1-1     By:  Harris                                            S.B. No. 998

 1-2           (In the Senate - Filed March 6, 1997; March 12, 1997, read

 1-3     first time and referred to Committee on Jurisprudence;

 1-4     March 26, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 7, Nays 0; March 26, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 998                   By:  Harris

 1-8                                   AN ACT

 1-9     relating to the administration and operation of certain trusts.

1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-11           SECTION 1.  Section 112.035, Property Code, is amended by

1-12     adding Subsection (e) to read as follows:

1-13           (e)  A beneficiary of the trust may not be considered a

1-14     settlor merely because of a lapse, waiver, or release of the

1-15     beneficiary's right to withdraw a part of the trust property if the

1-16     value of the property that could have been withdrawn by exercising

1-17     the right of withdrawal in any calendar year does not exceed at the

1-18     time of the lapse, waiver, or release the greater of the amount

1-19     specified in:

1-20                 (1)  Section 2041(b)(2) or 2514(e), Internal Revenue

1-21     Code of 1986; or

1-22                 (2)  Section 2503(b), Internal Revenue Code of 1986.

1-23           SECTION 2.  Subsection (a), Section 113.082, Property Code,

1-24     is amended to read as follows:

1-25           (a)  A trustee may be removed in accordance with the terms of

1-26     the trust instrument, or, on the petition of an interested person

1-27     and after hearing, a court may, in its discretion, remove a trustee

1-28     and deny part or all of the trustee's compensation [if]:

1-29                 (1)  because of a material violation or attempted

1-30     violation by the trustee of [materially violated or attempted to

1-31     violate] the terms of the trust if [and] the violation or attempted

1-32     violation results in a material financial loss to the trust;

1-33                 (2)  because of the mental incapacity or insolvency of

1-34     the trustee [becomes incompetent or insolvent]; or

1-35                 (3)  [in the discretion of the court,] for other cause.

1-36           SECTION 3.  The change in law made by Section 2 of this Act

1-37     applies only to a cause of action for removal under Section

1-38     113.082, Property Code, as amended by this Act, that is filed on or

1-39     after the effective date of this Act. An action that is filed

1-40     before the effective date of this Act is governed by the law in

1-41     effect at the time the action is filed, and the former law is

1-42     continued in effect for that purpose.

1-43           SECTION 4.  This Act takes effect September 1, 1997.

1-44           SECTION 5.  The importance of this legislation and the

1-45     crowded condition of the calendars in both houses create an

1-46     emergency and an imperative public necessity that the

1-47     constitutional rule requiring bills to be read on three several

1-48     days in each house be suspended, and this rule is hereby suspended.

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