1-1 By: Whitmire S.B. No. 489
1-2 (In the Senate - Filed February 25, 1993; March 1, 1993, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 6, 1993, reported favorably by the following vote: Yeas 7,
1-5 Nays 0; April 6, 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 A BILL TO BE ENTITLED
1-16 AN ACT
1-17 relating to decedents' estates, multiple-party accounts, and
1-18 trusts.
1-19 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-20 SECTION 1. Section 37A, Texas Probate Code, is amended to
1-21 read as follows:
1-22 Sec. 37A. Means of Evidencing Disclaimer or Renunciation of
1-23 Property or Interest Receivable From a Decedent. Any person, or
1-24 the personal representative of an incompetent, deceased, unborn or
1-25 unascertained, or minor person, with prior court approval of the
1-26 court having, or which would have, jurisdiction over such personal
1-27 representative, or any independent executor of a deceased person,
1-28 without prior court approval, who may be entitled to receive any
1-29 property as a beneficiary and who intends to effect disclaimer
1-30 irrevocably on or after September 1, 1977, of the whole or any part
1-31 of such property shall evidence same as herein provided. A
1-32 disclaimer evidenced as provided herein<,> shall be effective as of
1-33 the death of decedent and shall relate back for all purposes to the
1-34 death of the decedent and is not subject to the claims of any
1-35 creditor of the disclaimant. Unless the decedent's will provides
1-36 otherwise, the property subject to the disclaimer <and the property
1-37 subject thereof> shall pass as if the person disclaiming or on
1-38 whose behalf a disclaimer is made had predeceased the decedent and
1-39 a future interest that would otherwise take effect in possession or
1-40 enjoyment after the termination of the estate or interest that is
1-41 disclaimed takes effect as if the disclaiming beneficiary had
1-42 predeceased the decedent <unless decedent's will provides
1-43 otherwise>. Failure to comply with the provisions hereof shall
1-44 render such disclaimer ineffective except as an assignment of such
1-45 property to those who would have received same had the person
1-46 attempting the disclaimer died prior to the decedent. The term
1-47 "property" as used in this section shall include all legal and
1-48 equitable interests, powers, and property, whether present or
1-49 future, whether vested or contingent, and whether beneficial or
1-50 burdensome, in whole or in part. The term "disclaimer" as used in
1-51 this section shall include "renunciation." In this section
1-52 "beneficiary" includes a person who would have been entitled, if
1-53 the person had not made a disclaimer, to receive property as a
1-54 result of the death of another person by inheritance, under a will,
1-55 by an agreement between spouses for community property with a right
1-56 of survivorship, by a joint tenancy with a right of survivorship,
1-57 or by any other survivorship agreement, account, or interest in
1-58 which the interest of the decedent passes to a surviving
1-59 beneficiary, by an insurance, annuity, endowment, employment,
1-60 deferred compensation, or other contract or arrangement, or under a
1-61 pension, profit sharing, thrift, stock bonus, life insurance,
1-62 survivor income, incentive, or other plan or program providing
1-63 retirement, welfare, or fringe benefits with respect to an employee
1-64 or a self-employed individual. Nothing in this section shall be
1-65 construed to preclude a subsequent disclaimer by any person who
1-66 shall be entitled to property as a result of a disclaimer. The
1-67 following shall apply to such disclaimers:
1-68 (a) Written Memorandum of Disclaimer and Filing Thereof. In
2-1 the case of property receivable by a beneficiary, the disclaimer
2-2 shall be evidenced by a written memorandum, acknowledged before a
2-3 notary public or other person authorized to take acknowledgements
2-4 of conveyances of real estate. Unless the beneficiary is a
2-5 charitable organization or governmental agency of the state, a
2-6 written memorandum of disclaimer disclaiming a present interest
2-7 shall be filed not later than nine months after the death of the
2-8 decedent and a written memorandum of disclaimer disclaiming a
2-9 future interest may be filed not later than nine months after the
2-10 event determining that the taker of the property or interest is
2-11 finally ascertained and his interest is indefeasibly vested. If
2-12 the beneficiary is a charitable organization or a governmental
2-13 agency of the state, a written memorandum of disclaimer disclaiming
2-14 a present or future interest shall be filed not later than nine
2-15 months after the beneficiary receives the notice required by
2-16 Section 128A of this code. The written memorandum of disclaimer
2-17 shall be filed in the probate court in which the decedent's will
2-18 has been probated or in which proceedings have been commenced for
2-19 the administration of the decedent's estate or which has before it
2-20 an application for either of the same; provided, however, if the
2-21 administration of the decedent's estate is closed, or after the
2-22 expiration of one year following the date of the issuance of
2-23 letters testamentary in an independent administration, or if there
2-24 has been no will of the decedent probated or filed for probate, or
2-25 if no administration of the decedent's estate has been commenced,
2-26 or if no application for administration of the decedent's estate
2-27 has been filed, the written memorandum of disclaimer shall be filed
2-28 with the county clerk of the county of the decedent's residence,
2-29 or, if the decedent is not a resident of this state but real
2-30 property or an interest therein located in this state is
2-31 disclaimed, a written memorandum of disclaimer shall be filed with
2-32 the county clerk of the county in which such real property or
2-33 interest therein is located, and recorded by such county clerk in
2-34 the deed records of that county.
2-35 (b) Notice of Disclaimer. Unless the beneficiary is a
2-36 charitable organization or governmental agency of the state, copies
2-37 of any written memorandum of disclaimer shall be delivered in
2-38 person to, or shall be mailed by registered or certified mail to
2-39 and received by, the legal representative of the transferor of the
2-40 interest or the holder of legal title to the property to which the
2-41 disclaimer relates not later than nine months after the death of
2-42 the decedent or, if the interest is a future interest, not later
2-43 than nine months after the date the person who will receive the
2-44 property or interest is finally ascertained and the person's
2-45 interest is indefeasibly vested <date on which the transfer
2-46 creating the interest in the disclaiming person is made>. If the
2-47 beneficiary is a charitable organization or government agency of
2-48 the state, the notices required by this section shall be filed not
2-49 later than nine months after the beneficiary receives the notice
2-50 required by Section 128A of this code.
2-51 (c) Power to Provide for Disclaimer. Nothing herein shall
2-52 prevent a person from providing in a will, insurance policy,
2-53 employee benefit agreement, or other instrument for the making of
2-54 disclaimers by a beneficiary of an interest receivable under that
2-55 instrument and for the disposition of disclaimed property in a
2-56 manner different from the provisions hereof.
2-57 (d) Irrevocability of Disclaimer. Any disclaimer filed and
2-58 served under this section shall be irrevocable.
2-59 (e) Partial Disclaimer. Any person who may be entitled to
2-60 receive any property as a beneficiary may disclaim such property in
2-61 whole or in part, including but not limited to specific powers of
2-62 invasion, powers of appointment, and fee estate in favor of life
2-63 estates; and a partial disclaimer or renunciation, in accordance
2-64 with the provisions of this section, shall be effective whether the
2-65 property so renounced or disclaimed constitutes a portion of a
2-66 single, aggregate gift or constitutes part or all of a separate,
2-67 independent gift; provided, however, that a partial disclaimer
2-68 shall be effective only with respect to property expressly
2-69 described or referred to by category in such disclaimer; and
2-70 provided further, that a partial disclaimer of property which is
3-1 subject to a burdensome interest created by the decedent's will
3-2 shall not be effective unless such property constitutes a gift
3-3 which is separate and distinct from undisclaimed gifts.
3-4 (f) Partial Disclaimer by Spouse. Without limiting
3-5 Subsection (e) of this section, a disclaimer by the decedent's
3-6 surviving spouse of a transfer by the decedent is not a disclaimer
3-7 by the surviving spouse of all or any part of any other transfer
3-8 from the decedent to or for the benefit of the surviving spouse,
3-9 regardless of whether the property or interest that would have
3-10 passed under the disclaimed transfer passes because of the
3-11 disclaimer to or for the benefit of the surviving spouse by the
3-12 other transfer.
