SRC-SLL S.B. 911 75(R)   BILL ANALYSIS


Senate Research Center   S.B. 911
By: Cain
Jurisprudence
3-12-97
As Filed


DIGEST 

In 1996 the federal government enacted legislation that extended
protection from certain environmental claims to fiduciaries.  This was in
response to the growing number of environmentally burdened properties
ending up in the hands of fiduciaries, thus exposing the fiduciaries to
liability. Prior to federal relief, if the trust could not cover the cost
of damages, the corporate trustee and the individual trustee/trustees
administering the trust account could be held personally liable.  In
addition, it is generally held that a trustee may not delegate the
responsibility for investments to a third party and mitigate liability for
claims brought by a beneficiary specific to performance of those
investments managed by a third party.  As the knowledge of investments by
beneficiaries expands, and the nature of the market changes, trustees are
often not able to provide alternative investment strategies in the
appropriate circumstances.  This bill will bring the state statute in line
with the federal law regarding fiduciary liability for an environmentally
burdened property and will allow a release of the liability of the trustee
when a third party outside investment advisor is hired. 

PURPOSE

As proposed, S.B. 911 provides new regulations regarding fiduciary
liability for an environmentally burdened property, and allows a release
of the liability of the trustee when a third party outside investment
advisor is hired. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 114.001, Property Code, by adding Subsection
(e), to provide that the trustee has the same protection from liability
provided for a fiduciary under 42 U.S.C.  Section 9607(n). 

SECTION 2. Amends Section 114.005, Property Code, to authorize a
beneficiary who has full legal capacity to release a trustee from
responsibility for an investment made or recommended by an agent retained
by the trustee for that purpose.  Authorizes the release to provide that
the beneficiary is acting for that beneficiary and as a representative for
an unborn or unascertained beneficiary.  Sets forth the extent of the
release on the unborn or unascertained beneficiary's interest.  Provides
that the release is effective only as to the releasing beneficiary's pro
rata share of the trust estate.  Requires the release under this section
to be in writing and delivered to the trustee. 

SECTION 3. Effective date: September 1, 1997.

SECTION 4. Emergency clause.