75R12384 E                           

         By Smith                                              H.B. No. 2039

         Substitute the following for H.B. No. 2039:

         By Rhodes                                         C.S.H.B. No. 2039

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to certain rights of a trustee and settlor concerning a

 1-3     charitable trust.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter A, Chapter 113, Property Code, is

 1-6     amended by adding Section 113.026 to read as follows:

 1-7           Sec. 113.026.  AUTHORITY TO DESIGNATE NEW CHARITABLE

 1-8     BENEFICIARY.  (a)  In this section:

 1-9                 (1)  "Charitable entity" has the meaning assigned by

1-10     Section 123.001.

1-11                 (2)  "Failed charitable beneficiary" means a charitable

1-12     entity that is named as a beneficiary of a trust and that:

1-13                       (A)  does not exist at the time the charitable

1-14     entity's interest in the trust becomes vested;

1-15                       (B)  ceases to exist during the term of the

1-16     trust; or

1-17                       (C)  ceases to be a charitable entity during the

1-18     term of the trust.

1-19           (b)  Unless otherwise provided in the trust instrument, the

1-20     trustee of a trust may designate, without obtaining judicial

1-21     approval, one or more replacement charitable beneficiaries for a

1-22     failed charitable beneficiary.  Each replacement charitable

1-23     beneficiary must be a charitable entity and an entity described

1-24     under Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the

 2-1     Internal Revenue Code of 1986  (26 U.S.C. Sections 170(b)(1)(A),

 2-2     170(c), 2055(a), and 2522(a)).

 2-3           (c)  If the settlor of the trust is living and not

 2-4     incapacitated at the time a trustee is designating a replacement

 2-5     charitable beneficiary, the trustee shall attempt to consult with

 2-6     the settlor concerning the settlor's recommendation concerning one

 2-7     or more replacement charitable beneficiaries and shall consider the

 2-8     settlor's recommendation before naming a replacement charitable

 2-9     beneficiary.

2-10           (d)  If the trustee chooses the replacement charitable

2-11     beneficiary recommended by the settlor under Subsection (c), the

2-12     replacement charitable beneficiary does not have to have the same

2-13     or similar charitable purpose as the failed charitable beneficiary,

2-14     and no notice to the attorney general is required.  In all other

2-15     cases, the trustee must:

2-16                 (1)  choose one or more replacement charitable

2-17     beneficiaries with the same or similar charitable purpose as the

2-18     failed charitable beneficiary; and

2-19                 (2)  give notice of the selection of the replacement

2-20     charitable beneficiary to the attorney general by certified mail

2-21     return receipt requested.

2-22           (e)  If the trust instrument provides a means for replacing a

2-23     failed charitable beneficiary, the trust investment shall govern

2-24     the replacement of a failed charitable beneficiary, and the

2-25     provisions of this section shall not apply.

2-26           SECTION 2.  Section 113.026, Property Code, as added by this

2-27     Act, applies to a trust regardless of whether the trust was created

 3-1     before, on, or after the effective date of this Act.

 3-2           SECTION 3.  The importance of this legislation and the

 3-3     crowded condition of the calendars in both houses create an

 3-4     emergency and an imperative public necessity that the

 3-5     constitutional rule requiring bills to be read on three several

 3-6     days in each house be suspended, and this rule is hereby suspended,

 3-7     and that this Act take effect and be in force from and after its

 3-8     passage, and it is so enacted.