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.

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