of the Internal
13-34 Revenue Code of 1986 (26 U.S.C. Secs. 2055 and 2056), and its
13-35 subsequent amendments, the frequency and method of determining the
13-36 beneficiaries' respective interests in the undistributed assets of
13-37 the estate shall be in the executor's sole and absolute discretion.
13-38 The executor may consider all relevant factors, including
13-39 administrative convenience and expense and the interests of the
13-40 various beneficiaries of the estate in order to reach a fair and
13-41 equitable result among beneficiaries.
13-42 SECTION 25. Sections 436(3) and (5), Texas Probate Code, are
13-43 amended to read as follows:
13-44 (3) "Financial institution" means an organization
13-45 authorized to do business under state or federal laws relating to
13-46 financial institutions, including, without limitation, banks and
13-47 trust companies, savings banks, building and loan associations,
13-48 savings and loan companies or associations, <and> credit unions,
13-49 and brokerage firms that deal in the sales and purchases of stocks,
13-50 bonds, and other types of securities.
13-51 (5) "Multiple-party account" means a joint account, a
13-52 convenience account, a P.O.D. account, or a trust account. It does
13-53 not include accounts established for deposit of funds of a
13-54 partnership, joint venture, or other association for business
13-55 purposes, or accounts controlled by one or more persons as the duly
13-56 authorized agent or trustee for a corporation, unincorporated
13-57 association, charitable or civic organization, or a regular
13-58 fiduciary or trust account where the relationship is established
13-59 other than by deposit agreement.
13-60 SECTION 26. Sections 439(b) and (c), Texas Probate Code, are
13-61 amended to read as follows:
13-62 (b) If the account is a P.O.D. account and there is a
13-63 written agreement signed by the original payee or payees, on the
13-64 death of the original payee or on the death of the survivor of two
13-65 or more original payees, any sums remaining on deposit belong to
13-66 the P.O.D. payee or payees if surviving, or to the survivor of them
13-67 if one or more P.O.D. payees die before the original payee. If two
13-68 or more P.O.D. payees survive, there is no right of survivorship in
13-69 event of death of a P.O.D. payee thereafter unless the terms of the
13-70 account or deposit agreement expressly provide for survivorship
14-1 between them.
14-2 (c) If the account is a trust account and there is a written
14-3 agreement signed by the trustee or trustees, on death of the
14-4 trustee or the survivor of two or more trustees, any sums remaining
14-5 on deposit belong to the person or persons named as beneficiaries,
14-6 if surviving, or to the survivor of them if one or more
14-7 beneficiaries die before the trustee dies<, unless there is clear
14-8 and convincing evidence of a contrary intent>. If two or more
14-9 beneficiaries survive, there is no right of survivorship in event
14-10 of death of any beneficiary thereafter unless the terms of the
14-11 account or deposit agreement expressly provide for survivorship
14-12 between them.
14-13 SECTION 27. Part 1, Chapter XI, Texas Probate Code, is
14-14 amended by adding Section 438A to read as follows:
14-15 Sec. 438A. CONVENIENCE ACCOUNT. (a) If an account is
14-16 established at a financial institution by a party in the names of
14-17 the party and a co-signer and the terms of the account provide that
14-18 the sums on deposit are paid or delivered to the party or to the
14-19 co-signer "for the convenience" of the party, the account is a
14-20 convenience account.
14-21 (b) The making of a deposit in a convenience account does
14-22 not affect the title to the deposit.
14-23 (c) The party to a convenience account is not considered to
14-24 have made a gift of one-half of the deposit or of any additions or
14-25 accruals to the deposit to the co-signer.
14-26 (d) On the death of the party, the co-signer shall have no
14-27 right of survivorship in the account and ownership of the account
14-28 remains in the party.
14-29 (e) If an addition is made to the account by anyone other
14-30 than the party, the addition and accruals to the addition are
14-31 considered to have been made by the party.
