SRC-SLL C.S.S.B. 998 75(R)BILL ANALYSIS


Senate Research CenterC.S.S.B. 998
By: Harris
Jurisprudence
3-24-97
Committee Report (Substituted)


DIGEST 

Currently, the law is not clear as to the status of a beneficiary who has
allowed the right of withdrawal of assets from a trust to lapse.  The
settlor, generally the person who creates or makes the initial
contribution to the trust, has certain creditor liabilities that are not
intended to be passed on to the beneficiary.  A beneficiary may be
required to take on these liabilities simply because the beneficiary has
not exercised the withdrawal rights.  Additionally, a Texas Supreme Court
decision has called into question the court's discretion in removing a
trustee.    This bill will prohibit the beneficiary of a trust from being
considered the settlor if the beneficiary fails to exercise withdrawal
rights and will provide that the court has the discretion to remove the
trustee under certain conditions. 

PURPOSE

As proposed, C.S.S.B. 998 prohibits the beneficiary of a trust from being
considered the settlor if the beneficiary fails to exercise withdrawal
rights and provides that the court has the discretion to remove the
trustee under certain conditions. 

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 112.035, Property Code, by adding Subsection
(e), to prohibit a beneficiary of the trust from being considered the
settlor merely because of a lapse, waiver, or release of the beneficiary's
right to withdraw a part of the trust property if the value of the
property that could have been withdrawn by exercising the right of
withdrawal in any calendar year does not exceed at the time of the lapse,
waiver, or release the greater of the amount specified in certain sections
of the Internal Revenue Code of 1986. 

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.  Makes nonsubstantive
changes. 

SECTION 3. Makes application of SECTION 2 of this Act prospective.

SECTION 4. Effective date: September 1, 1997.

SECTION 5. Emergency clause.

SUMMARY OF COMMITTEE CHANGES

SECTION 1.

Amends Section 112.035, Property Code, to make nonsubstantive changes.



 SECTION 2.

Amends Section 113.082(a), Property Code, to make nonsubstantive change.