3-13 (g) Disclaimer After Acceptance. No disclaimer shall be
3-14 effective after the acceptance of the property by the beneficiary.
3-15 For the purpose of this section, acceptance shall occur only if the
3-16 person making such disclaimer has previously taken possession or
3-17 exercised dominion and control of such property in the capacity of
3-18 beneficiary.
3-19 (h) <(g)> Interest in Trust Property. A beneficiary who
3-20 accepts an interest in a trust is not considered to have a direct
3-21 or indirect interest in trust property that relates to a licensed
3-22 or permitted business and over which the beneficiary exercises no
3-23 control. Direct or indirect beneficial ownership of not more than
3-24 five percent of any class of equity securities that is registered
3-25 under the Securities Exchange Act of 1934 shall not be deemed to be
3-26 an ownership interest in the business of the issuer of such
3-27 securities within the meaning of any statute, pursuant thereto.
3-28 SECTION 2. Subdivision (12), Section 24.002, Business &
3-29 Commerce Code, is amended to read as follows:
3-30 (12) "Transfer" means every mode, direct or indirect,
3-31 absolute or conditional, voluntary or involuntary, of disposing of
3-32 or parting with an asset or an interest in an asset, and includes
3-33 payment of money, release, lease, and creation of a lien or other
3-34 encumbrance. The term does not include a transfer under a
3-35 disclaimer filed under Section 37A, Texas Probate Code, or Section
3-36 112.010, Property Code.
3-37 SECTION 3. Subsection (d), Section 112.010, Property Code,
3-38 is amended to read as follows:
3-39 (d) A disclaimer under this section is effective as of the
3-40 date of the transfer of the interest involved and relates back for
3-41 all purposes to the date of the transfer and is not subject to the
3-42 claims of any creditor of the disclaimant. Unless the terms of the
3-43 trust provide otherwise, <and> the interest that is the subject of
3-44 the disclaimer passes as if the person disclaiming had predeceased
3-45 the transfer and a future interest that would otherwise take effect
3-46 in possession or enjoyment after the termination of the estate or
3-47 interest that is disclaimed takes effect as if the disclaiming
3-48 beneficiary had predeceased the transfer. A disclaimer under this
3-49 section is irrevocable.
3-50 SECTION 4. Section 44, Texas Probate Code, is amended to
3-51 read as follows:
3-52 Sec. 44. ADVANCEMENTS <ADVANCEMENT BROUGHT INTO HOTCHPOTCH>.
3-53 (a) If a decedent dies intestate as to all or a portion of the
3-54 decedent's estate, property the decedent gave during the decedent's
3-55 lifetime to a person who, on the date of the decedent's death, is
3-56 the decedent's heir, or property received by a decedent's heir
3-57 under a nontestamentary transfer under Chapter XI of this code is
3-58 an advancement against the heir's intestate share only if:
3-59 (1) the decedent declared in a contemporaneous writing
3-60 or the heir acknowledged in writing that the gift or
3-61 nontestamentary transfer is an advancement; or
3-62 (2) the decedent's contemporaneous writing or the
3-63 heir's written acknowledgment otherwise indicates that the gift or
3-64 nontestamentary transfer is to be taken into account in computing
3-65 the division and distribution of the decedent's intestate estate.
3-66 (b) For purposes of Subsection (a) of this section, property
3-67 that is advanced is valued at the time the heir came into
3-68 possession or enjoyment of the property or at the time of the
3-69 decedent's death, whichever occurs first.
3-70 (c) If the recipient of the property fails to survive the
4-1 decedent, the property is not taken into account in computing the
4-2 division and distribution of the decedent's intestate estate,
4-3 unless the decedent's contemporaneous writing provides otherwise.
4-4 <Where any of the heirs of a person dying intestate shall have
4-5 received from such intestate in his lifetime any real, personal or
4-6 mixed estate by way of advancement, and shall choose to come into
4-7 the partition and distribution of the estate with the other
4-8 distributees, such advancement shall be brought into hotchpotch
4-9 with the whole estate, and such party returning such advancement
4-10 shall thereupon be entitled to his proper portion of the whole
4-11 estate; provided that it shall be sufficient to account for the
4-12 value of the property so brought into hotchpotch at the time it was
4-13 advanced. Every gratuitous inter vivos transfer is deemed to be an
4-14 absolute gift and not an advancement unless proved to be an
4-15 advancement. If an advancee dies before the intestate, leaving a
4-16 lineal heir who takes from the intestate, the advancement shall be
4-17 taken into account in the same manner as if it had been directly to
4-18 such heir. If such heir is entitled to a lesser share in the
4-19 estate than the advancee would have been entitled to had he
4-20 survived the intestate, then the heir shall be charged only with
4-21 such portion of the advancement as the amount he would have
4-22 inherited, had there been no advancement, bears to the amount which
4-23 the advancee would have inherited had there been no advancement.>
4-24 SECTION 5. Section 45, Texas Probate Code, is amended to
4-25 read as follows:
4-26 Sec. 45. Community Estate. (a) On the intestate death of
4-27 one of the spouses to a marriage, the community property estate of
4-28 the deceased spouse passes to the surviving spouse if:
4-29 (1) no child or other descendant of the deceased
4-30 spouse survives the deceased spouse; or
4-31 (2) all surviving children and descendants of the
4-32 deceased spouse are also children or descendants of the surviving
4-33 spouse.
4-34 (b) On the intestate death of one of the spouses to a
4-35 marriage, if a child or other descendant of the deceased spouse
4-36 survives the deceased spouse and the child or descendant is not a
4-37 child or descendant of the surviving spouse, one-half of the
4-38 community estate is retained by the surviving spouse and the other
4-39 one-half passes to the children or descendants of the deceased
4-40 spouse. The <Upon the dissolution of the marriage relation by
4-41 death, all property belonging to the community estate of the
4-42 husband and wife shall go to the survivor, if there be no child or
4-43 children of the deceased or their descendants; but if there be a
4-44 child or children of the deceased, or descendants of such child or
4-45 children, then the survivor shall be entitled to one-half of said
4-46 property, and the other half shall pass to such child or children,
4-47 or their descendants. But such> descendants shall inherit only
4-48 such portion of said property to which they would be entitled under
4-49 Section 43 of this code. In every case, the community estate
4-50 passes charged with the debts against it.
4-51 SECTION 6. Subsection (d), Section 47, Texas Probate Code,
4-52 is amended to read as follows:
4-53 (d) Joint Owners. If any real or personal property,
4-54 including community property with a right of survivorship, <stocks,
4-55 bonds, bank deposits, or other intangible property> shall be so
4-56 owned that one of two joint owners is entitled to the whole on the
4-57 death of the other, and neither survives the other by 120 hours,
4-58 these assets shall be distributed one-half as if one joint owner
4-59 had survived and the other one-half as if the other joint owner had
4-60 survived. If there are more than two joint owners and all have
4-61 died within a period of less than 120 hours, these assets shall be
4-62 divided into as many equal portions as there are joint owners and
4-63 these portions shall be distributed respectively to those who would
4-64 have taken in the event that each joint owner survived.
4-65 SECTION 7. Section 58, Texas Probate Code, is amended by
4-66 adding Subsections (c) and (d) to read as follows:
4-67 (c) A legacy of personal property does not include any
4-68 contents of the property unless the will directs that the contents
4-69 are included in the legacy. A devise of real property does not
4-70 include any personal property located on or associated with the
5-1 real property or any contents of property located on the real
5-2 property unless the will directs that the personal property or
5-3 contents are included in the devise.