14-32 (f) All deposits to a convenience account and additions and
14-33 accruals to the deposits may be paid to the party or to the
14-34 co-signer. The financial institution is completely released from
14-35 liability for a payment made from the account before the financial
14-36 institution receives notice in writing signed by the party not to
14-37 make the payment in accordance with the terms of the account.
14-38 After receipt of the notice from the party, the financial
14-39 institution may require the party to approve any further payments
14-40 from the account.
14-41 (g) If the financial institution makes a payment of the sums
14-42 on deposit in a convenience account to the co-signer after the
14-43 death of the party and before the financial institution has
14-44 received written notice of the party's death, the financial
14-45 institution is completely released from liability for the payment.
14-46 If a financial institution makes payment to the personal
14-47 representative of the deceased party's estate after the death of
14-48 the party and before service on the financial institution of a
14-49 court order prohibiting payment, the financial institution is
14-50 released to the extent of the payment from liability to any person
14-51 claiming a right to the funds. The receipt by the representative
14-52 to whom payment is made is a complete release and discharge of the
14-53 financial institution.
14-54 SECTION 28. Section 111.004, Property Code, is amended by
14-55 adding Subdivision (24) to read as follows:
14-56 (24) "Environmental law" means any federal, state, or
14-57 local law, rule, regulation, or ordinance relating to protection of
14-58 the environment.
14-59 SECTION 29. Subchapter A, Chapter 113, Property Code, is
14-60 amended by adding Section 113.025 to read as follows:
14-61 Sec. 113.025. POWERS OF TRUSTEE REGARDING ENVIRONMENTAL
14-62 LAWS. (a) A trustee or a potential trustee may inspect,
14-63 investigate, cause to be inspected, or cause to be investigated
14-64 trust property, property that the trustee or potential trustee has
14-65 been asked to hold, or property owned or operated by an entity in
14-66 which the trustee or potential trustee holds or has been asked to
14-67 hold any interest or for the purpose of determining the potential
14-68 application of environmental law with respect to the property.
14-69 This subsection does not grant any person the right of access to
14-70 any property. The taking of any action under this subsection with
15-1 respect to a trust or an addition to a trust is not evidence that a
15-2 person has accepted the trust or the addition to the trust.
15-3 (b) A trustee may take on behalf of the trust any action
15-4 before or after the initiation of an enforcement action or other
15-5 legal proceeding that the trustee reasonably believes will help to
15-6 prevent, abate, or otherwise remedy any actual or potential
15-7 violation of any environmental law affecting property held directly
15-8 or indirectly by the trustee.
15-9 SECTION 30. Section 114.001, Property Code, is amended by
15-10 adding Subsection (d) to read as follows:
15-11 (d) The trustee is not liable to the beneficiary for a loss
15-12 or depreciation in value of the trust property or for acting or
15-13 failing to act under Section 113.025 or under any other provision
15-14 of this subtitle if the action or failure to act relates to
15-15 compliance with an environmental law and if there is no gross
15-16 negligence or bad faith on the part of the trustee. The provision
15-17 of any instrument governing trustee liability does not increase the
15-18 liability of the trustee as provided by this section unless the
15-19 settlor expressly makes reference to this subsection.
15-20 SECTION 31. Section 114.063, Property Code, is amended to
15-21 read as follows:
15-22 Sec. 114.063. General Right to Reimbursement. (a) A
15-23 trustee may discharge or reimburse himself from trust principal or
15-24 income or partly from both for:
15-25 (1) advances made for the convenience, benefit, or
15-26 protection of the trust or its property; <and>
15-27 (2) expenses incurred while administering or
15-28 protecting the trust or because of the trustee's holding or owning
15-29 any of the trust property; and
15-30 (3) expenses incurred for any action taken under
15-31 Section 113.025.
15-32 (b) The trustee has a lien against trust property to secure
15-33 reimbursement under Subsection (a) <of this section>.
