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.