5-4 (d) In this section:
5-5 (1) "Contents" means tangible personal property other
5-6 than titled personal property found inside of or on a specifically
5-7 bequested or devised item. The term includes clothing, pictures,
5-8 furniture, coin collections, and other items of tangible personal
5-9 property that do not require a formal transfer of title or that are
5-10 located in another item of tangible personal property such as a
5-11 cedar chest or furniture located on real property.
5-12 (2) "Titled personal property" includes all tangible
5-13 personal property represented by a certificate of title, written
5-14 label, marking, or designation that signifies ownership by a
5-15 person. The term includes a stock certificate, motor vehicle,
5-16 motor home, motorboat, or other similar property that requires a
5-17 formal transfer of title.
5-18 SECTION 8. Section 58a, Texas Probate Code, is amended to
5-19 read as follows:
5-20 Sec. 58a. DEVISES OR BEQUESTS TO TRUSTEES. (a) A testator
5-21 may validly devise or bequeath property in a will to the trustee of
5-22 a trust established or to be established:
5-23 (1) during the testator's lifetime by the testator, by
5-24 the testator and another person, or by another person, including a
5-25 funded or unfunded life insurance trust, in which the settlor has
5-26 reserved any or all rights of ownership of the insurance contracts;
5-27 or
5-28 (2) at the testator's death by the testator's devise
5-29 or bequest to the trustee, if the trust is identified in the
5-30 testator's will and its terms are in a written instrument, other
5-31 than a will, that is executed before, with, or after the execution
5-32 of the testator's will or in another person's will if that other
5-33 person has predeceased the testator, regardless of the existence,
5-34 size, or character of the corpus of the trust.
5-35 (b) A devise or bequest is not invalid because the trust is
5-36 amendable or revocable or because the trust was amended after the
5-37 execution of the will or the testator's death.
5-38 (c) Unless the testator's will provides otherwise, property
5-39 devised or bequeathed to a trust described by Subsection (a) of
5-40 this section is not held under a testamentary trust of the
5-41 testator. The property becomes a part of the trust to which it is
5-42 devised or bequeathed and must be administered and disposed of in
5-43 accordance with the provisions of the instrument establishing the
5-44 trust, including any amendments to the instrument made before or
5-45 after the testator's death.
5-46 (d) Unless the testator's will provides otherwise, a
5-47 revocation or termination of the trust before the testator's death
5-48 causes the devise or bequest to lapse. <By a will duly executed
5-49 pursuant to the provisions of this Code, a testator may devise or
5-50 bequeath property to the trustee of any trust (including an
5-51 unfunded life insurance trust, even though the trustor has reserved
5-52 any or all rights of ownership in the insurance contracts) the
5-53 terms of which are evidenced by a written instrument in existence
5-54 before or concurrently with the execution of such will and which is
5-55 identified in such will, even though such trust is subject to
5-56 amendment, modification, revocation or termination. The property
5-57 so devised or bequeathed shall be added to the corpus of such trust
5-58 to be administered as a part thereof and shall thereafter be
5-59 governed by the terms and provisions of the instrument establishing
5-60 such trust, including written amendments or modifications thereto
5-61 made before the death of the testator. An entire revocation of the
5-62 trust prior to the testator's death shall cause the devise or
5-63 bequest to lapse.>
5-64 SECTION 9. Section 67, Texas Probate Code, is amended by
5-65 amending Subsection (a) and adding Subsection (d) to read as
5-66 follows:
5-67 (a) Whenever a pretermitted child is not mentioned in the
5-68 testator's will, provided for in the testator's will, or otherwise
5-69 provided for by the testator <of a testator, as herein defined, is
5-70 neither provided for nor in any way mentioned in the testator's
6-1 will>, the pretermitted child shall succeed to a portion of the
6-2 testator's estate as provided by Subdivision (1) or (2) of this
6-3 section. <herein provided:>
6-4 (1) If the testator has one or more children living
6-5 when he executes his last will, and:
6-6 (A) No provision is made therein for any such
6-7 child, a pretermitted child succeeds to the portion of the
6-8 testator's separate and community estate to which the pretermitted
6-9 child would have been entitled pursuant to Section 38(a) of this
6-10 code had the testator died intestate without a surviving spouse
6-11 owning only that portion of his estate not devised or bequeathed to
6-12 the parent of the pretermitted child.
6-13 (B) Provision is made therein for one or more of
6-14 such children, a pretermitted child is entitled to share in the
6-15 testator's estate as follows:
6-16 (i) The portion of the testator's estate
6-17 to which the pretermitted child is entitled is limited to the
6-18 disposition made to children under the will.
6-19 (ii) The pretermitted child shall receive
6-20 such share of the testator's estate, as limited in Subparagraph
6-21 (i), as he would have received had the testator included all
6-22 pretermitted children with the children upon whom benefits were
6-23 conferred under the will, and given an equal share of such benefits
6-24 to each such child.
6-25 (iii) To the extent that it is feasible,
6-26 the interest of the pretermitted child in the testator's estate
6-27 shall be of the same character, whether an equitable or legal life
6-28 estate or in fee, as the interest that the testator conferred upon
6-29 his children under the will.
6-30 (2) If the testator has no child living when he
6-31 executes his last will, the pretermitted child succeeds to the
6-32 portion of the testator's separate and community estate to which
6-33 the pretermitted child would have been entitled pursuant to Section
6-34 38(a) of this code had the testator died intestate without a
6-35 surviving spouse owning only that portion of his estate not devised
6-36 or bequeathed to the parent of the pretermitted child.
6-37 (d) For the purposes of this section, a child is provided
6-38 for or a provision is made for a child if a disposition of property
6-39 to or for the benefit of the pretermitted child, whether vested or
6-40 contingent, is made:
6-41 (1) in the testator's will, including a devise or
6-42 bequest to a trustee as authorized by Section 58(a) of this code;
6-43 or
6-44 (2) outside the testator's will and is intended to
6-45 take effect at the testator's death.
6-46 SECTION 10. Subsections (a) and (e), Section 68, Texas
6-47 Probate Code, are amended to read as follows:
6-48 (a) If a devisee who is a descendant of the testator or a
6-49 descendant of a testator's parent is deceased at the time of the
6-50 execution of the will, fails to survive the testator, or is treated
6-51 as if the devisee predeceased the testator by Section 47 of this
6-52 code or otherwise, the descendants of the devisee who survived the
6-53 testator by 120 hours take the devised property in place of the
6-54 devisee. The property shall be divided into as many shares as
6-55 there are surviving descendants in the nearest <same> degree of
6-56 kinship to the devisee and <or surviving descendants of> deceased
6-57 persons in the same degree whose descendants survived <as> the
6-58 testator. Each<, with each> surviving descendant in the nearest
6-59 degree receives <receiving> one share, and the share of each
6-60 deceased person in the same degree is divided among his descendants
6-61 by representation <in the same manner>. For purposes of this
6-62 section, a person who would have been a devisee under a class gift
6-63 if the person had survived the testator is treated as a devisee
6-64 unless the person died before the date the will was executed.
6-65 (e) This section applies unless the testator's last will and
6-66 testament provides otherwise. For example, a devise or bequest in
6-67 the testator's will such as "to my surviving children" or "to such
6-68 of my children as shall survive me" prevents the application of
6-69 Subsection (a) of this section.
6-70 SECTION 11. Chapter IV, Texas Probate Code, is amended by
7-1 adding Section 70A to read as follows:
7-2 Sec. 70A. INCREASE IN SECURITIES; ACCESSIONS. (a) Unless
7-3 the will clearly provides otherwise, a devise of securities that
7-4 are owned by the testator on the date of execution of the will
7-5 includes the following additional securities subsequently acquired
7-6 by the testator as a result of the testator's ownership of the
7-7 devised securities:
7-8 (1) securities of the same organization acquired
7-9 because of action initiated by the organization or any successor,
7-10 related, or acquiring organization, including stock splits, stock
7-11 dividends, and new issues of stock acquired in a reorganization,
7-12 redemption, or exchange, other than securities acquired through the
7-13 exercise of purchase options or through a plan of reinvestment; and
7-14 (2) securities of another organization acquired as a
7-15 result of a merger, consolidation, reorganization, or other
7-16 distribution by the organization or any successor, related, or
7-17 acquiring organization, including stock splits, stock dividends,
7-18 and new issues of stock acquired in a reorganization, redemption,
7-19 or exchange, other than securities acquired through the exercise of
7-20 purchase options or through a plan of reinvestment.
