1-1 AN ACT
1-2 relating to a trust created for the management of a ward's assets.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 867, Texas Probate Code, is amended to
1-5 read as follows:
1-6 Sec. 867. CREATION OF MANAGEMENT TRUST. On application by
1-7 the guardian of a ward or by a ward's attorney ad litem at any
1-8 time after the date of the attorney's appointment under Section 646
1-9 of this code, the court in which the guardianship proceeding is
1-10 pending may enter an order that creates for the ward's benefit a
1-11 trust for the management of guardianship funds if the court finds
1-12 that the creation of the trust is in the ward's best interests.
1-13 The order shall direct the guardian or another person to deliver
1-14 all or part of the assets of the guardianship to a trust company or
1-15 a state or national bank that has trust powers in this state. The
1-16 order shall include terms, conditions, and limitations placed on
1-17 the trust. The court shall maintain the trust under the same cause
1-18 number as the guardianship proceeding.
1-19 SECTION 2. Section 868, Texas Probate Code, is amended by
1-20 amending Subsections (a) and (b) and adding Subsections (d) and (e)
1-21 to read as follows:
1-22 (a) Except as provided by Subsection (d) of this section, a
1-23 [A] trust created under Section 867 of this code must provide that:
1-24 (1) the ward is the sole beneficiary of the trust;
2-1 (2) the trustee may disburse an amount of the trust's
2-2 principal or income as the trustee determines is necessary to
2-3 expend for the health, education, support, or maintenance of the
2-4 ward;
2-5 (3) the income of the trust that the trustee does not
2-6 disburse under Subdivision (2) of this subsection must be added to
2-7 the principal of the trust;
2-8 (4) the trustee serves without giving a bond; and
2-9 (5) the trustee, on annual application to the court
2-10 and subject to the court's approval, is entitled to receive
2-11 reasonable compensation for services that the trustee provided to
2-12 the ward as the ward's trustee that is:
2-13 (A) to be paid from the trust's income,
2-14 principal, or both; and
2-15 (B) determined in the same manner as
2-16 compensation of a guardian of an estate under Section 665 of this
2-17 code.
2-18 (b) The trust may provide that a trustee make a
2-19 distribution, payment, use, or application of trust funds for the
2-20 health, education, support, or maintenance of the ward or of
2-21 another person whom the ward is legally obligated to support, as
2-22 necessary and without the intervention of a guardian or other
2-23 representative of the ward, to:
2-24 (1) the ward's guardian; [or to]
2-25 (2) a person who has physical custody of the ward [for
2-26 the health, education, support, or maintenance of the ward] or [of]
2-27 another person whom the ward is legally obligated to support; or
3-1 (3) a person providing a good or service to the ward
3-2 or another person whom the ward is legally obligated to support.
3-3 (d) When creating or modifying a trust, the court may omit
3-4 or modify terms required by Subsection (a)(1) or (2) of this
3-5 section only if the court determines that the omission or
3-6 modification:
3-7 (1) is necessary and appropriate for the ward to be
3-8 eligible to receive public benefits or assistance under a state or
3-9 federal program that is not otherwise available to the ward; and
3-10 (2) is in the ward's best interests.
3-11 (e) The court may include additional provisions in a trust
3-12 created or modified under this section if the court determines an
3-13 addition does not conflict with Subsection (a) and, if appropriate,
3-14 Subsection (d) of this section.
3-15 SECTION 3. Subpart N, Part 4, Chapter XIII, Texas Probate
3-16 Code, is amended by adding Sections 868A, 869B, and 869C to read as
3-17 follows:
3-18 Sec. 868A. DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION
3-19 OF TRUST. On or at any time after the creation of a trust under
3-20 this subpart, the court may discharge the guardian of the ward's
3-21 estate only if a guardian of the ward's person remains and the
3-22 court determines that the discharge is in the ward's best
3-23 interests.
3-24 Sec. 869B. APPLICABILITY OF TEXAS TRUST CODE. (a) A trust
3-25 created under Section 867 of this code is subject to Subtitle B,
3-26 Title 9, Property Code.
3-27 (b) To the extent of a conflict between Subtitle B, Title 9,
4-1 Property Code, and a provision of this subpart or of the trust, the
4-2 provision of the subpart or trust controls.
4-3 Sec. 869C. JURISDICTION OVER TRUST MATTERS. A court that
4-4 creates a trust under Section 867 of this code has the same
4-5 jurisdiction to hear matters relating to the trust as the court has
4-6 with respect to the guardianship and other matters covered by this
4-7 chapter.
4-8 SECTION 4. Section 870(b), Texas Probate Code, is amended to
4-9 read as follows:
4-10 (b) If the ward is an incapacitated person other than a
4-11 minor, the trust terminates on the date the court determines that
4-12 continuing the trust [a guardianship] is no longer in the ward's
4-13 best interests [necessary for the ward] or on the death of the
4-14 ward.
4-15 SECTION 5. Section 115.001(d), Property Code, is amended to
4-16 read as follows:
4-17 (d) The jurisdiction of the district court over proceedings
4-18 concerning trusts is exclusive except for jurisdiction conferred by
4-19 law on a statutory probate court or a court that creates a trust
4-20 under Section 867, Texas Probate Code.
4-21 SECTION 6. Section 868(c), Texas Probate Code, is repealed.
4-22 SECTION 7. (a) A trust may be created under Section 867,
4-23 Texas Probate Code, as amended by this Act, regardless of the date
4-24 on which the guardianship was created.
4-25 (b) A trust otherwise valid under Section 867, Texas Probate
4-26 Code, is not invalid solely because it was created for a
4-27 guardianship that was in existence before September 1, 1993, and
5-1 those trusts are validated as of the date of the creation of the
5-2 trust.
5-3 SECTION 8. This Act takes effect September 1, 1997, and
5-4 applies to all trusts created under Section 867, Texas Probate
5-5 Code, as amended by this Act, regardless of the date on which the
5-6 trusts were created.
5-7 SECTION 9. The importance of this legislation and the
5-8 crowded condition of the calendars in both houses create an
5-9 emergency and an imperative public necessity that the
5-10 constitutional rule requiring bills to be read on three several
5-11 days in each house be suspended, and this rule is hereby suspended.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1314 was passed by the House on May
2, 1997, by a non-record vote.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1314 was passed by the Senate on May
26, 1997, by the following vote: Yeas 31, Nays 0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor