By Thompson                                           H.B. No. 2401
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to matters concerning the Texas Probate Code.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 58.  Interests Which May Pass Under a Will,  is
    1-5  amended to read as follows:
    1-6        (a)  Every person competent to make a last will and testament
    1-7  may thereby devise and bequeath all the estate, right, title, and
    1-8  interest in property the person has at the time of the person's
    1-9  death, subject to the limitations prescribed by law.
   1-10        (b)  A person who makes a last will and testament may:
   1-11              (1)  disinherit an heir; and
   1-12              (2)  direct the disposition of property or an interest
   1-13  passing under the will or by intestacy.
   1-14        (c)  A legacy of personal property does not include any
   1-15  contents of the property unless the will directs that the contents
   1-16  are included in the legacy.  A devise of real property does not
   1-17  include any personal property located on or associated with the
   1-18  real property or any contents of personal property located on the
   1-19  real property unless the will directs that the personal property or
   1-20  contents are included in the devise.
   1-21        (d)  In this section:
   1-22              (1)  "Contents" means tangible personal property, other
   1-23  than titled personal property, found inside of or on a specifically
    2-1  <bequested> bequeathed or devised item.  The term includes
    2-2  clothing, pictures, furniture, coin collections, and other items of
    2-3  tangible personal property that do not require a formal transfer of
    2-4  title <or> and that are located in another item of tangible personal
    2-5  property such as a cedar chest or other furniture <located on real
    2-6  property>.
    2-7        (2)  "Titled personal property" includes all tangible
    2-8  personal property represented by a certificate of title,
    2-9  certificate of ownership, written label, marking, or designation
   2-10  that signifies ownership by a person.  The term includes a <stock
   2-11  certificate,> motor vehicle, motor home, motorboat, or other
   2-12  similar property that requires a formal transfer of title.
   2-13        SECTION 69.  Voidness Arising From Divorce or Annulment is
   2-14  amended to read as follows:
   2-15        (a)  If, after making a will, the testator is divorced <after
   2-16  making a will> or the testator's marriage is annuled, all
   2-17  provisions in the will in favor of the testator's former spouse <so
   2-18  divorced>, or appointing such spouse to any fiduciary capacity
   2-19  under the will or with respect to the estate or person of the
   2-20  testator's children, shall be null and void and of no effect unless
   2-21  the will expressly provides otherwise.
   2-22        (b)  A person who is divorced from the decedent or whose
   2-23  marriage to the decedent has been annulled is not a surviving
   2-24  spouse unless, by virtue of a subsequent marriage, the person is
   2-25  married to the decedent at the time of death.
    3-1        SECTION 113.111.  Charges Against Income and Principal is
    3-2  amended to read as follows:
    3-3        (a)  The following charges shall be made against income:
    3-4              (1)  ordinary expenses incurred in the administration,
    3-5  management, or preservation of the trust property, including
    3-6  regularly recurring taxes assessed against any portion of the
    3-7  principal, water rates, premiums on insurance on the interests of
    3-8  an income beneficiary, remainderman, or trustee, interest paid by
    3-9  the trustee, and ordinary repairs;
   3-10              (2)  a reasonable allowance for depreciation on
   3-11  improvements representing an addition of value to property held by
   3-12  the trustee as part of the principal if the improvements are
   3-13  subject to depreciation under generally accepted accounting
   3-14  principles, but no allowance may be made for depreciation of the
   3-15  portion of any real property used by a beneficiary as a residence
   3-16  or for depreciation of any property held by the trustee on the
   3-17  effective date of this subtitle for which the trustee <is> was not
   3-18  then making an allowance for depreciation;
   3-19              (3)  court costs and other fees on periodic judicial
   3-20  accountings, unless the court directs otherwise;
   3-21              (4)  court costs, attorney's fees, and other fees on
   3-22  other accounting or judicial proceedings if the matter primarily
   3-23  concerns the income interest, unless the court directs otherwise;
   3-24              (5)  all expenses reasonably incurred by the trustee
   3-25  for current management of principal and application of income;
    4-1              (6)  the portion of attorney's fees and the trustee's
    4-2  compensation for services in the management and administration of
    4-3  the trust estate, irrespective of the manner of computation, and
    4-4  for extraordinary and unusual services, including remuneration of
    4-5  the trustee for acceptance of the trust, distribution of the trust
    4-6  properties, termination of the trust estate, and all other fees of
    4-7  similar nature, as the trustee determines in its discretion to be
    4-8  just and equitable;
    4-9              (7)  a tax levied on proceeds defined as income under
   4-10  this subchapter or the trust instrument that is payable by the
   4-11  trustee; and
   4-12              (8)  regularly recurring charges payable from income to
   4-13  the same extent and in the same manner that income is apportioned
   4-14  under Section 113.103 of this Act.