7-21 (b) Unless the will clearly provides otherwise, a devise of
7-22 securities does not include a cash distribution relating to the
7-23 securities and accruing before death, whether or not the
7-24 distribution is paid before death.
7-25 (c) In this section:
7-26 (1) "Securities" has the meaning assigned by Section
7-27 4, The Securities Act (Article 581-4, Vernon's Texas Civil
7-28 Statutes), and its subsequent amendments.
7-29 (2) "Stock" means securities.
7-30 SECTION 12. Section 89, Texas Probate Code, is amended to
7-31 read as follows:
7-32 Sec. 89. Action of Court on Probated Will. Upon the
7-33 completion of hearing of an application for the probate of a will,
7-34 if the Court be satisfied that such will should be admitted to
7-35 probate, an order to that effect shall be entered. Certified
7-36 copies of such will and the order <probate of the same>, or of the
7-37 record thereof, and the record of testimony, may be recorded in
7-38 other counties, and may be used in evidence, as the original might
7-39 be, on the trial of the same matter in any other court, when taken
7-40 there by appeal or otherwise.
7-41 <Probate of Wills as Muniments of Title. In each instance
7-42 where the Court is satisfied that a will should be admitted to
7-43 probate, and where the Court is further satisfied that there are no
7-44 unpaid debts owing by the estate of the testator, excluding debts
7-45 secured by liens on real estate, or for other reason finds that
7-46 there is no necessity for administration upon such estate, the
7-47 Court may admit such will to probate as a Muniment of Title.>
7-48 <The order admitting a will to probate as a Muniment of Title
7-49 shall constitute sufficient legal authority to all persons owing
7-50 any money, having custody of any property, or acting as registrar
7-51 or transfer agent of any evidence of interest, indebtedness,
7-52 property, or right belonging to the estate, and to persons
7-53 purchasing from or otherwise dealing with the estate, for payment
7-54 or transfer to the persons described in such will as entitled to
7-55 receive the particular asset without administration. The person or
7-56 persons entitled to property under the provisions of such wills
7-57 shall be entitled to deal and treat with the properties to which
7-58 they are so entitled in the same manner as if the record of title
7-59 thereof were vested in their names.>
7-60 <Unless waived by the Court, before the 181st day, or such
7-61 later day as may be extended by the Court, after the date a will is
7-62 admitted to probate as a Muniment of Title, the applicant for
7-63 probate of the will shall file with the clerk of the Court a sworn
7-64 affidavit stating specifically the terms of the will that have been
7-65 fulfilled and the terms of the will that have been unfulfilled.
7-66 Failure of the applicant for probate of the will to file such
7-67 affidavit shall not otherwise affect title to property passing
7-68 under the terms of the will.>
7-69 SECTION 13. Part 1, Chapter V, Texas Probate Code, is
7-70 amended by adding Section 89A to read as follows:
8-1 Sec. 89A. PROBATE OF WILLS AS MUNIMENTS OF TITLE. (a) In
8-2 each instance where the court is satisfied that a will should be
8-3 admitted to probate, and where the court is further satisfied that
8-4 there are no unpaid debts owing by the estate of the testator,
8-5 excluding debts secured by liens on real estate, or for other
8-6 reason finds that there is no necessity for administration upon
8-7 such estate, the court may admit such will to probate as a muniment
8-8 of title.
8-9 (b) If a person who is entitled to property under the
8-10 provisions of the will cannot be ascertained solely by reference to
8-11 the will or if a question of construction of the will exists, on
8-12 proper application and notice as provided by Chapter 37, Civil
8-13 Practice and Remedies Code, the court may hear evidence and include
8-14 in the order probating the will as a muniment of title a
8-15 declaratory judgment construing the will or determining those
8-16 persons who are entitled to receive property under the will and the
8-17 persons' shares or interests in the estate. The judgment is
8-18 conclusive in any suit between any person omitted from the judgment
8-19 and a bona fide purchaser for value who has purchased real or
8-20 personal property after entry of the judgment without actual notice
8-21 of the claim of the omitted person to an interest in the estate.
8-22 Any person who has delivered property of the decedent to a person
8-23 declared to be entitled to the property under the judgment or has
8-24 engaged in any other transaction with the person in good faith
8-25 after entry of the judgment is not liable to any person for actions
8-26 taken in reliance on the judgment.
8-27 (c) The order admitting a will to probate as a muniment of
8-28 title shall constitute sufficient legal authority to all persons
8-29 owing any money to the estate of the decedent, having custody of
8-30 any property, or acting as registrar or transfer agent of any
8-31 evidence of interest, indebtedness, property, or right belonging to
8-32 the estate, and to persons purchasing from or otherwise dealing
8-33 with the estate, for payment or transfer, without liability, to the
8-34 persons described in such will as entitled to receive the
8-35 particular asset without administration. The person or persons
8-36 entitled to property under the provisions of such wills shall be
8-37 entitled to deal with and treat the properties to which they are so
8-38 entitled in the same manner as if the record of title thereof were
8-39 vested in their names.
8-40 (d) Unless waived by the court, before the 181st day, or
8-41 such later day as may be extended by the court, after the date a
8-42 will is admitted to probate as a muniment of title, the applicant
8-43 for probate of the will shall file with the clerk of the court a
8-44 sworn affidavit stating specifically the terms of the will that
8-45 have been fulfilled and the terms of the will that have been
8-46 unfulfilled. Failure of the applicant for probate of the will to
8-47 file such affidavit shall not otherwise affect title to property
8-48 passing under the terms of the will.
8-49 SECTION 14. Section 110, Texas Probate Code, is amended to
8-50 read as follows:
8-51 Sec. 110. Persons Disqualified to Serve as Guardians.
8-52 (a) The following persons shall not be appointed guardians:
8-53 (1) <(a)> Minors.
8-54 (2) <(b)> Persons whose conduct is notoriously bad.
8-55 (3) <(c)> Incompetents.
8-56 (4) <(d)> Those who are themselves parties, or whose
8-57 father or mother is a party to a lawsuit on the result of which the
8-58 welfare of the person for whom, or for whose estate, a guardian is
8-59 to be appointed, may depend, unless the court:
8-60 (A) determines, in its discretion, that the
8-61 lawsuit claim of the party applying for guardianship is not in
8-62 conflict with the claim of the party who is the subject of the
8-63 guardianship; or
8-64 (B) appoints a guardian ad litem, if necessary,
8-65 to separately and independently represent the interest of the party
8-66 who is the subject of the guardianship throughout the litigation
8-67 process.
8-68 (5) <(e)> Those who are indebted to the person for
8-69 whom or for whose estate a guardian is to be appointed, unless they
8-70 pay the debt prior to the appointment, or who are asserting any
9-1 claim to any property, real or personal, adverse to the person for
9-2 whom, or for whose estate, the appointment is sought.
9-3 (6) <(g)> Those who by reason of inexperience or lack
9-4 of education, or for other good reason, are shown to be incapable
9-5 of properly and prudently managing and controlling the ward or his
9-6 estate.
9-7 (b) If an ad litem is appointed under Subsection (a) of this
9-8 section, the fees and expenses of the guardian ad litem shall be
9-9 taxed as costs of the litigation proceeding that made the ad
9-10 litem's appointment necessary. In the interest of judicial
9-11 economy, the guardian ad litem may be the same person who has been
9-12 appointed attorney ad litem under Section 113A or 131(c) of this
9-13 code or may be a person who is serving as an ad litem for the
9-14 benefit of the ward in any other proceeding.
