By Thompson                                           H.B. No. 1851
         76R1877 CLG-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to guardianships and management trusts for incapacitated
 1-3     persons.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 745(c), Texas Probate Code, is amended to
 1-6     read as follows:
 1-7           (c)  When the estate of a minor ward consists only of cash or
 1-8     cash equivalents in an amount of $50,000 [$25,000] or less, the
 1-9     guardianship of the estate may be terminated and the assets paid to
1-10     the county clerk of the county in  which the guardianship
1-11     proceeding is pending, and the clerk shall manage the funds as
1-12     provided by Section 887 of this code.
1-13           SECTION 2.  Subpart D, Part 4, Chapter XIII, Texas Probate
1-14     Code, is amended by adding Sections 760A and 760B to read as
1-15     follows:
1-16           Sec. 760A.  CHANGE OF RESIDENT AGENT.  (a)  A guardian may
1-17     change its resident agent to accept service of process in a
1-18     guardianship proceeding  or other matter relating to the
1-19     guardianship by filing a statement of the change entitled
1-20     "Designation of Successor Resident Agent" with the court in which
1-21     the guardianship proceeding is pending.  The statement must contain
1-22     the names and addresses of the:
1-23                 (1)  guardian;
1-24                 (2)  resident agent; and
 2-1                 (3)  successor resident agent.
 2-2           (b)  The designation of a successor resident agent made in a
 2-3     statement filed under this section takes effect on the date on
 2-4     which the  statement is filed with the court.
 2-5           Sec. 760B.  RESIGNATION OF RESIDENT AGENT.  (a)   A resident
 2-6     agent of a guardian may resign as the resident agent by giving
 2-7     notice to the guardian and filing with the court in which the
 2-8     guardianship proceeding is pending a statement entitled
 2-9     "Resignation of Resident Agent" that:
2-10                 (1)  contains the name of the guardian;
2-11                 (2)  contains the address of the guardian most recently
2-12     known by the resident agent;
2-13                 (3)  states that notice of the resignation has been
2-14     given to the guardian and that the guardian does not have a
2-15     resident agent; and
2-16                 (4)  contains the date on which the notice of the
2-17     resignation was given to the guardian.
2-18           (b)  The resident agent shall send, by certified mail, return
2-19     receipt requested, a copy of a resignation statement filed under
2-20     Subsection (a)  of this section to:
2-21                 (1)  the guardian at the address most recently known by
2-22     the agent; and
2-23                 (2)  each party in the case or the party's attorney or
2-24     other designated representative of record.
2-25           (c)  The resignation of a resident agent takes effect on the
2-26     date on which the court enters an order accepting the agent's
2-27     resignation.  A court may not enter an order accepting the agent's
 3-1     resignation unless the agent complies with the requirements of this
 3-2     section.
 3-3           SECTION 3.  Section 761(a), Texas Probate Code, is amended to
 3-4     read as follows:
 3-5           (a)  The court, on its own motion or on motion of any
 3-6     interested person, including the ward, and without notice, may
 3-7     remove any guardian, appointed under this chapter, who:
 3-8                 (1)  neglects to qualify in the manner and time
 3-9     required by law;
3-10                 (2)  fails to return within 90 days after
3-11     qualification, unless the time is extended by order of the court,
3-12     an inventory of the property of the guardianship estate and list of
3-13     claims that have come to the guardian's knowledge;
3-14                 (3)  having been required to give a new bond, fails to
3-15     do so within the time prescribed;
3-16                 (4)  absents himself from the state for a period of
3-17     three months at one time without permission of the court, or
3-18     removes from the state;
3-19                 (5)  cannot be served with notices or other processes
3-20     because of the fact that:
3-21                       (A)  the guardian's whereabouts are unknown;
3-22                       (B)  [, or because] the guardian is eluding
3-23     service; or
3-24                       (C)  the guardian is a nonresident of this state
3-25     who does not have a resident agent to accept service of process in
3-26     any guardianship proceeding or other matter relating to the
3-27     guardianship;
 4-1                 (6)  has misapplied, embezzled, or removed from the
 4-2     state, or is about to misapply, embezzle, or remove from the state,
 4-3     all or any part of the property committed to the guardian's care;
 4-4     or
 4-5                 (7)  has cruelly treated a ward, or has neglected to
 4-6     educate or maintain the ward as liberally as the means of the ward
 4-7     and the condition of the ward's estate permit.