15-34 (c) A potential trustee is entitled to reimbursement from
15-35 trust principal or income or partly from both for reasonable
15-36 expenses incurred for any action taken under Section 113.025(a) if:
15-37 (1) a court orders reimbursement or the potential
15-38 trustee has entered into a written agreement providing for
15-39 reimbursement with the personal representative of the estate, the
15-40 trustee of the trust, the settlor, the settlor's attorney-in-fact,
15-41 the settlor's personal representative, or the person or entity
15-42 designated in the trust instrument or will to appoint a trustee;
15-43 and
15-44 (2) the potential trustee has been appointed trustee
15-45 under the terms of the trust instrument or will or has received a
15-46 written request to accept the trust from the settlor, the settlor's
15-47 attorney-in-fact, the settlor's personal representative, or the
15-48 person or entity designated in the trust instrument or will to
15-49 appoint a trustee.
15-50 SECTION 32. Section 113.109, Property Code, is amended to
15-51 read as follows:
15-52 Sec. 113.109. PROPERTY OTHER THAN NATURAL RESOURCES SUBJECT
15-53 TO DEPLETION. (a) If the principal of a trust includes a deferred
15-54 payment right, the proceeds of the right, on receipt, are income up
15-55 to five percent of the inventory value of the right, determined
15-56 separately for each year following the year in which the right
15-57 first becomes subject to the trust. The remainder of the proceeds
15-58 is principal. The allocation to income is computed in the same
15-59 manner in which interest under a loan of the initial inventory
15-60 amount would be computed, at five percent interest compounded
15-61 annually, if periodic payments are made by the borrower to the
15-62 lender.
15-63 (b) For the first year, inventory value is determined as
15-64 provided by this subtitle. For each year after the first year, the
15-65 inventory value is:
15-66 (1) reduced to the extent that proceeds of the right
15-67 were allocated to principal during the preceding year; and
15-68 (2) increased to the extent that the proceeds received
15-69 during the preceding year were less than five percent of the
15-70 inventory value for that year.
16-1 (c) While the deferred payment right is under administration
16-2 in a decedent's estate, income and principal are determined by
16-3 using the fiscal year of the estate and ending on the date the
16-4 trust is funded with the right. After the administration of the
16-5 estate, the fiscal year of the trust is used. The five percent
16-6 allocation to income is prorated for a year that is less than 12
16-7 months.
16-8 (d) The proceeds of a deferred payment right include all
16-9 receipts relating to the right, whether or not the receipts are
16-10 periodic. After the proceeds are received by the trustee and
16-11 allocated, this section does not apply to the proceeds, except to
16-12 the extent the proceeds include a deferred payment right.
16-13 (e) In this section:
16-14 (1) "Deferred payment right" means a depletable asset,
16-15 other than natural resources or timber, consisting of the right to
16-16 property under a contract, account, or other arrangement that is
16-17 payable not earlier than 12 months after the date the right becomes
16-18 subject to the trust. A deferred payment right includes the right
16-19 to receive a periodic, annuity, installment, or single sum future
16-20 payment:
16-21 (A) under a leasehold, patent, copyright, or
16-22 royalty;
16-23 (B) of income in respect of a decedent under
16-24 Section 691 of the Internal Revenue Code of 1986 (26 U.S.C. Sec.
16-25 691);
16-26 (C) of death benefits;
16-27 (D) of benefits under a nonqualified plan of
16-28 deferred compensation or similar arrangement; or
16-29 (E) under an employee's trust, a retirement
16-30 account, a plan described by Section 403 of the Internal Revenue
16-31 Code of 1986 (26 U.S.C. Sec. 403), or an employee benefit plan.
