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.