1-1 AN ACT 1-2 relating to allocation of principal and income in certain trusts. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Subchapter D, Chapter 113, Property Code, is 1-5 amended by adding Section 113.1021 to read as follows: 1-6 Sec. 113.1021. ALLOCATION OF PRINCIPAL AND INCOME IN 1-7 CHARITABLE TRUSTS. (a) Unless otherwise provided by the trust 1-8 instrument, an increase in the value of the following obligations 1-9 over the value at the time the obligation was acquired by the trust 1-10 is income: 1-11 (1) a deferred annuity before annuitization; and 1-12 (2) a life insurance contract before the death of the 1-13 insured. 1-14 (b) For purposes of this section and unless otherwise 1-15 provided by the trust instrument, the increase in value of an 1-16 obligation described by Subsection (a) is available for 1-17 distribution only when the trustee receives cash on account of the 1-18 obligation. If the obligation is surrendered or partially 1-19 liquidated, the cash received must be attributed first to the 1-20 increase. Notwithstanding Section 113.103, the increase in the 1-21 value of the obligation is available for distribution to the income 1-22 beneficiary who is the income beneficiary when the cash is received 1-23 and, if different, not to the income beneficiary who was the income 1-24 beneficiary at the time the income accrued. 2-1 (c) Section 113.109 applies to the allocation of principal 2-2 and income for a deferred annuity after annuitization. 2-3 SECTION 2. (a) This Act takes effect September 1, 1999. 2-4 (b) The change in law made by this Act applies only to 2-5 principal and income subject to allocation on or after September 1, 2-6 1999. Principal and income subject to allocation before September 2-7 1, 1999, is governed by the law in effect immediately before that 2-8 date, and the former law is continued in effect for that purpose. 2-9 SECTION 3. The importance of this legislation and the 2-10 crowded condition of the calendars in both houses create an 2-11 emergency and an imperative public necessity that the 2-12 constitutional rule requiring bills to be read on three several 2-13 days in each house be suspended, and this rule is hereby suspended. _______________________________ _______________________________ President of the Senate Speaker of the House I certify that H.B. No. 1373 was passed by the House on April 13, 1999, by a non-record vote; and that the House concurred in Senate amendments to H.B. No. 1373 on May 8, 1999, by a non-record vote. _______________________________ Chief Clerk of the House I certify that H.B. No. 1373 was passed by the Senate, with amendments, on May 6, 1999, by the following vote: Yeas 30, Nays 0. _______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor