By Smith                                               H.B. No. 115
         76R1311 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)  If the trust instrument provides a means for replacing a
1-20     failed charitable beneficiary, the trust investment governs the
1-21     replacement of a failed charitable beneficiary, and this section
1-22     does not apply.
1-23           (c)  The trustee of a trust may designate, without obtaining
1-24     judicial approval, one or more replacement charitable beneficiaries
 2-1     for a failed charitable beneficiary.  Each replacement charitable
 2-2     beneficiary must be a charitable entity and an entity described
 2-3     under Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the
 2-4     Internal Revenue Code of 1986  (26 U.S.C. Sections 170(b)(1)(A),
 2-5     170(c), 2055(a), and 2522(a)).
 2-6           (d)  If the settlor of the trust is living and not
 2-7     incapacitated at the time a trustee is designating a replacement
 2-8     charitable beneficiary, the trustee shall attempt to consult with
 2-9     the settlor concerning the settlor's recommendation concerning one
2-10     or more replacement charitable beneficiaries and shall consider the
2-11     settlor's recommendation before naming a replacement charitable
2-12     beneficiary.
2-13           (e)  If the trustee chooses the replacement charitable
2-14     beneficiary recommended by the settlor under Subsection (d), the
2-15     replacement charitable beneficiary is not required to have the same
2-16     or similar charitable purpose as the failed charitable beneficiary,
2-17     and notice to the attorney general is not required.  In all other
2-18     cases, the trustee must:
2-19                 (1)  choose one or more replacement charitable
2-20     beneficiaries with the same or similar charitable purpose as the
2-21     failed charitable beneficiary; and
2-22                 (2)  give notice of the selection of the replacement
2-23     charitable beneficiary to the attorney general by certified mail
2-24     return receipt requested.
2-25           SECTION 2.  Section 113.026, Property Code, as added by this
2-26     Act, applies to a trust regardless of whether the trust was created
2-27     before, on, or after the effective date of this Act.
 3-1           SECTION 3.  The importance of this legislation and the
 3-2     crowded condition of the calendars in both houses create an
 3-3     emergency and an imperative public necessity that the
 3-4     constitutional rule requiring bills to be read on three several
 3-5     days in each house be suspended, and this rule is hereby suspended,
 3-6     and that this Act take effect and be in force from and after its
 3-7     passage, and it is so enacted.