HBA-KMH H.B. 1851 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 1851 By: Thompson Judicial Affairs 4/22/1999 Committee Report (Amended) BACKGROUND AND PURPOSE Historically, the Real Estate, Probate and Trust Law section of the State Bar of Texas has identified provisions of the Probate Code that are in need of revision. H.B. 1851 codifies a number of the suggested revisions that the Real Estate, Probate and Trust Law section of the State Bar of Texas has identified as in need of revision. This bill authorizes the termination of a guardianship and payment of the balance over to the court registry if the amount in the estate is $50,000 or less. This bill also permits a resident agent to resign, grants the court authority to remove a guardian who does not appoint a new resident agent, authorizes the court to order a person holding a ward's will to produce it to a guardian attempting to make tax motivated gifts, eliminates the requirement that a guardian be appointed before a trust is established, allows the court to discharge guardians after the establishment of a guardianship trust, clarifies the court's jurisdiction over guardianship trustees, and raises the minimum amount necessary to close a guardianship trust. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority previously delegated to the Supreme Court of Texas is modified in SECTION 4 (Section 865A, Probate Code) of this bill. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 745(c), Probate Code, to raise the value of an estate of a minor ward consisting of cash or cash equivalents which is authorized to be closed and managed, paid to the county clerk, and managed by the clerk to $50,000 from $25,000. SECTION 2. Amends Subpart D, Part 4, Chapter XIII, Probate Code, by adding Sections 760A and 760B, as follows: Sec. 760A. CHANGE OF RESIDENT AGENT. (a) Authorizes a guardian to change its resident agent for matters relating to the guardianship by filing the prescribed statement of change with the names and addresses of the guardian, resident agent, and successor resident agent. (b) Provides that the designation of a successor resident agent made in a statement filed under this section takes effect on the date on which the statement is filed with the court. Sec. 760B. RESIGNATION OF RESIDENT AGENT. Authorizes a resident agent of a guardian to resign as the resident agent by giving notice to the guardian and filing the prescribed resignation statement with the set forth contents. Requires the resident agent to send, by certified mail, return receipt requested, a copy of a resignation statement filed under this section to the guardian, each party or the party's representative of record. Provides that the resignation of the resident agent takes effect on the date on which the court enters an order accepting the agent's resignation. Prohibits a court from entering an order accepting the agent's resignation unless the agent complies with the requirements of this section. SECTION 3. Amends Section 761(a), Probate Code, to authorize the removal of a guardian who can not be served with notices or process because the guardian is a nonresident of this state who does not have a resident agent to accept service of process in matters relating to the guardianship. SECTION 4. Amends Subpart M, Part 4, Chapter XIII, Probate Code, by adding Section 865A, as follows: Sec. 865A. INSPECTION OF CERTAIN INSTRUMENT FOR ESTATE PLANNING PURPOSE. Authorizes the guardian of the ward's estate to apply to the court for an order to seek an in camera inspection of a true copy of a will, codicil, trust, or other estate planning instrument of the ward as a means of obtaining access to the instrument for purposes of establishing an estate plan under Section 865 (Power to Make Tax-Motivated Gifts)of this code. Sets forth the contents of an application under this section. Requires a copy of the application to be sent to each person who has custody of a described instrument, the ward's spouse, the ward's dependents, all devisees under the instrument, and as directed by the court. Sets forth procedures for notices. Requires the court to direct the person that has custody of the requested instrument to deliver a true copy to the court for inspection only, upon a finding of good cause at a hearing. Requires the court to review the instrument and release all or part of the instrument to the applicant only for the prescribed purpose on a finding of good cause after the in camera inspection. Authorizes the court to appoint a guardian ad litem for the ward or an interested party at any stage of the proceedings as is appropriate for the protection of the ward or party. Provides that an attorney does not violate attorney-client privilege by complying with the order of the court under this section. Provides that notwithstanding Section 22.004 (Rules of Civil Procedure), Government Code, the supreme court may not amend or adopt rules in conflict with the provision that the prescribed compliance does not violate attorney-client privilege. SECTION 5. Amends Section 867, Probate Code, as follows: Sec. 867. CREATION OF MANAGEMENT TRUST. (a) Authorizes an application to create a trust for the management of all or part of the estate of a ward or proposed ward to be filed in the court in which the guardianship proceeding is pending by the guardian, attorney ad litem as prescribed, or any other person with standing under Section 642 (Standing to Commence or Contest Proceeding). Provides that the applicant must meet the prescribed proof by clear and convincing evidence before the entering of an order that creates a trust under this section. Provides that a determination of the incapacity of an adult proposed ward must be made in the prescribed manner at a hearing held under this section. Deletes the existing provisions of this section authorizing the court to enter an order creating a trust under this section. Requires a trust under this section to direct the guardian or another person to deliver all or part of the estate of the ward or proposed ward, as well as the assets, to a trust company or a state or national bank that has trust powers in this state and include the terms, conditions, and limitations placed on the trust. Provides that an order creating a trust under this section is sufficient legal authority for the delivery, transfer, or payment of funds or property to the trustee by certain persons. Makes conforming and nonsubstantive changes. SECTION 6. Amends Section 868A, Probate Code, to authorize the court to discharge a guardian of the person under the provision of this section, as well as the guardian of the estate. Makes conforming and nonsubstantive changes. SECTION 7. Amends Section 869C, Probate Code, to grant jurisdiction over the trustee through creation of a trust under this section in the same respect as to a guardian under this chapter. SECTION 8. Makes application of this Act prospective as to Section 745(c), Probate Code, as added by this Act, regarding an application to close a guardianship. SECTION 9. Makes application of this Act prospective as to Sections 760A and 760B, Probate Code, as added by this Act, regarding a change in designation of or a resignation of a resident agent. SECTION 10. Makes application of this Act prospective as to Section 761, Probate Code, as added by this Act, regarding a motion for the removal of a guardian. SECTION 11. Makes application of this Act prospective as to Section 867, Probate Code, as added by this Act, regarding an application for the creation of a trust. SECTION 12. Makes application of this Act prospective as to Section 868A, Probate Code, as added by this Act, regarding a motion for the discharge of a guardian. SECTION 13. Effective date: September 1, 1999. SECTION 14. Emergency clause. EXPLANATION OF AMENDMENTS Committee Amendment No. 1 Amends H.B. No. 1851 by striking SECTIONS 5, 6, 7, 11, and 12 of the bill and by renumbering the remaining SECTIONS of the bill accordingly.