1-1 By: Shapleigh S.B. No. 1388
1-2 (In the Senate - Filed March 11, 1999; March 15, 1999, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 22, 1999, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 4, Nays 0; April 22, 1999,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1388 By: Brown
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to management of property recovered in a suit for the
1-11 benefit of a minor or incapacitated person.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. The heading to Chapter 142, Property Code, is
1-14 amended to read as follows:
1-15 CHAPTER 142. MANAGEMENT OF PROPERTY RECOVERED IN SUIT BY A NEXT
1-16 FRIEND OR GUARDIAN AD LITEM
1-17 SECTION 2. Subsection (a), Section 142.001, Property Code,
1-18 is amended to read as follows:
1-19 (a) In a suit in which a minor or incapacitated person who
1-20 has no legal guardian is represented by a next friend or an
1-21 appointed guardian ad litem, the court, on application and hearing,
1-22 may provide by decree for the investment of funds accruing to the
1-23 minor or other person under the judgment in the suit.
1-24 SECTION 3. Section 142.002, Property Code, is amended to
1-25 read as follows:
1-26 Sec. 142.002. MANAGEMENT BY BONDED MANAGER. (a) In a suit
1-27 in which a minor or incapacitated person who has no legal guardian
1-28 is represented by a next friend or an appointed guardian ad litem,
1-29 the court in which a judgment is rendered may by an order entered
1-30 of record authorize the next friend, the guardian ad litem, or
1-31 another person to take possession of money or other personal
1-32 property recovered under the judgment for the minor or other person
1-33 represented.
1-34 (b) The next friend, guardian ad litem, or other person may
1-35 not take possession of the property until the person [he] has
1-36 executed a bond as principal that:
1-37 (1) is in an amount at least double the value of the
1-38 property or, if a surety on the bond is a solvent surety company
1-39 authorized under the law of this state to execute the bond, is in
1-40 an amount at least equal to the value of the property;
1-41 (2) is payable to the county judge; and
1-42 (3) is conditioned on the obligation of the next
1-43 friend, guardian ad litem, or other person to use the property
1-44 under the direction of the court for the benefit of its owner and
1-45 to return the property, with interest or other increase, to the
1-46 person entitled to receive the property when ordered by the court
1-47 to do so.
1-48 SECTION 4. Subsections (a) and (b), Section 142.004,
1-49 Property Code, are amended to read as follows:
1-50 (a) In a suit in which a minor or incapacitated person who
1-51 has no legal guardian is represented by a next friend or an
1-52 appointed guardian ad litem, any money recovered by the plaintiff,
1-53 if not otherwise managed under this chapter, may be invested:
1-54 (1) by the next friend or guardian ad litem in
1-55 interest-bearing time deposits in a financial institution doing
1-56 business in this state and insured by the Federal Deposit Insurance
1-57 Corporation [F.D.I.C.]; or
1-58 (2) by the clerk of the court, on written order of the
1-59 court of proper jurisdiction, in:
1-60 (A) interest-bearing deposits in a financial
1-61 institution doing business in this state that is insured by the
1-62 Federal Deposit Insurance Corporation;
1-63 (B) United States treasury bills;
1-64 (C) an eligible interlocal investment pool that
2-1 meets the requirements of Sections 2256.016, 2256.017, and
2-2 2256.019, Government Code; or
2-3 (D) a no-load money market mutual fund, if the
2-4 fund:
2-5 (i) is regulated by the Securities and
2-6 Exchange Commission;
2-7 (ii) has a dollar weighted average stated
2-8 maturity of 90 days or fewer; and
2-9 (iii) includes in its investment
2-10 objectives the maintenance of a stable net asset value of $1 for
2-11 each share.
2-12 (b) If the money invested under this section may not be
2-13 withdrawn from the financial institution without an order of the
2-14 court, a next friend or guardian ad litem who makes the investment
2-15 is not required to execute a bond with respect to the money.
2-16 SECTION 5. Chapter 142, Property Code, is amended by adding
2-17 Sections 142.008 and 142.009 to read as follows:
2-18 Sec. 142.008. STRUCTURED SETTLEMENT. (a) In a suit in
2-19 which a minor or incapacitated person who has no legal guardian is
2-20 represented by a next friend or an appointed guardian ad litem, the
2-21 court, on a motion from the parties, may provide for a structured
2-22 settlement that:
2-23 (1) provides for periodic payments; and
2-24 (2) is funded by:
2-25 (A) an obligation guaranteed by the United
2-26 States government; or
2-27 (B) an annuity contract that meets the
2-28 requirements of Section 142.009.
2-29 (b) The person obligated to fund a structured settlement
2-30 shall provide to the court:
2-31 (1) a copy of the instrument that provides funding for
2-32 the structured settlement; or
2-33 (2) an affidavit from an independent financial
2-34 consultant that specifies the present value of the structured
2-35 settlement and the method by which the value is calculated.
2-36 Sec. 142.009. ANNUITY CONTRACT REQUIREMENTS FOR STRUCTURED
2-37 SETTLEMENT. (a) An annuity contract that funds a structured
2-38 settlement as provided by Section 142.008 must be provided by an
2-39 insurance company that is not:
2-40 (1) an affiliate, as that term is defined by Article
2-41 21.49-1, Insurance Code, of a liability insurance carrier involved
2-42 in the suit for which the structured settlement is created; or
2-43 (2) connected in any way to a person obligated to fund
2-44 the structured settlement.
2-45 (b) An insurance company providing an annuity contract for a
2-46 structured settlement must:
2-47 (1) be licensed to write annuity contracts in this
2-48 state;
2-49 (2) have a minimum of $1 million of capital and
2-50 surplus; and
2-51 (3) be approved by the court and comply with any
2-52 requirements imposed by the court to ensure funding to satisfy
2-53 periodic settlement payments.
2-54 (c) In approving an insurance company under Subsection
2-55 (b)(3), the court may consider whether the company holds an
2-56 industry rating equivalent to at least two of the following rating
2-57 organizations:
2-58 (1) A. M. Best Company: A++ or A+;
2-59 (2) Duff & Phelps Credit Rating Company Insurance
2-60 Company Claims Paying Ability Rating: AA-, AA, AA+, or AAA;
2-61 (3) Moody's Investors Service Claims Paying Ability
2-62 Rating: Aa3, Aa2, Aa1, or aaa; or
2-63 (4) Standard & Poor's Corporation Insurer
2-64 Claims-Paying Ability Rating: AA-, AA, AA+, or AAA.
2-65 SECTION 6. This Act takes effect September 1, 1999.
2-66 SECTION 7. The importance of this legislation and the
2-67 crowded condition of the calendars in both houses create an
2-68 emergency and an imperative public necessity that the
2-69 constitutional rule requiring bills to be read on three several
3-1 days in each house be suspended, and this rule is hereby suspended.
3-2 * * * * *