1-1 By: Smith (Senate Sponsor - Harris) H.B. No. 115 1-2 (In the Senate - Received from the House April 9, 1999; 1-3 April 12, 1999, read first time and referred to Committee on 1-4 Jurisprudence; April 20, 1999, reported favorably by the following 1-5 vote: Yeas 4, Nays 0; April, 20, 1999, sent to printer.) 1-6 A BILL TO BE ENTITLED 1-7 AN ACT 1-8 relating to certain rights of a trustee and settlor concerning a 1-9 charitable trust. 1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-11 SECTION 1. Subchapter A, Chapter 113, Property Code, is 1-12 amended by adding Section 113.026 to read as follows: 1-13 Sec. 113.026. AUTHORITY TO DESIGNATE NEW CHARITABLE 1-14 BENEFICIARY. (a) In this section: 1-15 (1) "Charitable entity" has the meaning assigned by 1-16 Section 123.001. 1-17 (2) "Failed charitable beneficiary" means a charitable 1-18 entity that is named as a beneficiary of a trust and that: 1-19 (A) does not exist at the time the charitable 1-20 entity's interest in the trust becomes vested; 1-21 (B) ceases to exist during the term of the 1-22 trust; or 1-23 (C) ceases to be a charitable entity during the 1-24 term of the trust. 1-25 (b) This section applies only to an express written trust 1-26 created by an individual with a charitable entity as a beneficiary. 1-27 If the trust instrument provides a means for replacing a failed 1-28 charitable beneficiary, the trust instrument governs the 1-29 replacement of a failed charitable beneficiary, and this section 1-30 does not apply. 1-31 (c) The trustee of a trust may select one or more 1-32 replacement charitable beneficiaries for a failed charitable 1-33 beneficiary in accordance with this section. 1-34 (d) Each replacement charitable beneficiary selected under 1-35 this section by any person must: 1-36 (1) be a charitable entity and an entity described 1-37 under Sections 170(b)(1)(A), 170(c), 2055(a), and 2522(a) of the 1-38 Internal Revenue Code of 1986, as amended; and 1-39 (2) have the same or similar charitable purpose as the 1-40 failed charitable beneficiary. 1-41 (e) If the settlor of the trust is living and not 1-42 incapacitated at the time a trustee is selecting a replacement 1-43 charitable beneficiary, the trustee shall consult with the settlor 1-44 concerning the selection of one or more replacement charitable 1-45 beneficiaries. 1-46 (f) If the trustee and the settlor agree on the selection of 1-47 one or more replacement charitable beneficiaries, the trustee shall 1-48 send notice of the selection to the attorney general. If the 1-49 attorney general determines that one or more replacement charitable 1-50 beneficiaries do not have the same or similar charitable purpose as 1-51 the failed charitable beneficiary, not later than the 21st day 1-52 after the date the attorney general receives notice of the 1-53 selection, the attorney general shall request in writing that a 1-54 district court in the county in which the trust was created review 1-55 the selection. If the court agrees with the attorney general's 1-56 determination, any remaining replacement charitable beneficiary 1-57 agreed on by the trustee and the settlor is the replacement 1-58 charitable beneficiary. If there is not a remaining replacement 1-59 charitable beneficiary agreed on by the trustee and the settlor, 1-60 the court shall select one or more replacement charitable 1-61 beneficiaries. If the court finds that the attorney general's 1-62 request for a review is unreasonable, the replacement charitable 1-63 beneficiary is the charitable beneficiary agreed on by the trustee 1-64 and the settlor, and the court may require the attorney general to 2-1 pay all court costs of the parties involved. Not later than the 2-2 30th day after the date the selection is final, the trustee shall 2-3 provide to each replacement charitable beneficiary selected notice 2-4 of the selection by certified mail, return receipt requested. 2-5 (g) If the trustee and the settlor cannot agree on the 2-6 selection of a replacement charitable beneficiary, the trustee 2-7 shall send notice of that fact to the attorney general not later 2-8 than the 21st day after the date the trustee determines that an 2-9 agreement cannot be reached. The attorney general shall refer the 2-10 matter to a district court in the county in which the trust was 2-11 created. The trustee and the settlor may each recommend to the 2-12 court one or more replacement charitable beneficiaries. The court 2-13 shall select a replacement charitable beneficiary and, not later 2-14 than the 30th day after the date of the selection, provide to each 2-15 charitable beneficiary selected notice of the selection by 2-16 certified mail, return receipt requested. 2-17 SECTION 2. Section 113.026, Property Code, as added by this 2-18 Act, applies only to a trust created on or after the effective date 2-19 of this Act. 2-20 SECTION 3. The importance of this legislation and the 2-21 crowded condition of the calendars in both houses create an 2-22 emergency and an imperative public necessity that the 2-23 constitutional rule requiring bills to be read on three several 2-24 days in each house be suspended, and this rule is hereby suspended, 2-25 and that this Act take effect and be in force from and after its 2-26 passage, and it is so enacted. 2-27 * * * * *