PMWJ S.B. 998 75(R)BILL ANALYSIS JUDICIAL AFFAIRS S.B. 998 By: Harris (Thompson) 4-16-97 Committee Report (Unamended) BACKGROUND Current law is not clear as to the status of a beneficiary who has allowed his right of withdrawal of assets from a trust to lapse. A Texas Supreme Court decision has called into question the court's discretion in removing a trustee. PURPOSE This bill clarifies that a beneficiary may not be treated as a settlor of the trust simply because of a lapsed withdrawal right and clarifies the court's discretion to remove a trustee or to deny a trustee compensation for cause. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1 adds Subsec. (e) to Section 112.035 of the Property Code to provide that a beneficiary of a trust may not be considered a settlor merely because of a lapse, waiver or release of the beneficiary's right to withdraw a part of the trust as long as the value of the property, during the year the right to withdraw could have been exercised, did not exceed certain amounts as defined by the Internal Revenue Code. SECTION 2 amends Section 113.082(a), Property Code, to authorize a court, in its discretion, to remove a trustee and deny part or all of the trustee's compensation if certain criteria are met. It also makes nonsubstantive changes. SECTION 3. Application of act. SECTION 4. Effective date. SECTION 5. Emergency clause.