   4-15        (b)  The following charges shall be made against principal:
   4-16              (1)  the portion of the attorney's fees and the
   4-17  trustee's compensation not charged to income under Subdivision (6)
   4-18  of Subsection (a) of this section;
   4-19              (2)  expenses reasonably incurred in connection with
   4-20  principal and court costs primarily concerning matters of
   4-21  principal;
   4-22              (3)  charges not provided for in Subsection (a) of this
   4-23  section, including the cost of investing and reinvesting principal,
   4-24  the payments on principal of an indebtedness, including a mortgage
   4-25  amortized by periodic payments of principal, expenses for
    5-1  preparation of property for rental or sale, and, unless the court
    5-2  directs otherwise, expenses incurred in maintaining or defending
    5-3  any action to construe the trust, to protect the trust or the trust
    5-4  property, or to assure the title of trust property;
    5-5              (4)  extraordinary repairs or expenses incurred in
    5-6  making a capital improvement to principal, including special
    5-7  assessments, but a trustee may establish an allowance for
    5-8  depreciation out of income to the extent permitted by Subdivision
    5-9  (2) of Subsection (a) of this section and by Section 113.106 of
   5-10  this Act;
   5-11              (5)  a tax levied on profit, gain, or other proceeds
   5-12  allocated to principal, notwithstanding characterization of the tax
   5-13  as an income tax by the taxing authority; and
   5-14              (6)  if an estate tax, transfer tax, or inheritance tax
   5-15  is levied in respect to a trust in which both an income beneficiary
   5-16  and a remainderman have an interest, any amount apportioned to the
   5-17  trust, including interest and penalties, even though the income
   5-18  beneficiary also has rights in the principal<; and>
   5-19              <(7)  regularly recurring charges payable from income
   5-20  to the same extent and in the same manner that income is
   5-21  apportioned under Section 113.103 of this Act>.
   5-22        (c)  If charges against income are unusual in amount, the
   5-23  trustee may by use of reserves or other reasonable means apportion
   5-24  the charges over a reasonable period of time and withhold from
   5-25  distribution sufficient amounts to regularize distributions.
