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.
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