By:  Shapleigh                                        S.B. No. 1388
                                A BILL TO BE ENTITLED
                                       AN ACT
 1-1     relating to management of property recovered in a suit for the
 1-2     benefit of a minor or incapacitated person.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  The heading to Chapter 142, Property Code, is
 1-5     amended to read as follows:
 1-6      CHAPTER 142.  MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT
 1-7                         FRIEND OR GUARDIAN AD LITEM
 1-8           SECTION 2.  Subsection (a), Section 142.001, Property Code,
 1-9     is amended to read as follows:
1-10           (a)  In a suit in which a minor or incapacitated person who
1-11     has no legal guardian is represented by a next friend or an
1-12     appointed guardian ad litem, the court, on application and hearing,
1-13     may provide by decree for the investment of funds accruing to the
1-14     minor or other person under the judgment in the suit.
1-15           SECTION 3.  Section 142.002, Property Code, is amended to
1-16     read as follows:
1-17           Sec. 142.002.  MANAGEMENT BY BONDED MANAGER.  (a)  In a suit
1-18     in which a minor or incapacitated person who has no legal guardian
1-19     is represented by a next friend or an appointed guardian ad litem,
1-20     the court in which a judgment is rendered may by an order entered
1-21     of record authorize the next friend, the guardian ad litem, or
1-22     another person to take possession of money or other personal
1-23     property recovered under the judgment for the minor or other person
1-24     represented.
 2-1           (b)  The next friend, guardian ad litem, or other person may
 2-2     not take possession of the property until the person [he] has
 2-3     executed a bond as principal that:
 2-4                 (1)  is in an amount at least double the value of the
 2-5     property or, if a surety on the bond is a solvent surety company
 2-6     authorized under the law of this state to execute the bond, is in
 2-7     an amount at least equal to the value of the property;
 2-8                 (2)  is payable to the county judge; and
 2-9                 (3)  is conditioned on the obligation of the next
2-10     friend, guardian ad litem, or other person to use the property
2-11     under the direction of the court for the benefit of its owner and
2-12     to return the property, with interest or other increase, to the
2-13     person entitled to receive the property when ordered by the court
2-14     to do so.
2-15           SECTION 4.  Subsections (a) and (b), Section 142.004,
2-16     Property Code, are amended to read as follows:
2-17           (a)  In a suit in which a minor or incapacitated person who
2-18     has no legal guardian is represented by a next friend or an
2-19     appointed guardian ad litem, any money recovered by the plaintiff,
2-20     if not otherwise managed under this chapter, may be invested:
2-21                 (1)  by the next friend or guardian ad litem in
2-22     interest-bearing time deposits in a financial institution doing
2-23     business in this state and insured by the Federal Deposit Insurance
2-24     Corporation [F.D.I.C.]; or
2-25                 (2)  by the clerk of the court, on written order of the
2-26     court of proper jurisdiction, in:
 3-1                       (A)  interest-bearing deposits in a financial
 3-2     institution doing business in this state that is insured by the
 3-3     Federal Deposit Insurance Corporation;
 3-4                       (B)  United States treasury bills;
 3-5                       (C)  an eligible interlocal investment pool that
 3-6     meets the requirements of Sections 2256.016, 2256.017, and
 3-7     2256.019, Government Code; or
 3-8                       (D)  a no-load money market mutual fund, if the
 3-9     fund:
3-10                             (i)  is regulated by the Securities and
3-11     Exchange Commission;
3-12                             (ii)  has a dollar weighted average stated
3-13     maturity of 90 days or fewer; and
3-14                             (iii)  includes in its investment
3-15     objectives the maintenance of a stable net asset value of $1 for
3-16     each share.
3-17           (b)  If the money invested under this section may not be
3-18     withdrawn from the financial institution without an order of the
3-19     court, a next friend or guardian ad litem who makes the investment
3-20     is not required to execute a bond with respect to the money.
3-21           SECTION 5.  Chapter 142, Property Code, is amended by adding
3-22     Sections 142.008 and 142.009 to read as follows:
3-23           Sec. 142.008.  STRUCTURED SETTLEMENT.  (a)  In a suit in
3-24     which a minor or incapacitated person who has no legal guardian is
3-25     represented by a next friend or an appointed guardian ad litem, the
3-26     court, on a motion from the parties, may provide for a structured
 4-1     settlement that:
 4-2                 (1)  provides for periodic payments; and
 4-3                 (2)  is funded by:
 4-4                       (A)  an obligation guaranteed by the United
 4-5     States government; or
 4-6                       (B)  an annuity contract that meets the
 4-7     requirements of Section 142.009.
 4-8           (b)  The person obligated to fund a structured settlement
 4-9     shall provide to the court:
4-10                 (1)  a copy of the instrument that provides funding for
4-11     the structured settlement; or
4-12                 (2)  an affidavit from an independent financial
4-13     consultant that specifies the present value of the structured
4-14     settlement and the method by which the value is calculated.
4-15           (c)  A structured settlement provided for under this section
4-16     is solely for the benefit of the beneficiary of the structured
4-17     settlement and is not subject to the interest payment calculations
4-18     contained in Section 117.054, Local Government Code.
4-19           Sec. 142.009.  ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED
4-20     SETTLEMENT.  (a)  An annuity contract that funds a structured
4-21     settlement as provided by Section 142.008 must be provided by an
4-22     insurance company that is not:
4-23                 (1)  an affiliate, as that term is defined by Article
4-24     21.49-1, Insurance Code, of a liability insurance carrier involved
4-25     in the suit for which the structured settlement is created; or
4-26                 (2)  connected in any way to a person obligated to fund
 5-1     the structured settlement.
 5-2           (b)  An insurance company providing an annuity contract for a
 5-3     structured settlement must:
 5-4                 (1)  be licensed to write annuity contracts in this
 5-5     state;
 5-6                 (2)  have a minimum of $1 million of capital and
 5-7     surplus; and
 5-8                 (3)  be approved by the court and comply with any
 5-9     requirements imposed by the court to ensure funding to satisfy
5-10     periodic settlement payments.
5-11           (c)  In approving an insurance company under Subsection
5-12     (b)(3), the court may consider whether the company holds an
5-13     industry rating equivalent to at least two of the following rating
5-14     organizations:
5-15                 (1)  A. M. Best Company:  A++ or A+;
5-16                 (2)  Duff & Phelps Credit Rating Company Insurance
5-17     Company Claims Paying Ability Rating:  AA-, AA, AA+, or AAA;
5-18                 (3)  Moody's Investors Service Claims Paying Ability
5-19     Rating:  Aa3, Aa2, Aa1, or aaa; or
5-20                 (4)  Standard & Poor's Corporation Insurer
5-21     Claims-Paying Ability Rating:  AA-, AA, AA+, or AAA.
5-22           SECTION 6.  This Act takes effect September 1, 1999.
5-23           SECTION 7.  The importance of this legislation and the
5-24     crowded condition of the calendars in both houses create an
5-25     emergency and an imperative public necessity that the
5-26     constitutional rule requiring bills to be read on three several
 6-1     days in each house be suspended, and this rule is hereby suspended.