HBA-JLV H.B. 1608 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1608 By: Averitt Financial Institutions 3/2/2001 Introduced BACKGROUND AND PURPOSE Currently, perpetual trusts are prohibited by the Texas Constitution and the Property Code. The Rule Against Perpetuities (RAP) provides that a trust must end twenty-one years after the death of the last "measuring life," or family members who are alive at the time the trust is created. Since a Texas resident cannot create a perpetual trust in Texas, that resident can create a perpetual trust by moving their capital to a trust fund created in another state that allows perpetual trusts. By revising the RAP provision, Texans may be encouraged to leave trust assets in the state, which may prevent an erosion of the intangible personal property tax base. House Bill 1608 removes the prohibition on perpetual trusts and provides that a trust vesting interest can last for up to 1,000 years. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 1608 amends the Property Code to provide that the rule against perpetuities or remoteness in vesting, as that rule relates to trusts, does not apply in this state. The bill provides that these provisions govern the applicability of any rule against perpetuities or remoteness of vesting as that rule relates to trusts, with an exception. The bill provides that an interest in a trust is not good unless it must vest, if at all, not later than 1,000 years after some life in being at the time of the creation of the interest. EFFECTIVE DATE January 1, 2002, but only if the constitutional amendment proposed by the 77th Legislature, Regular Session, 2001, removing the prohibition against perpetual trusts is approved by the voters. If that amendment is not approved by the voters, this Act has no effect.