 4-8           SECTION 4.  Subpart M, Part 4, Chapter XIII, Texas Probate
 4-9     Code, is amended by adding Section 865A to read as follows:
4-10           Sec. 865A.  INSPECTION OF CERTAIN INSTRUMENT FOR ESTATE
4-11     PLANNING PURPOSES.  (a)  On the filing of an application under
4-12     Section 865 of this code, the guardian of the ward's estate may
4-13     apply to the court for an order to seek an in camera inspection of
4-14     a true copy of a will, codicil, trust, or other estate planning
4-15     instrument of the ward as a means of obtaining access to the
4-16     instrument for purposes of establishing an estate plan under
4-17     Section 865 of this code.
4-18           (b)  An application filed under this section must:
4-19                 (1)  be sworn to by the guardian;
4-20                 (2)  list all of the instruments requested for
4-21     inspection; and
4-22                 (3)  state one or more reasons supporting the necessity
4-23     to inspect each requested instrument for the purpose described by
4-24     Subsection (a) of this section.
4-25           (c)  A person who files an application under this section
4-26     shall send a copy of the application to:
4-27                 (1)  each person who has custody of an instrument
 5-1     listed in the application;
 5-2                 (2)  the ward's spouse;
 5-3                 (3)  the ward's dependents;
 5-4                 (4)  all devisees under a will, trust, or other
 5-5     beneficial instrument relating to the ward's estate; and
 5-6                 (5)  any other person as directed by the court.
 5-7           (d)  Notice required by Subsection (c) of this section must
 5-8     be delivered by certified mail to a person described by Subsection
 5-9     (c)(2), (3), (4), or (5) of this section and by registered or
5-10     certified mail to a person described by Subsection (c)(1) of this
5-11     section.   After the 10th day after the date on which the applicant
5-12     complies with the notice requirement, the applicant may request
5-13     that a hearing be held on the application.  Notice of the date,
5-14     time, and place of the hearing must be given by the applicant to
5-15     each person described by Subsection (c)(1) of this section when the
5-16     court sets a date for a hearing on the application.
5-17           (e)  After the conclusion of a hearing on the application and
5-18     on a finding that there is good cause for an in camera inspection
5-19     of a requested instrument, the court shall direct the person that
5-20     has custody of the requested will, codicil, trust, or other estate
5-21     planning instrument to deliver a true copy of the instrument to the
5-22     court for in camera inspection only.  After conducting an in camera
5-23     review of the instrument, the court, if good cause exists, shall
5-24     release all or part of the instrument to the applicant only for the
5-25     purpose described by Subsection (a) of this section.
5-26           (f)  The court may appoint a guardian ad litem for the ward
5-27     or an interested party at any stage of the proceedings if it is
 6-1     considered advisable for the protection of the ward or the
 6-2     interested party.
 6-3           (g)  An attorney does not violate the attorney-client
 6-4     privilege solely by complying with a court order to release an
 6-5     instrument subject to this section.  Notwithstanding Section
 6-6     22.004, Government Code, the supreme court may not amend or adopt
 6-7     rules in conflict with this subsection.
 6-8           SECTION 5.  Section 867, Texas Probate Code, is amended to
 6-9     read as follows:
6-10           Sec. 867.  CREATION OF MANAGEMENT TRUST.  (a)  An application
6-11     to  create a trust for the management of all or part of the  estate
6-12     of a ward or proposed ward may be filed in the court in which the
6-13     guardianship proceeding is pending by:
6-14                 (1)  the guardian of the person or estate of the ward;
6-15                 (2)  the attorney ad litem of a ward or proposed ward
6-16     at any time after the date of the ad litem's appointment under
6-17     Section 646 of this code;
6-18                 (3)  the guardian ad litem of a ward or proposed ward
6-19     at any time after the date of the ad litem's appointment under
6-20     Section 645 of this code; or
6-21                 (4)  any other person who has standing to commence a
6-22     guardianship proceeding under Section 642 of this code.
6-23           (b)  Before entering an order that creates a trust under this
6-24     section, the applicant has the burden to prove and the court must
6-25     find by clear and convincing evidence that:
6-26                 (1)  the proposed ward is an incapacitated person or
6-27     the ward remains incapacitated, as appropriate;
 7-1                 (2)  creation of a trust under this section is in the
 7-2     best interest of the ward or proposed ward; and
 7-3                 (3)  both the rights and property of the ward or
 7-4     proposed ward will be protected by the creation of a trust under
 7-5     this section.
 7-6           (c)  A determination of incapacity of an adult proposed ward
 7-7     at a hearing held under this section must be made in the same
 7-8     manner and to the same extent as a determination of incapacity is
 7-9     made for an adult proposed ward at a proceeding to appoint a
7-10     guardian of the estate for the ward.