16-32 (2) "Employee benefit plan" means an employee benefit
16-33 plan as defined by Section 1002, Employee Retirement Income
16-34 Security Act of 1974 (ERISA) (29 U.S.C. Sec. 1002), a plan that
16-35 does not meet the requirements of an employee benefit plan under
16-36 ERISA because the plan does cover common law employees, or a plan
16-37 that is similar to an employee benefit plan under ERISA whether or
16-38 not the plan is covered under Subchapter I of ERISA.
16-39 (3) "Year" means the fiscal year for federal income
16-40 tax reporting purposes. <If part of the principal consists of
16-41 property other than natural resources or timber that is depletable,
16-42 such as a leasehold, patent, copyright, royalty, or right to
16-43 receive payments on a contract for deferred compensation, and the
16-44 trustee does not have a duty to change the form of the investment,
16-45 the return from the property is income, but if the trustee has a
16-46 duty under existing law or the instrument creating the trust to
16-47 change the form of the investment, as soon as it may be done
16-48 without sacrifice of value, the return from the property is income
16-49 up to five percent a year of the inventory value of the property,
16-50 and the remainder is principal.>
16-51 SECTION 33. (a) The changes in law made by Sections 1, 2,
16-52 and 3 of this Act apply only to a disclaimer made on or after the
16-53 effective date of this Act. A disclaimer made before the effective
16-54 date of this Act is covered by the law in effect when the
16-55 disclaimer was made, and the former law is continued in effect for
16-56 that purpose.
16-57 (b) The changes in law made by Sections 4, 5, 6, 7, 8, 9,
16-58 10, 11, 12, and 24 of this Act apply only to the estates of persons
16-59 who die on or after the effective date of this Act. The estate of
16-60 a person who dies before the effective date of this Act is covered
16-61 by the law in effect when the person died, and the former law is
16-62 continued in effect for that purpose.
16-63 (c) The changes in law made by Section 13 of this Act apply
16-64 only to a guardian appointed on or after the effective date of this
16-65 Act. A guardian appointed before the effective date of this Act is
16-66 covered by the law in effect when the guardian was appointed, and
16-67 the former law is continued in effect for that purpose.
16-68 (d) The changes in law made by Section 26 of this Act apply
16-69 only to an account created on or after the effective date of this
16-70 Act. An account created before the effective date of this Act is
17-1 covered by the law in effect when the account was created, and the
17-2 former law is continued in effect for that purpose.
17-3 (e) The changes in law made by Section 32 of this Act apply
17-4 only to property that becomes subject to a trust on or after the
17-5 effective date of this Act. Property that becomes subject to a
17-6 trust before the effective date of this Act is covered by the law
17-7 in effect when the property became subject to the trust, and the
17-8 former law is continued in effect for that purpose.
17-9 SECTION 34. This Act takes effect September 1, 1993.
17-10 SECTION 35. The importance of this legislation and the
17-11 crowded condition of the calendars in both houses create an
17-12 emergency and an imperative public necessity that the
17-13 constitutional rule requiring bills to be read on three several
17-14 days in each house be suspended, and this rule is hereby suspended.
17-15 * * * * *
17-16 Austin,
17-17 Texas
17-18 May 4, 1993
17-19 Hon. Bob Bullock
17-20 President of the Senate
17-21 Sir:
17-22 We, your Committee on Jurisprudence to which was referred H.B. No.
17-23 1200, have had the same under consideration, and I am instructed to
17-24 report it back to the Senate with the recommendation that it do
17-25 pass, as amended, and be printed.
17-26 Henderson,
17-27 Chairman
17-28 * * * * *
17-29 WITNESSES
17-30 FOR AGAINST ON
17-31 ___________________________________________________________________
17-32 FOR AGAINST ON
17-33 ___________________________________________________________________
17-34 Name: Dianne Hughes x
17-35 Representing: TX Bankers Assoc.
17-36 City: Austin
17-37 -------------------------------------------------------------------
17-38 Name: Alvin J. Golden x
17-39 Representing: State Bar-Real Estate Law
17-40 City: Austin
17-41 ------------------------------------------------------------------