By Naishtat                                           H.B. No. 3632
         76R6714 CLG-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to trustees of certain trusts.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 867, Texas Probate Code, is amended to
 1-5     read as follows:
 1-6           Sec. 867.  CREATION OF MANAGEMENT TRUST.  (a)  On application
 1-7     by the guardian of a ward or by a ward's attorney ad litem at any
 1-8     time after the date of the attorney's appointment under Section 646
 1-9     of this code, the court in which the guardianship proceeding is
1-10     pending may enter an order that creates for the ward's benefit a
1-11     trust for the management of guardianship funds if the court finds
1-12     that the creation of the trust is in the ward's best interests.
1-13     Except as provided by Subsection (b) of this section, the court
1-14     shall appoint a trust company or a state or national bank that has
1-15     trust powers in this state to serve as trustee of the trust.
1-16           (b)  The court may appoint a person other than a trust
1-17     company or bank described by Subsection (a) of this section to
1-18     serve as trustee of the trust only if:
1-19                 (1)  no trust company or bank described by Subsection
1-20     (a) of this section is willing to serve as trustee;
1-21                 (2)  the value of the trust's principal is $50,000 or
1-22     less; and
1-23                 (3)  the court determines the appointment to be in the
1-24     ward's best interests.
 2-1           (c)  The order shall direct the guardian or another person to
 2-2     deliver all or part of the assets of the guardianship to a person
 2-3     or corporate fiduciary appointed by the court as trustee of the
 2-4     trust [company or a state or national bank that has trust powers in
 2-5     this state].  The order shall include terms, conditions, and
 2-6     limitations placed on the trust.  The court shall maintain the
 2-7     trust under the same cause number as the guardianship proceeding.
 2-8           SECTION 2.  Section 868(a), Texas Probate Code, is amended to
 2-9     read as follows:
2-10           (a)  Except as provided by Subsection (d) of this section, a
2-11     trust created under Section 867 of this code must provide that:
2-12                 (1)  the ward is the sole beneficiary of the trust;
2-13                 (2)  the trustee may disburse an amount of the trust's
2-14     principal or income as the trustee determines is necessary to
2-15     expend for the health, education, support, or maintenance of the
2-16     ward;
2-17                 (3)  the income of the trust that the trustee does not
2-18     disburse under Subdivision (2) of this subsection must be added to
2-19     the principal of the trust;
2-20                 (4)  if[] the trustee is a corporate fiduciary, the
2-21     trustee serves without giving a bond; and
2-22                 (5)  the trustee, on annual application to the court
2-23     and subject to the court's approval, is entitled to receive
2-24     reasonable compensation for services that the trustee provided to
2-25     the ward as the ward's trustee that is:
2-26                       (A)  to be paid from the trust's income,
2-27     principal, or both; and
 3-1                       (B)  determined in the same manner as
 3-2     compensation of a guardian of an estate under Section 665 of this
 3-3     code.
 3-4           SECTION 3.  Subpart N, Part 4, Chapter XIII, Texas Probate
 3-5     Code, is amended by adding Section 868B to read as follows:
 3-6           Sec. 868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  The court
 3-7     shall require a person, other than a corporate fiduciary, serving
 3-8     as trustee to file with the county clerk a bond in an amount equal
 3-9     to the value of the trust's principal and projected annual income
3-10     and with the conditions the court determines are necessary.
3-11           SECTION 4.  Section 869A, Texas Probate Code, is amended to
3-12     read as follows:
3-13           Sec. 869A.  SUCCESSOR TRUSTEE.  The court may appoint a
3-14     [corporate fiduciary as] successor trustee if the trustee resigns,
3-15     becomes ineligible, or is removed.
3-16           SECTION 5.  This Act takes effect September 1, 1999, and
3-17     applies only to an application for the creation of a trust filed on
3-18     or after that date.  An application for the creation of a trust
3-19     filed before the effective date of this Act is governed by the law
3-20     in effect when the application was filed, and the former law is
3-21     continued in effect for that purpose.
3-22           SECTION 6.  The importance of this legislation and the
3-23     crowded condition of the calendars in both houses create an
3-24     emergency and an imperative public necessity that the
3-25     constitutional rule requiring bills to be read on three several
3-26     days in each house be suspended, and this rule is hereby suspended.