HBA-LCA H.B. 3632 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3632 By: Naishtat Judicial Affairs 4/21/1999 Introduced BACKGROUND AND PURPOSE Under current law, a corporate trustee must be appointed to serve as manager of certain trusts. If no corporate trustee is willing to serve - for example, in the case of a small trust - there is no provision that allows a court to appoint a noncorporate trustee. H.B. 3632 allows a court to appoint a noncorporate trustee for the estate of a ward if no corporate trustee is willing to serve, the trust assets are less than $50,000, and such an appointment is in the best interest of the ward. This bill also provides that such a noncorporate trustee must file a bond in the amount of the principal of the trust and its anticipated annual interest. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 867, Probate Code, as follows: Sec. 867. CREATION OF MANAGEMENT TRUST. (a) Requires a court, upon creation of a trust for a ward, to appoint a trust company or a state or national bank that has trust powers in this state to serve as trustee, except as provided by Subsection (b). (b) Authorizes a court to appoint a person other than a trust company or bank described by Subsection (a) to serve as trustee if no such trust company or bank is willing to serve as trustee, the value of the trust's principal is $50,000 or less, and the court determines such an appointment to be in the ward's best interests. (c) Requires the order to direct the guardian or another person to deliver all or part of the assets of the guardianship to a person or corporate fiduciary appointed by the court as trustee of the trust. Makes a conforming change. Created from existing text. SECTION 2. Amends Section 868(a), Probate Code, to establish that, except as provided by Subsection (d), a trust created under this section must provide that, if the trustee is a corporate fiduciary, the trustee serves without giving bond. SECTION 3. Amends Subpart N, Part 4, Chapter XIII, Probate Code, by adding Section 868B, as follows: Sec. 868B. BOND REQUIREMENT FOR CERTAIN TRUSTEES. Requires a court to require a person, other than a corporate fiduciary, who serves as trustee to file with the county clerk a bond in the amount of the trust's principal and projected annual income and with the conditions the court determines are necessary. SECTION 4. Amends Section 869A, Probate Code, to make a conforming change. SECTION 5. Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 6. Emergency clause.