1-1 By: Naishtat (Senate Sponsor - Wentworth) H.B. No. 1314
1-2 (In the Senate - Received from the House May 5, 1997;
1-3 May 6, 1997, read first time and referred to Committee on
1-4 Jurisprudence; May 18, 1997, reported favorably by the following
1-5 vote: Yeas 7, Nays 0; May 18, 1997, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to a trust created for the management of a ward's assets.
1-9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-10 SECTION 1. Section 867, Texas Probate Code, is amended to
1-11 read as follows:
1-12 Sec. 867. CREATION OF MANAGEMENT TRUST. On application by
1-13 the guardian of a ward or by a ward's attorney ad litem at any
1-14 time after the date of the attorney's appointment under Section 646
1-15 of this code, the court in which the guardianship proceeding is
1-16 pending may enter an order that creates for the ward's benefit a
1-17 trust for the management of guardianship funds if the court finds
1-18 that the creation of the trust is in the ward's best interests.
1-19 The order shall direct the guardian or another person to deliver
1-20 all or part of the assets of the guardianship to a trust company or
1-21 a state or national bank that has trust powers in this state. The
1-22 order shall include terms, conditions, and limitations placed on
1-23 the trust. The court shall maintain the trust under the same cause
1-24 number as the guardianship proceeding.
1-25 SECTION 2. Section 868, Texas Probate Code, is amended by
1-26 amending Subsections (a) and (b) and adding Subsections (d) and (e)
1-27 to read as follows:
1-28 (a) Except as provided by Subsection (d) of this section, a
1-29 [A] trust created under Section 867 of this code must provide that:
1-30 (1) the ward is the sole beneficiary of the trust;
1-31 (2) the trustee may disburse an amount of the trust's
1-32 principal or income as the trustee determines is necessary to
1-33 expend for the health, education, support, or maintenance of the
1-34 ward;
1-35 (3) the income of the trust that the trustee does not
1-36 disburse under Subdivision (2) of this subsection must be added to
1-37 the principal of the trust;
1-38 (4) the trustee serves without giving a bond; and
1-39 (5) the trustee, on annual application to the court
1-40 and subject to the court's approval, is entitled to receive
1-41 reasonable compensation for services that the trustee provided to
1-42 the ward as the ward's trustee that is:
1-43 (A) to be paid from the trust's income,
1-44 principal, or both; and
1-45 (B) determined in the same manner as
1-46 compensation of a guardian of an estate under Section 665 of this
1-47 code.
1-48 (b) The trust may provide that a trustee make a
1-49 distribution, payment, use, or application of trust funds for the
1-50 health, education, support, or maintenance of the ward or of
1-51 another person whom the ward is legally obligated to support, as
1-52 necessary and without the intervention of a guardian or other
1-53 representative of the ward, to:
1-54 (1) the ward's guardian; [or to]
1-55 (2) a person who has physical custody of the ward [for
1-56 the health, education, support, or maintenance of the ward] or [of]
1-57 another person whom the ward is legally obligated to support; or
1-58 (3) a person providing a good or service to the ward
1-59 or another person whom the ward is legally obligated to support.
1-60 (d) When creating or modifying a trust, the court may omit
1-61 or modify terms required by Subsection (a)(1) or (2) of this
1-62 section only if the court determines that the omission or
1-63 modification:
1-64 (1) is necessary and appropriate for the ward to be
2-1 eligible to receive public benefits or assistance under a state or
2-2 federal program that is not otherwise available to the ward; and
2-3 (2) is in the ward's best interests.
2-4 (e) The court may include additional provisions in a trust
2-5 created or modified under this section if the court determines an
2-6 addition does not conflict with Subsection (a) and, if appropriate,
2-7 Subsection (d) of this section.
2-8 SECTION 3. Subpart N, Part 4, Chapter XIII, Texas Probate
2-9 Code, is amended by adding Sections 868A, 869B, and 869C to read as
2-10 follows:
2-11 Sec. 868A. DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION
2-12 OF TRUST. On or at any time after the creation of a trust under
2-13 this subpart, the court may discharge the guardian of the ward's
2-14 estate only if a guardian of the ward's person remains and the
2-15 court determines that the discharge is in the ward's best
2-16 interests.
2-17 Sec. 869B. APPLICABILITY OF TEXAS TRUST CODE. (a) A trust
2-18 created under Section 867 of this code is subject to Subtitle B,
2-19 Title 9, Property Code.
2-20 (b) To the extent of a conflict between Subtitle B, Title 9,
2-21 Property Code, and a provision of this subpart or of the trust, the
2-22 provision of the subpart or trust controls.
2-23 Sec. 869C. JURISDICTION OVER TRUST MATTERS. A court that
2-24 creates a trust under Section 867 of this code has the same
2-25 jurisdiction to hear matters relating to the trust as the court has
2-26 with respect to the guardianship and other matters covered by this
2-27 chapter.
2-28 SECTION 4. Section 870(b), Texas Probate Code, is amended to
2-29 read as follows:
2-30 (b) If the ward is an incapacitated person other than a
2-31 minor, the trust terminates on the date the court determines that
2-32 continuing the trust [a guardianship] is no longer in the ward's
2-33 best interests [necessary for the ward] or on the death of the
2-34 ward.
2-35 SECTION 5. Section 115.001(d), Property Code, is amended to
2-36 read as follows:
2-37 (d) The jurisdiction of the district court over proceedings
2-38 concerning trusts is exclusive except for jurisdiction conferred by
2-39 law on a statutory probate court or a court that creates a trust
2-40 under Section 867, Texas Probate Code.
2-41 SECTION 6. Section 868(c), Texas Probate Code, is repealed.
2-42 SECTION 7. (a) A trust may be created under Section 867,
2-43 Texas Probate Code, as amended by this Act, regardless of the date
2-44 on which the guardianship was created.
2-45 (b) A trust otherwise valid under Section 867, Texas Probate
2-46 Code, is not invalid solely because it was created for a
2-47 guardianship that was in existence before September 1, 1993, and
2-48 those trusts are validated as of the date of the creation of the
2-49 trust.
2-50 SECTION 8. This Act takes effect September 1, 1997, and
2-51 applies to all trusts created under Section 867, Texas Probate
2-52 Code, as amended by this Act, regardless of the date on which the
2-53 trusts were created.
2-54 SECTION 9. The importance of this legislation and the
2-55 crowded condition of the calendars in both houses create an
2-56 emergency and an imperative public necessity that the
2-57 constitutional rule requiring bills to be read on three several
2-58 days in each house be suspended, and this rule is hereby suspended.
2-59 * * * * *