    6-1        SECTION 137.  Collection of Small Estates Upon Affidavit is
    6-2  amended to read as follows:
    6-3        (a)  The distributees of an estate shall be entitled thereto,
    6-4  to the extent that the assets, exclusive of homestead and exempt
    6-5  property, exceed the known liabilities of said estate, exclusive of
    6-6  liabilities secured by homestead and exempt property, without
    6-7  awaiting the appointment of a personal representative when:
    6-8              (1)  No petition for the appointment of a personal
    6-9  representative is pending or has been granted; and
   6-10              (2)  Thirty days have elapsed since the death of the
   6-11  decedent; and
   6-12              (3)  The value of the entire assets of the estate, not
   6-13  including homestead and exempt property, does not exceed $50,000;
   6-14  and
   6-15              (4)  There is filed with the clerk of the court having
   6-16  jurisdiction and venue an affidavit sworn to by two disinterested
   6-17  witnesses <and>, by such distributees as have legal capacity<,> and,
   6-18  if the facts warrant, by the natural guardian or next of kin of any
   6-19  minor or incompetent who is also a distributee, which affidavit
   6-20  shall be examined by the judge of the court having jurisdiction and
   6-21  venue; <the judge may find, in his discretion, that the affidavit
   6-22  conforms to the terms of this section, if the judge approves the
   6-23  affidavit, the affidavit is to be recorded as an official public
   6-24  record under Chapter 194, Local Government Code, or if the county
   6-25  has not adopted a microfilm or microphotographic process under
    7-1  Chapter 194, Local Government Code, the affidavit must be recorded
    7-2  in "Small Estates" records by the clerk, showing> and
    7-3              (5)  The affidavit shows the existence of the foregoing
    7-4  conditions<, including> and includes a list of all known assets and
    7-5  liabilities of the estate<,> the names and addresses of the
    7-6  distributees, and <their right> the distributees' rights to receive
    7-7  the money or property of the estate<,> or to have such evidences of
    7-8  money, property or other rights of the estate as are found to exist
    7-9  transferred to them<, being> as heirs, devisees<,> or assignees<,>:
   7-10  and <listing all assets and known liabilities of the estates>
   7-11              (6)  The judge, in his discretion, finds that the
   7-12  affidavit conforms to the terms of this section and approves the
   7-13  affidavit; and
   7-14              <(5)> (7)  A copy of <such> the affidavit, certified to
   7-15  by said clerk, is furnished by the distributees of the estate to
   7-16  the person or persons owing money to the estate, having custody or
   7-17  possession of property of the estate, or acting as registrar,
   7-18  fiduciary or transfer agent of or for evidences of interest,
   7-19  indebtedness, property or other right belonging to <said> the
   7-20  estate.
   7-21        (b)  This section does not affect the disposition of property
   7-22  under the terms of a will or other testamentary document nor,
   7-23  except as provided by Subsection (c) of this section, does it
   7-24  transfer title to real property.
   7-25        (c)  Title to homestead that is the only real property in a
    8-1  decedent's estate may be transferred on an affidavit that meets the
    8-2  requirements of this section.  An affidavit that is used to
    8-3  transfer title to a homestead under this section.  An affidavit
    8-4  that is used to transfer title to a homestead under this section
    8-5  must be recorded in the deed records of <a> the county in which the
    8-6  homestead is located.  A bona fide purchaser for value may rely on
    8-7  a recorded affidavit under this section.  A bona fide purchaser for
    8-8  value without actual or constructive notice of an heir who is not
    8-9  disclosed in a recorded affidavit under this section acquires title
   8-10  to a homestead free of the interests of the undisclosed heir, but
   8-11  the bona fide purchaser remains subject to <a> any claim a creditor
   8-12  of the decedent has <as provided> by law.  A <person> purchaser has
   8-13  constructive notice of <the rights of> an heir who is not disclosed
   8-14  in a recorded affidavit under this section if an affidavit,
   8-15  judgment of heirship, or title transaction in the chain of title in
   8-16  the deed records <states that> identifies the heir of the decedent
   8-17  who is not disclosed in the affidavit <is> as an heir of the
   8-18  decedent.  An heir who is not disclosed in a recorded affidavit
   8-19  under this section may recover from an heir who receives
   8-20  consideration from a purchaser in a transfer <to a bona fide
   8-21  purchaser> for value of title to a homestead passing under the
   8-22  affidavit.
   8-23        (d)  <The county clerk of every county that> If the judge
   8-24  approves the affidavit under this section, the affidavit is to be
   8-25  recorded as an official public record under Chapter 194, Local
    9-1  Government Code.  If the county has not adopted a microfilm or
    9-2  microphotographic process under Chapter 194, Local Government Code,
    9-3  the county clerk shall provide and keep in his office an
    9-4  appropriate book labeled "Small Estates," with an accurate index
    9-5  showing the name of the decedent and reference to land, if any,
    9-6  involved, in which he shall record every such affidavit so filed,
    9-7  upon being paid his legal recording fee<, said index to show the
    9-8  name of decedent and reference to land, if any involved>.