9-15 (c) A spouse, parent, or child who has been disqualified
9-16 from serving as guardian because of a litigation conflict under
9-17 Subsection (a)(4) of this section and who is otherwise qualified as
9-18 a guardian may be appointed as successor guardian on the removal of
9-19 any conflict causing the initial disqualification.
9-20 SECTION 15. Section 111, Texas Probate Code, as amended by
9-21 Section 2, Chapter 330, and Section 1, Chapter 1164, Acts of the
9-22 71st Legislature, Regular Session, 1989, is amended to read as
9-23 follows:
9-24 Sec. 111. Application for Appointment of Permanent Guardian.
9-25 <(a)> A proceeding for the appointment of a guardian shall be
9-26 begun by written application filed in the court of the county
9-27 having venue thereof. Any person may make such application. Such
9-28 application shall be sworn and must state:
9-29 (1) The name, sex, date of birth, and residence, of
9-30 the person for whom the appointment of a guardian is sought;
9-31 (2) If a minor, the names of the parents and next of
9-32 kin of such persons, and whether either or both of the parents are
9-33 deceased;
9-34 (3) If a minor, a statement of whether the minor has
9-35 been the subject of a legal or conservatorship proceeding within
9-36 the preceding two-year period, and if so, the court involved, the
9-37 nature of the proceeding, and the final disposition, if any, of the
9-38 proceeding;
9-39 (4) If a person 60 years of age or older, the name and
9-40 address, to the best of the applicant's knowledge, of the person's
9-41 spouse, brother, sister, and children;
9-42 (5) A general description of the property comprising
9-43 such person's estate, if guardianship of the estate is sought;
9-44 (6) The facts which require that a guardian be
9-45 appointed;
9-46 (7) The name, relationship, and address of the person
9-47 whom the applicant desires to have appointed as guardian;
9-48 (8) Whether guardianship of the person and estate, or
9-49 of the person or of the estate, is sought;
9-50 (9) The social security number of the applicant and of
9-51 the person for whom the appointment of a guardian is sought; and
9-52 (10) Such other facts as show that the court has venue
9-53 over the proceeding.
9-54 <(b) The portion of the application stating the information
9-55 required by Subsection (a)(3) of this section shall be sworn to by
9-56 the applicant.>
9-57 SECTION 16. Subsection (q), Section 145, Texas Probate Code,
9-58 is amended to read as follows:
9-59 (q) Absent proof of fraud or collusion on the part of a
9-60 judge, no judge may be held civilly liable for the commission of
9-61 misdeeds or the omission of any required act of any person, firm,
9-62 or corporation designated as an independent executor or independent
9-63 administrator under Subsections (c), (d), and (e) of the section.
9-64 Section 36 of this code does not apply to the appointment of an
9-65 independent executor or administrator under Subsection (c), (d), or
9-66 (e) of this section.
9-67 SECTION 17. Section 154A, Texas Probate Code, is amended by
9-68 adding Subsection (i) to read as follows:
9-69 (i) Absent proof of fraud or collusion on the part of a
9-70 judge, the judge may not be held civilly liable for the commission
10-1 of misdeeds or the omission of any required act of any person,
10-2 firm, or corporation designated as a successor independent executor
10-3 under this section. Section 36 of this code does not apply to an
10-4 appointment of a successor independent executor under this section.
10-5 SECTION 18. Section 160, Texas Probate Code, is amended to
10-6 read as follows:
10-7 Sec. 160. Powers of Surviving Spouse When No Administration
10-8 is Pending. (a) When no one has qualified as executor or
10-9 administrator of the estate of a deceased spouse, the surviving
10-10 spouse, whether the husband or wife, as the surviving partner of
10-11 the marital partnership, without qualifying as community
10-12 administrator as hereinafter provided, has power to sue and be sued
10-13 for the recovery of community property; to sell, mortgage, lease,
10-14 and otherwise dispose of community property for the purpose of
10-15 paying community debts; to collect claims due to the community
10-16 estate; and has such other powers as shall be necessary to preserve
10-17 the community property, discharge community obligations, and wind
10-18 up community affairs.
10-19 (b) If an affidavit stating that the affiant is the
10-20 surviving spouse and that no one has qualified as executor or
10-21 administrator of the estate of the deceased spouse is furnished to
10-22 a person owing money to the community estate for current wages at
10-23 the time of the death of the deceased spouse, the person making
10-24 payment or delivering to the affiant the deceased spouse's final
10-25 paycheck for wages, including unpaid sick pay or vacation pay, if
10-26 any, is released from liability to the same extent as if the
10-27 payment or delivery were made to a personal representative of the
10-28 deceased spouse. The person is not required to inquire into the
10-29 truth of the affidavit. The affiant to whom the payment or
10-30 delivery is made is answerable to any person having a prior right
10-31 and is accountable to any personal representative who is appointed.
10-32 The affiant is liable for any damage or loss to any person that
10-33 arises from a payment or delivery made in reliance on the
10-34 affidavit.
10-35 (c) This section does not affect the disposition of the
10-36 property of the deceased spouse.
10-37 SECTION 19. Section 271, Texas Probate Code, is amended to
10-38 read as follows:
10-39 Sec. 271. Exempt Property to Be Set Apart. (a) Unless an
10-40 affidavit is filed under Subsection (b) of this section,
10-41 immediately <Immediately> after the inventory, appraisement, and
10-42 list of claims have been approved, the court shall, by order, set
10-43 apart for the use and benefit of the surviving spouse and minor
10-44 children and unmarried children remaining with the family of the
10-45 deceased, all such property of the estate as is exempt from
10-46 execution or forced sale by the constitution and laws of the state.
10-47 (b) Before the approval of the inventory, appraisement, and
10-48 list of claims, a surviving spouse, any person who is authorized to
10-49 act on behalf of minor children of the deceased, or any unmarried
10-50 children remaining with the family of the deceased may apply to the
10-51 court to have exempt property set aside by filing an application
10-52 and a verified affidavit listing all of the property that the
10-53 applicant claims is exempt. The applicant bears the burden of
10-54 proof by a preponderance of the evidence at any hearing on the
10-55 application. The court shall set aside property of the decedent's
10-56 estate that the court finds is exempt.
10-57 SECTION 20. Section 273, Texas Probate Code, is amended to
10-58 read as follows:
10-59 Sec. 273. Allowance in Lieu of Exempt Property. In case
10-60 there should not be among the effects of the deceased all or any of
10-61 the specific articles exempted from execution or forced sale by the
10-62 Constitution and laws of this state, the court shall make a
10-63 reasonable allowance in lieu thereof, to be paid to such surviving
10-64 spouse and children, or such of them as there are, as hereinafter
10-65 provided. The allowance in lieu of a homestead shall in no case
10-66 exceed $15,000 <Ten Thousand Dollars> and the allowance for other
10-67 exempted property shall in no case exceed $5,000 <One Thousand
10-68 Dollars>, exclusive of the allowance for the support of the
10-69 surviving spouse and minor children which is hereinafter provided
10-70 for.
11-1 SECTION 21. Section 286, Texas Probate Code, is amended to
11-2 read as follows:
11-3 Sec. 286. Family Allowance to Surviving Spouses and Minors.
11-4 (a) Unless an affidavit is filed under Subsection (b) of this
11-5 section, immediately <Immediately> after the inventory,
11-6 appraisement, and list of claims have been approved, the court
11-7 shall fix a family allowance for the support of the surviving
11-8 spouse and minor children of the deceased.
