By Thompson                                     H.B. No. 2006

      75R6488 CLG-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the administration and operation of certain trusts.

 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-4           SECTION 1.  Section 112.035, Property Code, is amended by

 1-5     adding Subsection (e) to read as follows:

 1-6           (e)  A beneficiary of the trust may not be considered the

 1-7     settlor merely because of a lapse, waiver, or release of the

 1-8     beneficiary's right to withdraw a part of the trust property if the

 1-9     value of the property in any calendar year during which the right

1-10     of withdrawal could have been exercised does not exceed at the time

1-11     of the lapse, waiver, or release the greater of the amount

1-12     specified in:

1-13                 (1)  Section 2041(b)(2) or 2514(e), Internal Revenue

1-14     Code of 1986; or

1-15                 (2)  Section 2503(b), Internal Revenue Code of 1986.

1-16           SECTION 2.  Section 113.082(a), Property Code, is amended to

1-17     read as follows:

1-18           (a)  A trustee may be removed in accordance with the terms of

1-19     the trust instrument, or, on the petition of an interested person

1-20     and after hearing, a court, in its discretion, may remove a trustee

1-21     and deny part or all of the trustee's compensation for cause,

1-22     including [if]:

1-23                 (1)  a material violation or attempted violation by the

1-24     trustee of [materially violated or attempted to violate] the terms

 2-1     of the trust if [and] the violation or attempted violation results

 2-2     in a material financial loss to the trust; or

 2-3                 (2)  the incompetency or insolvency of the trustee

 2-4     [becomes incompetent or insolvent; or]

 2-5                 [(3)  in the discretion of the court, for other cause].

 2-6           SECTION 3.  The change in law made by Section 2 of this Act

 2-7     applies only to a cause of action for removal under Section

 2-8     113.082, Property Code, as amended by this Act, that is filed on or

 2-9     after the effective date of this Act.  An action that is filed

2-10     before the effective date of this Act is governed by the law in

2-11     effect at the time the action is filed, and the former law is

2-12     continued in effect for that purpose.

2-13           SECTION 4.  This Act takes effect September 1, 1997.

2-14           SECTION 5.  The importance of this legislation and the

2-15     crowded condition of the calendars in both houses create an

2-16     emergency and an imperative public necessity that the

2-17     constitutional rule requiring bills to be read on three several

2-18     days in each house be suspended, and this rule is hereby suspended.