7-11           (d)  An [On application  by the guardian of a ward or by a
7-12     ward's attorney ad litem at any time after the date of the
7-13     attorney's appointment under Section 646 of this code, the court in
7-14     which the guardianship proceeding is pending may enter an order
7-15     that creates for the ward's benefit a trust for the management of
7-16     guardianship funds if the court finds that the creation of the
7-17     trust is in the ward's best interests.  The] order creating a trust
7-18     under this section shall:
7-19                 (1)  direct the guardian or another person to deliver
7-20     all or part of the assets of the estate of the ward or proposed
7-21     ward  [guardianship] to a trust company or a state or national bank
7-22     that has trust powers in this state; and
7-23                 (2)  [. The order shall] include the terms, conditions,
7-24     and limitations placed on the trust.
7-25           (e)  An order creating a trust under this section is
7-26     sufficient legal authority for the delivery, transfer, or payment
7-27     of funds or property to the trustee by a person who:
 8-1                 (1)  owes money to the ward or proposed ward;
 8-2                 (2)  has custody of any of the property of the ward or
 8-3     proposed ward; or
 8-4                 (3)  acts as a registrar or transfer agent of any
 8-5     evidence of interest, indebtedness, property, or right belonging to
 8-6     the ward or proposed ward.
 8-7           (f)  The court shall maintain the trust under the same cause
 8-8     number as the guardianship proceeding.
 8-9           SECTION 6.  Section 868A, Texas Probate Code, is amended to
8-10     read as follows:
8-11           Sec. 868A.  DISCHARGE OF GUARDIAN OF ESTATE AND CONTINUATION
8-12     OF TRUST.  On or at any time after the creation of a trust under
8-13     this subpart, the court may discharge the guardian of the [ward's]
8-14     estate or person, or both, of the ward [only] if [a guardian of the
8-15     ward's person remains and] the court determines that the discharge
8-16     is in the ward's best interests.
8-17           SECTION 7.  Section 869C, Texas Probate Code, is amended to
8-18     read as follows:
8-19           Sec. 869C.  JURISDICTION OVER TRUST MATTERS.     A court that
8-20     creates a trust under Section 867 of this code has the same
8-21     jurisdiction over the trustee and to hear matters relating to the
8-22     trust as the court has with respect to a guardian, the
8-23     guardianship, and other matters covered by this chapter.
8-24           SECTION 8.  The change in law made by this Act to Section
8-25     745(c), Texas Probate Code, applies only to an application to close
8-26     a guardianship filed on or after the effective date of this Act.
8-27     An application to close a guardianship filed before the effective
 9-1     date of this Act is governed by the law in effect on the date on
 9-2     which the application was filed, and the former law is continued in
 9-3     effect for that  purpose.
 9-4           SECTION 9.  Sections 760A and 760B, Texas Probate Code, as
 9-5     added by this Act, apply only to a change in designation of or a
 9-6     resignation of a resident agent made on or after the effective date
 9-7     of this Act.  A change in designation of or the resignation of a
 9-8     resident agent made before the effective date of this Act is
 9-9     governed by the law in effect when the change in designation of or
9-10     the resignation of the resident agent occurred, and the former law
9-11     is continued in effect for that purpose.
9-12           SECTION 10.  The changes in law made by this Act to Section
9-13     761, Texas Probate Code, apply only to a motion for the removal of
9-14     a guardian made or filed on or after the effective date of this
9-15     Act.  A motion for the removal of a guardian made or filed before
9-16     the effective date of this Act is governed by the law in effect on
9-17     the date the motion was made or filed, and the former law is
9-18     continued in effect for that purpose.
9-19           SECTION 11.  The changes in law made by this Act to Section
9-20     867, Texas Probate Code, apply only to an application for the
9-21     creation of a trust filed on or after the effective date of this
9-22     Act.  An application for the creation of a trust filed before the
9-23     effective date of this Act is governed by the law in effect when
9-24     the application was filed, and the former law is continued in
9-25     effect for that purpose.
9-26           SECTION 12.  The changes in law made by this Act to Section
9-27     868A, Texas Probate Code, apply only to the motion for the
 10-1    discharge of a guardian made or filed on or after the effective
 10-2    date of this Act.  A motion for the discharge of a guardian made or
 10-3    filed before the effective date of this Act is governed by the law
 10-4    in effect on the date the motion was made or filed, and the former
 10-5    law is continued in effect for that purpose.
 10-6          SECTION 13.  This Act takes effect September 1, 1999.
 10-7          SECTION 14.  The importance of this legislation and the
 10-8    crowded condition of the calendars in both houses create an
 10-9    emergency and an imperative public necessity that the
10-10    constitutional rule requiring bills to be read on three several
10-11    days in each house be suspended, and this rule is hereby suspended.