By Smith H.B. No. 115 76R7970 CAS-F 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) This section applies only to an express written trust 1-20 created by an individual with a charitable entity as a beneficiary. 1-21 If the trust instrument provides a means for replacing a failed 1-22 charitable beneficiary, the trust instrument governs the 1-23 replacement of a failed charitable beneficiary, and this section 1-24 does not apply. 2-1 (c) The trustee of a trust may select one or more 2-2 replacement charitable beneficiaries for a failed charitable 2-3 beneficiary in accordance with this section. 2-4 (d) Each replacement charitable beneficiary selected under 2-5 this section by any person must: 2-6 (1) be a charitable entity and an entity described 2-7 under Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the 2-8 Internal Revenue Code of 1986, as amended; and 2-9 (2) have the same or similar charitable purpose as the 2-10 failed charitable beneficiary. 2-11 (e) If the settlor of the trust is living and not 2-12 incapacitated at the time a trustee is selecting a replacement 2-13 charitable beneficiary, the trustee shall consult with the settlor 2-14 concerning the selection of one or more replacement charitable 2-15 beneficiaries. 2-16 (f) If the trustee and the settlor agree on the selection of 2-17 one or more replacement charitable beneficiaries, the trustee shall 2-18 send notice of the selection to the attorney general. If the 2-19 attorney general determines that one or more replacement charitable 2-20 beneficiaries do not have the same or similar charitable purpose as 2-21 the failed charitable beneficiary, not later than the 21st day 2-22 after the date the attorney general receives notice of the 2-23 selection, the attorney general shall request in writing that a 2-24 district court in the county in which the trust was created review 2-25 the selection. If the court agrees with the attorney general's 2-26 determination, any remaining replacement charitable beneficiary 2-27 agreed on by the trustee and the settlor is the replacement 3-1 charitable beneficiary. If there is not a remaining replacement 3-2 charitable beneficiary agreed on by the trustee and the settlor, 3-3 the court shall select one or more replacement charitable 3-4 beneficiaries. If the court finds that the attorney general's 3-5 request for a review is unreasonable, the replacement charitable 3-6 beneficiary is the charitable beneficiary agreed on by the trustee 3-7 and the settlor, and the court may require the attorney general to 3-8 pay all court costs of the parties involved. Not later than the 3-9 30th day after the date the selection is final, the trustee shall 3-10 provide to each replacement charitable beneficiary selected notice 3-11 of the selection by certified mail, return receipt requested. 3-12 (g) If the trustee and the settlor cannot agree on the 3-13 selection of a replacement charitable beneficiary, the trustee 3-14 shall send notice of that fact to the attorney general not later 3-15 than the 21st day after the date the trustee determines that an 3-16 agreement cannot be reached. The attorney general shall refer the 3-17 matter to a district court in the county in which the trust was 3-18 created. The trustee and the settlor may each recommend to the 3-19 court one or more replacement charitable beneficiaries. The court 3-20 shall select a replacement charitable beneficiary and, not later 3-21 than the 30th day after the date of the selection, provide to each 3-22 charitable beneficiary selected notice of the selection by 3-23 certified mail, return receipt requested. 3-24 SECTION 2. Section 113.026, Property Code, as added by this 3-25 Act, applies only to a trust created on or after the effective date 3-26 of this Act. 3-27 SECTION 3. The importance of this legislation and the 4-1 crowded condition of the calendars in both houses create an 4-2 emergency and an imperative public necessity that the 4-3 constitutional rule requiring bills to be read on three several 4-4 days in each house be suspended, and this rule is hereby suspended, 4-5 and that this Act take effect and be in force from and after its 4-6 passage, and it is so enacted.