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.
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