11-9 (b) Before the approval of the inventory, appraisement, and
11-10 list of claims, a surviving spouse or any person who is authorized
11-11 to act on behalf of minor children of the deceased may apply to the
11-12 court to have the court fix the family allowance by filing an
11-13 application and a verified affidavit describing the amount
11-14 necessary for the maintenance of the surviving spouse and minor
11-15 children for one year after the date of the death of the decedent
11-16 and describing the spouse's separate property and any property that
11-17 minor children have in their own right. The applicant bears the
11-18 burden of proof by a preponderance of the evidence at any hearing
11-19 on the application. The court shall fix a family allowance for the
11-20 support of the surviving spouse and minor children of the deceased.
11-21 SECTION 22. Section 333, Texas Probate Code, is amended to
11-22 read as follows:
11-23 Sec. 333. Certain Personal Property to Be Sold. (a) The
11-24 representative of an estate, after approval of inventory and
11-25 appraisement, shall promptly apply for an order of the court to
11-26 sell at public auction or privately, for cash or on credit not
11-27 exceeding six months, all of the estate that is liable to perish,
11-28 waste, or deteriorate in value, or that will be an expense or
11-29 disadvantage to the estate if kept. Property <Bonds, securities,
11-30 or other personal property deemed by the court not to be so liable,
11-31 property> exempt from forced sale, specific legacies, and personal
11-32 property necessary to carry on a farm, ranch, factory, or any other
11-33 business which it is thought best to operate, shall not be included
11-34 in such sales.
11-35 (b) In determining whether to order the sale of an asset
11-36 under Subsection (a) of this section, the court shall consider:
11-37 (1) the representative's duty to take care of and
11-38 manage the estate with the same care as a person of ordinary
11-39 prudence, discretion, and intelligence would exercise care in the
11-40 management of the person's own affairs; and
11-41 (2) whether the asset constitutes an asset that a
11-42 trustee is authorized to invest under Section 113.056 or Subchapter
11-43 F, Chapter 113, Property Code.
11-44 SECTION 23. Section 389, Texas Probate Code, is amended to
11-45 read as follows:
11-46 Sec. 389. Investments without Court Order. (a) The
11-47 guardian of the estate may retain, without regard to
11-48 diversification of investments and without liability for any
11-49 depreciation or loss resulting from the retention, any property
11-50 received into a guardianship estate at its inception or added to
11-51 the estate by gift, devise, or inheritance or by mutation or
11-52 increase. A guardian of the estate is not relieved from the duty
11-53 to take care of and manage the estate with the same care that a
11-54 person of ordinary prudence, discretion, and intelligence would
11-55 exercise in the management of the person's own affairs.
11-56 (b) If, at any time, the guardian of the estate shall have
11-57 on hand money belonging to the ward beyond that which may be
11-58 necessary for the education and maintenance of such ward or wards,
11-59 he shall invest such money as follows:
11-60 (1) <(a)> In bonds or other obligations of the United
11-61 States; <or>
11-62 (2) <(b)> In tax-supported bonds of the State of
11-63 Texas; <or>
11-64 (3) <(c)> In tax-supported bonds of any county,
11-65 district, political subdivision, or incorporated city or town in
11-66 the State of Texas; provided, that the bonds of counties,
11-67 districts, subdivisions, cities, and towns may be purchased only
11-68 subject to the following restrictions: the net funded debt of said
11-69 issuing unit shall not exceed ten per cent of the assessed value of
11-70 taxable property therein, "net funded debt" meaning the total
12-1 funded debt less sinking funds on hand; and further, in the case of
12-2 cities or towns, less that part of the debt incurred for
12-3 acquisition or improvement of revenue-producing utilities, the
12-4 revenues of which are not pledged to support other obligations;
12-5 provided, however, that these restrictions shall not apply to bonds
12-6 issued for road purposes in this state under authority of Section
12-7 52 of Article III of the Constitution of Texas, which bonds are
12-8 supported by a tax unlimited as to rate or amount; <or>
12-9 (4) <(d)> In shares or share accounts of any building
12-10 and loan association organized under the laws of this state,
12-11 provided the payment of such shares or share accounts is insured by
12-12 the Federal Savings & Loan Insurance Corporation; <or>
12-13 (5) <(e)> In the shares or share accounts of any
12-14 federal savings and loan association domiciled in this state, where
12-15 the payment of such shares or share accounts is insured by the
12-16 Federal Savings & Loan Insurance Corporation; <or>
12-17 (6) <(f)> In collateral bonds of companies
12-18 incorporated under the laws of the State of Texas, having a paid-in
12-19 capital of One Million Dollars or more, when such bonds are a
12-20 direct obligation of the company issuing them, and are specifically
12-21 secured by first mortgage real estate notes or other securities
12-22 pledged with a trustee; or
12-23 (7) <. (g)> In interest-bearing time deposits which
12-24 may be withdrawn on or before one year after demand in any bank
12-25 doing business in Texas where the payment of such time deposits is
12-26 insured by the Federal Deposit Insurance Corporation.
12-27 SECTION 24. The heading of Section 389A, Texas Probate Code,
12-28 is amended to read as follows:
12-29 Sec. 389A. <Other> Investments With Court Order.
12-30 SECTION 25. Part 8, Chapter VIII, Texas Probate Code, is
12-31 amended by adding Section 378B to read as follows:
12-32 Sec. 378B. ALLOCATION OF INCOME AND EXPENSES DURING
12-33 ADMINISTRATION OF DECEDENT'S ESTATE. (a) Except as provided by
12-34 Subsection (b) of this section and unless the will provides
12-35 otherwise, all expenses incurred in connection with the settlement
12-36 of a decedent's estate, including debts, funeral expenses, estate
12-37 taxes, interest and penalties relating to estate taxes, and family
12-38 allowances, shall be charged against the principal of the estate.
12-39 Fees and expenses of an attorney, accountant, or other professional
12-40 advisor, commissions and expenses of a personal representative,
12-41 court costs, and all other similar fees or expenses relating to the
12-42 administration of the estate shall be allocated between the income
12-43 and principal of the estate as the executor determines in its
12-44 discretion to be just and equitable.
12-45 (b) Unless the will provides otherwise, income from the
12-46 assets of a decedent's estate that accrues after the death of the
12-47 testator and before distribution, including income from property
12-48 used to discharge liabilities, shall be determined according to the
12-49 rules applicable to a trustee under the Texas Trust Code (Subtitle
12-50 B, Title 9, Property Code) and distributed as provided by
12-51 Subsections (c), (d), and (e) of this section.
12-52 (c) The income from the property bequeathed or devised to a
12-53 specific devisee shall be distributed to the devisee after
12-54 reduction for property taxes, ordinary repairs, insurance premiums,
12-55 interest accrued after the death of the testator, other expenses of
12-56 management and operation of the property, and other taxes,
12-57 including the taxes imposed on the income that accrues during the
12-58 period of administration and that is payable to the devisee.
12-59 (d) Except as provided by Subsection (f) of this section,
12-60 the balance of the net income shall be distributed to all other
12-61 devisees after reduction for the balance of property taxes,
12-62 ordinary repairs, insurance premiums, interest accrued, including
12-63 interest accruing as provided by Subsection (f) of this section
12-64 after the death of the testator, other expenses of management and
12-65 operation of all property from which the estate is entitled to
12-66 income, and taxes imposed on income that accrues during the period
12-67 of administration and that is payable or allocable to the devisees,
12-68 in proportion to the devisees' respective interests in the
12-69 undistributed assets of the estate.
12-70 (e) If a charitable organization is entitled to receive
13-1 income under Subsection (b) of this section, any amount allowed as
13-2 a tax deduction to the estate for income payable to the charitable
13-3 organization shall be paid, without reduction for taxes, to the
13-4 charitable organization.
13-5 (f) A devisee of a pecuniary bequest, whether or not in
13-6 trust, shall be paid interest on the bequest at the legal rate of
13-7 interest as provided by Article 1.03, Revised Statutes (Article
13-8 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
13-9 amendments, beginning one year after the date the court grants
13-10 letters testamentary or letters of administration.
