By:  Harris                                            S.B. No. 998

                                A BILL TO BE ENTITLED

                                       AN ACT

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

 1-2           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-3           SECTION 1.  Section 112.035, Property Code, is amended by

 1-4     adding Subsection (e) to read as follows:

 1-5           (e)  A beneficiary of the trust may not be considered a

 1-6     settlor merely because of a lapse, waiver, or release of the

 1-7     beneficiary's right to withdraw a part of the trust property if the

 1-8     value of the property that could have been withdrawn by exercising

 1-9     the right of withdrawal in any calendar year does not exceed at the

1-10     time of the lapse, waiver, or release the greater of the amount

1-11     specified in:

1-12                 (1)  Section 2041(b)(2) or 2514(e), Internal Revenue

1-13     Code of 1986; or

1-14                 (2)  Section 2503(b), Internal Revenue Code of 1986.

1-15           SECTION 2.  Subsection (a), Section 113.082, Property Code,

1-16     is amended to read as follows:

1-17           (a)  A trustee may be removed in accordance with the terms of

1-18     the trust instrument, or, on the petition of an interested person

1-19     and after hearing, a court may, in its discretion, remove a trustee

1-20     and deny part or all of the trustee's compensation [if]:

1-21                 (1)  because of a material violation or attempted

1-22     violation by the trustee of [materially violated or attempted to

1-23     violate] the terms of the trust if [and] the violation or attempted

 2-1     violation results in a material financial loss to the trust;

 2-2                 (2)  because of the mental incapacity or insolvency of

 2-3     the trustee [becomes incompetent or insolvent]; or

 2-4                 (3)  [in the discretion of the court,] for other cause.

 2-5           SECTION 3.  The change in law made by Section 2 of this Act

 2-6     applies only to a cause of action for removal under Section

 2-7     113.082, Property Code, as amended by this Act, that is filed on or

 2-8     after the effective date of this Act. An action that is filed

 2-9     before the effective date of this Act is governed by the law in

2-10     effect at the time the action is filed, and the former law is

2-11     continued in effect for that purpose.

2-12           SECTION 4.  This Act takes effect September 1, 1997.

2-13           SECTION 5.  The importance of this legislation and the

2-14     crowded condition of the calendars in both houses create an

2-15     emergency and an imperative public necessity that the

2-16     constitutional rule requiring bills to be read on three several

2-17     days in each house be suspended, and this rule is hereby suspended.