SRC-BWC H.B. 628 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 628
77R7365 CLG-DBy: Naishtat (Moncrief)
Jurisprudence
5/2/2001
Engrossed


DIGEST AND PURPOSE 

Under current law, a corporate fiduciary (trust company, state bank,
national bank) must serve as the trustee for a management trust set up for
a ward.  However, the small size of these trusts often makes it difficult
to find a corporate fiduciary who is willing to serve as trustee.  Without
provisions allowing the court to appoint a noncorporate trustee when no
corporate trustee is willing to serve, creating such trusts may be
difficult.  H.B. 628 authorizes a court to appoint a person other than a
financial institution as a trustee under certain conditions and requires a
noncorporate trustee to file a bond in the amount of the principal of the
trust with the county clerk's office.  

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to a
state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 867, Texas Probate Code, to define "financial
institution."  Authorizes the court in which a guardianship proceeding is
pending to enter an order that creates for a ward's or incapacitated
person's benefit a trust for the management of guardianship funds or funds
of the incapacitated person's estate if the court finds that the creation
of the trust is in the ward's or incapacitated person's best interests, on
application by the guardian of a ward or by ward's attorney ad litem or an
incapacitated person's guardian ad litem at any time after the date of the
ad litem's, rather than attorney's, appointment under Section 646 or
another provision of this code.  Authorizes the court, if the value of the
trust's principal is $50,000 or less, to appoint a person other than a
financial institution to serve as trustee of the trust only if the court
finds the appointment to be in the ward's best interest.  Authorizes the
court, if the value of the trust's principal is more than $50,000, to
appoint a person other than a financial institution to serve as trustee of
the trust only if the court finds that no financial institution is willing
to serve as trustee and the appointment is in the ward's best interests.
Requires the court to check any list of corporate fiduciaries located in
this state that is maintained at the office of the presiding judge of the
statutory probate courts or at the principal office of the Texas Bankers
Association.  Requires the order to direct the guardian or another person
to deliver all or part of the assets of the guardianship to a person or
corporate fiduciary appointed by the court as trustee of the trust.
Deletes text that required the assets to be delivered to trust company or a
state or national bank that has trust powers.   

SECTION 2.  Amends Section 868(a), Texas Probate Code, to require a trust
created under Section 867 of this code, except as provided by Subsection
(d), to provide that if the trustee is a corporate fiduciary, the trustee
serves without giving a bond. 

SECTION 3.  Amends Chapter XIII Part 4N, Texas Probate Code, by adding
Section 868B, as follows: 

Sec. 868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  Requires the court to
require a person, other than a corporate fiduciary, serving as trustee to
file with the county clerk  a bond in an amount equal to the value of the
trust's principal and projected annual income and with the conditions the
court determines are necessary. 

SECTION 4.  Amends Section 869A, Texas Probate Code, to delete text that
authorized the court to appoint a corporate fiduciary as successor trustee
if the trustee resigns, becomes ineligible, or is removed. 

SECTION 5.  Effective date: September 1, 2001.
            Makes application of this Act prospective.