13-11 (g) Income received by a trustee under this section shall be
13-12 treated as income of the trust as provided by Section 113.103,
13-13 Property Code.
13-14 (h) In this section, "undistributed assets" includes funds
13-15 used to pay debts, administration expenses, and federal and state
13-16 estate, inheritance, succession, and generation-skipping transfer
13-17 taxes until the date of payment of the debts, expenses, and taxes.
13-18 Except as required by Sections 2055 and 2056 of the Internal
13-19 Revenue Code of 1986 (26 U.S.C. Sections 2055 and 2056), and its
13-20 subsequent amendments, the frequency and method of determining the
13-21 beneficiaries' respective interests in the undistributed assets of
13-22 the estate shall be in the executor's sole and absolute discretion.
13-23 The executor may consider all relevant factors, including
13-24 administrative convenience and expense and the interests of the
13-25 various beneficiaries of the estate in order to reach a fair and
13-26 equitable result among beneficiaries.
13-27 SECTION 26. Subdivisions (3) and (5), Section 436, Texas
13-28 Probate Code, are amended to read as follows:
13-29 (3) "Financial institution" means an organization
13-30 authorized to do business under state or federal laws relating to
13-31 financial institutions, including, without limitation, banks and
13-32 trust companies, savings banks, building and loan associations,
13-33 savings and loan companies or associations, <and> credit unions,
13-34 and brokerage firms that deal in the sales and purchases of stocks,
13-35 bonds, and other types of securities.
13-36 (5) "Multiple-party account" means a joint account, a
13-37 convenience account, a P.O.D. account, or a trust account. It does
13-38 not include accounts established for deposit of funds of a
13-39 partnership, joint venture, or other association for business
13-40 purposes, or accounts controlled by one or more persons as the duly
13-41 authorized agent or trustee for a corporation, unincorporated
13-42 association, charitable or civic organization, or a regular
13-43 fiduciary or trust account where the relationship is established
13-44 other than by deposit agreement.
13-45 SECTION 27. Subsections (b) and (c), Section 439, Texas
13-46 Probate Code, are amended to read as follows:
13-47 (b) If the account is a P.O.D. account and there is a
13-48 written agreement signed by the original payee or payees, on the
13-49 death of the original payee or on the death of the survivor of two
13-50 or more original payees, any sums remaining on deposit belong to
13-51 the P.O.D. payee or payees if surviving, or to the survivor of them
13-52 if one or more P.O.D. payees die before the original payee. If two
13-53 or more P.O.D. payees survive, there is no right of survivorship in
13-54 event of death of a P.O.D. payee thereafter unless the terms of the
13-55 account or deposit agreement expressly provide for survivorship
13-56 between them.
13-57 (c) If the account is a trust account and there is a written
13-58 agreement signed by the trustee or trustees, on death of the
13-59 trustee or the survivor of two or more trustees, any sums remaining
13-60 on deposit belong to the person or persons named as beneficiaries,
13-61 if surviving, or to the survivor of them if one or more
13-62 beneficiaries die before the trustee dies<, unless there is clear
13-63 and convincing evidence of a contrary intent>. If two or more
13-64 beneficiaries survive, there is no right of survivorship in event
13-65 of death of any beneficiary thereafter unless the terms of the
13-66 account or deposit agreement expressly provide for survivorship
13-67 between them.
13-68 SECTION 28. Part 1, Chapter XI, Texas Probate Code, is
13-69 amended by adding Section 438A to read as follows:
13-70 Sec. 438A. CONVENIENCE ACCOUNT. (a) If an account is
14-1 established at a financial institution by a party in the names of
14-2 the party and a co-signer and the terms of the account provide that
14-3 the sums on deposit are paid or delivered to the party or to the
14-4 co-signer "for the convenience" of the party, the account is a
14-5 convenience account.
14-6 (b) The making of a deposit in a convenience account does
14-7 not affect the title to the deposit.
14-8 (c) The party to a convenience account is not considered to
14-9 have made a gift of one-half of the deposit or of any additions or
14-10 accruals to the deposit to the co-signer.
14-11 (d) On the death of the party, the co-signer shall have no
14-12 right of survivorship in the account and ownership of the account
14-13 remains in the party.
14-14 (e) If an addition is made to the account by anyone other
14-15 than the party, the addition and accruals to the addition are
14-16 considered to have been made by the party.
14-17 (f) All deposits to a convenience account and additions and
14-18 accruals to the deposits may be paid to the party or to the
14-19 co-signer. The financial institution is completely released from
14-20 liability for a payment made from the account before the financial
14-21 institution receives notice in writing signed by the party not to
14-22 make the payment in accordance with the terms of the account.
14-23 After receipt of the notice from the party, the financial
14-24 institution may require the party to approve any further payments
14-25 from the account.
14-26 (g) If the financial institution makes a payment of the sums
14-27 on deposit in a convenience account to the co-signer after the
14-28 death of the party and before the financial institution has
14-29 received written notice of the party's death, the financial
14-30 institution is completely released from liability for the payment.
14-31 If a financial institution makes payment to the personal
14-32 representative of the deceased party's estate after the death of
14-33 the party and before service on the financial institution of a
14-34 court order prohibiting payment, the financial institution is
14-35 released to the extent of the payment from liability to any person
14-36 claiming a right to the funds. The receipt by the representative
14-37 to whom payment is made is a complete release and discharge of the
14-38 financial institution.
14-39 SECTION 29. Section 111.004, Property Code, is amended by
14-40 adding Subdivision (24) to read as follows:
14-41 (24) "Environmental law" means any federal, state, or
14-42 local law, rule, regulation, or ordinance relating to protection of
14-43 the environment.
14-44 SECTION 30. Subchapter A, Chapter 113, Property Code, is
14-45 amended by adding Section 113.025 to read as follows:
14-46 Sec. 113.025. POWERS OF TRUSTEE REGARDING ENVIRONMENTAL
14-47 LAWS. (a) A trustee or a potential trustee may inspect,
14-48 investigate, cause to be inspected, or cause to be investigated
14-49 trust property, property that the trustee or potential trustee has
14-50 been asked to hold, or property owned or operated by an entity in
14-51 which the trustee or potential trustee holds or has been asked to
14-52 hold any interest or for the purpose of determining the potential
14-53 application of environmental law with respect to the property.
14-54 This subsection does not grant any person the right of access to
14-55 any property. The taking of any action under this subsection with
14-56 respect to a trust or an addition to a trust is not evidence that a
14-57 person has accepted the trust or the addition to the trust.
14-58 (b) A trustee may take on behalf of the trust any action
14-59 before or after the initiation of an enforcement action or other
14-60 legal proceeding that the trustee reasonably believes will help to
14-61 prevent, abate, or otherwise remedy any actual or potential
14-62 violation of any environmental law affecting property held directly
14-63 or indirectly by the trustee.
14-64 SECTION 31. Section 114.001, Property Code, is amended by
14-65 adding Subsection (d) to read as follows:
14-66 (d) The trustee is not liable to the beneficiary for a loss
14-67 or depreciation in value of the trust property or for acting or
14-68 failing to act under Section 113.025 or under any other provision
14-69 of this subtitle if the action or failure to act relates to
14-70 compliance with an environmental law and if there is no gross
15-1 negligence or bad faith on the part of the trustee. The provision
15-2 of any instrument governing trustee liability does not increase the
15-3 liability of the trustee as provided by this section unless the
15-4 settlor expressly makes reference to this subsection.
15-5 SECTION 32. Section 114.063, Property Code, is amended to
15-6 read as follows:
15-7 Sec. 114.063. General Right to Reimbursement. (a) A
15-8 trustee may discharge or reimburse himself from trust principal or
15-9 income or partly from both for:
15-10 (1) advances made for the convenience, benefit, or
15-11 protection of the trust or its property; <and>
15-12 (2) expenses incurred while administering or
15-13 protecting the trust or because of the trustee's holding or owning
15-14 any of the trust property; and
15-15 (3) expenses incurred for any action taken under
15-16 Section 113.025.
15-17 (b) The trustee has a lien against trust property to secure
15-18 reimbursement under Subsection (a) <of this section>.
15-19 (c) A potential trustee is entitled to reimbursement from
15-20 trust principal or income or partly from both for reasonable
15-21 expenses incurred for any action taken under Section 113.025(a) if:
15-22 (1) a court orders reimbursement or the potential
15-23 trustee has entered into a written agreement providing for
15-24 reimbursement with the personal representative of the estate, the
15-25 trustee of the trust, the settlor, the settlor's attorney-in-fact,
15-26 the settlor's personal representative, or the person or entity
15-27 designated in the trust instrument or will to appoint a trustee;
15-28 and
15-29 (2) the potential trustee has been appointed trustee
15-30 under the terms of the trust instrument or will or has received a
15-31 written request to accept the trust from the settlor, the settlor's
15-32 attorney-in-fact, the settlor's personal representative, or the
15-33 person or entity designated in the trust instrument or will to
15-34 appoint a trustee.
15-35 SECTION 33. Section 113.109, Property Code, is amended to
15-36 read as follows:
15-37 Sec. 113.109. PROPERTY OTHER THAN NATURAL RESOURCES SUBJECT
15-38 TO DEPLETION. (a) If the principal of a trust includes a deferred
15-39 payment right, the proceeds of the right, on receipt, are income up
15-40 to five percent of the inventory value of the right, determined
15-41 separately for each year following the year in which the right
15-42 first becomes subject to the trust. The remainder of the proceeds
15-43 is principal. The allocation to income is computed in the same
15-44 manner in which interest under a loan of the initial inventory
15-45 amount would be computed, at five percent interest compounded
15-46 annually, if periodic payments are made by the borrower to the
15-47 lender.
15-48 (b) For the first year, inventory value is determined as
15-49 provided by this subtitle. For each year after the first year, the
15-50 inventory value is:
15-51 (1) reduced to the extent that proceeds of the right
15-52 were allocated to principal during the preceding year; and
15-53 (2) increased to the extent that the proceeds received
15-54 during the preceding year were less than five percent of the
15-55 inventory value for that year.
15-56 (c) While the deferred payment right is under administration
15-57 in a decedent's estate, income and principal are determined by
15-58 using the fiscal year of the estate and ending on the date the
15-59 trust is funded with the right. After the administration of the
15-60 estate, the fiscal year of the trust is used. The five percent
15-61 allocation to income is prorated for a year that is less than 12
15-62 months.
15-63 (d) The proceeds of a deferred payment right include all
15-64 receipts relating to the right, whether or not the receipts are
15-65 periodic. After the proceeds are received by the trustee and
15-66 allocated, this section does not apply to the proceeds, except to
15-67 the extent the proceeds include a deferred payment right.
15-68 (e) In this section:
15-69 (1) "Deferred payment right" means a depletable asset,
15-70 other than natural resources or timber, consisting of the right to
16-1 property under a contract, account, or other arrangement that is
16-2 payable not earlier than 12 months after the date the right becomes
16-3 subject to the trust. A deferred payment right includes the right
16-4 to receive a periodic, annuity, installment, or single sum future
16-5 payment:
16-6 (A) under a leasehold, patent, copyright, or
16-7 royalty;
16-8 (B) of income in respect of a decedent under
16-9 Section 691 of the Internal Revenue Code of 1986 (26 U.S.C. Section
16-10 691);
16-11 (C) of death benefits;
16-12 (D) of benefits under a nonqualified plan of
16-13 deferred compensation or similar arrangement; or
16-14 (E) under an employee's trust, a retirement
16-15 account, a plan described by Section 403 of the Internal Revenue
16-16 Code of 1986 (26 U.S.C. Section 403), or an employee benefit plan.
16-17 (2) "Employee benefit plan" means an employee benefit
16-18 plan as defined by Section 1002, Employee Retirement Income
16-19 Security Act of 1974 (ERISA) (29 U.S.C. Section 1002), a plan that
16-20 does not meet the requirements of an employee benefit plan under
16-21 ERISA because the plan does cover common law employees, or a plan
16-22 that is similar to an employee benefit plan under ERISA whether or
16-23 not the plan is covered under Subchapter I of ERISA.
16-24 (3) "Year" means the fiscal year for federal income
16-25 tax reporting purposes. <If part of the principal consists of
16-26 property other than natural resources or timber that is depletable,
16-27 such as a leasehold, patent, copyright, royalty, or right to
16-28 receive payments on a contract for deferred compensation, and the
16-29 trustee does not have a duty to change the form of the investment,
16-30 the return from the property is income, but if the trustee has a
16-31 duty under existing law or the instrument creating the trust to
16-32 change the form of the investment, as soon as it may be done
16-33 without sacrifice of value, the return from the property is income
16-34 up to five percent a year of the inventory value of the property,
16-35 and the remainder is principal.>
16-36 SECTION 34. (a) The changes in law made by Sections 1, 2,
16-37 and 3 of this Act apply only to a disclaimer made on or after the
16-38 effective date of this Act. A disclaimer made before the effective
16-39 date of this Act is covered by the law in effect when the
16-40 disclaimer was made, and the former law is continued in effect for
16-41 that purpose.
16-42 (b) The changes in law made by Sections 4, 5, 6, 7, 8, 9,
16-43 10, 11, 12, 13, and 25 of this Act apply only to the estates of
16-44 persons who die on or after the effective date of this Act. The
16-45 estate of a person who dies before the effective date of this Act
16-46 is covered by the law in effect when the person died, and the
16-47 former law is continued in effect for that purpose.
16-48 (c) The changes in law made by Section 14 of this Act apply
16-49 only to a guardian appointed on or after the effective date of this
16-50 Act. A guardian appointed before the effective date of this Act is
16-51 covered by the law in effect when the guardian was appointed, and
16-52 the former law is continued in effect for that purpose.
16-53 (d) The changes in law made by Section 27 of this Act apply
16-54 only to an account created on or after the effective date of this
16-55 Act. An account created before the effective date of this Act is
16-56 covered by the law in effect when the account was created, and the
16-57 former law is continued in effect for that purpose.
16-58 (e) The changes in law made by Section 33 of this Act apply
16-59 only to property that becomes subject to a trust on or after the
16-60 effective date of this Act. Property that becomes subject to a
16-61 trust before the effective date of this Act is covered by the law
16-62 in effect when the property became subject to the trust, and the
16-63 former law is continued in effect for that purpose.
16-64 SECTION 35. This Act takes effect September 1, 1993.
16-65 SECTION 36. The importance of this legislation and the
16-66 crowded condition of the calendars in both houses create an
16-67 emergency and an imperative public necessity that the
16-68 constitutional rule requiring bills to be read on three several
16-69 days in each house be suspended, and this rule is hereby suspended.
16-70 * * * * *
17-1 Austin,
17-2 Texas
17-3 April 6, 1993
17-4 Hon. Bob Bullock
17-5 President of the Senate
17-6 Sir:
17-7 We, your Committee on Jurisprudence to which was referred S.B.
17-8 No. 489, have had the same under consideration, and I am instructed
17-9 to report it back to the Senate with the recommendation that it do
17-10 pass and be printed.
17-11 Henderson,
17-12 Chairman
17-13 * * * * *
17-14 WITNESSES
17-15 FOR AGAINST ON
17-16 ___________________________________________________________________
17-17 Name: Alvin Golden x
17-18 Representing:
17-19 City: Austin
17-20 -------------------------------------------------------------------