By Naishtat                                            H.B. No. 628
         77R7365 CLG-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to authorizing a person other than a corporate fiduciary
 1-3     to serve as trustee of certain trusts.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1. Section 867, Texas Probate Code, is amended to
 1-6     read as follows:
 1-7           Sec. 867.  CREATION OF MANAGEMENT TRUST.  (a)  In this
 1-8     section, "financial institution" means a financial institution, as
 1-9     defined by Section 201.101, Finance Code, that has trust powers and
1-10     exists and does business under the laws of this or another state or
1-11     the United States.
1-12           (b)  On application by the guardian of a ward or by a ward's
1-13     attorney ad litem or an incapacitated person's guardian ad litem at
1-14     any time after the date of the ad litem's [attorney's] appointment
1-15     under Section 646 or another provision of this code, the court in
1-16     which the guardianship proceeding is pending may enter an order
1-17     that creates for the ward's or incapacitated person's benefit a
1-18     trust for the management of guardianship funds or funds of the
1-19     incapacitated person's estate  if the court finds that the creation
1-20     of the trust is in the ward's or incapacitated person's best
1-21     interests.  Except as provided by Subsections (c) and (d) of this
1-22     section, the court shall appoint a financial institution to serve
1-23     as trustee of the trust.
1-24           (c)  If the value of the trust's principal is $50,000 or
 2-1     less, the court may appoint a person other than a financial
 2-2     institution to serve as trustee of the trust only if the court
 2-3     finds the appointment to be in the ward's best interests.
 2-4           (d)  If the value of the trust's principal is more than
 2-5     $50,000, the court may appoint a person other than a financial
 2-6     institution to serve as trustee of the trust only if the court
 2-7     finds that:
 2-8                 (1)  no financial institution is willing to serve as
 2-9     trustee; and
2-10                 (2)  the appointment is in the ward's best interests.
2-11           (e)  Before making a finding that there is no financial
2-12     institution willing to serve as trustee under Subsection (d)(1) of
2-13     this section, the court must check any list of corporate
2-14     fiduciaries located in this state that is maintained at the office
2-15     of the presiding judge of the statutory probate courts or at the
2-16     principal office of the Texas Bankers Association.
2-17           (f)  The order shall direct the guardian or another person to
2-18     deliver all or part of the assets of the guardianship to a person
2-19     or corporate fiduciary appointed by the court as trustee of the
2-20     trust [company or a state or national bank that has trust powers in
2-21     this state].  The order shall include terms, conditions, and
2-22     limitations placed on the trust.  The court shall maintain the
2-23     trust under the same cause number as the guardianship proceeding.
2-24           SECTION 2.  Section 868(a), Texas Probate Code, is amended to
2-25     read as follows:
2-26           (a)  Except as provided by Subsection (d) of this section, a
2-27     trust created under Section 867 of this code must provide that:
 3-1                 (1)  the ward is the sole beneficiary of the trust;
 3-2                 (2)  the trustee may disburse an amount of the trust's
 3-3     principal or income as the trustee determines is necessary to
 3-4     expend for the health, education, support, or maintenance of the
 3-5     ward;
 3-6                 (3)  the income of the trust that the trustee does not
 3-7     disburse under Subdivision (2) of this subsection must be added to
 3-8     the principal of the trust;
 3-9                 (4)  if[] the trustee is a corporate fiduciary, the
3-10     trustee serves without giving a bond; and
3-11                 (5)  the trustee, on annual application to the court
3-12     and subject to the court's approval, is entitled to receive
3-13     reasonable compensation for services that the trustee provided to
3-14     the ward as the ward's trustee that is:
3-15                       (A)  to be paid from the trust's income,
3-16     principal, or both; and
3-17                       (B)  determined in the same manner as
3-18     compensation of a guardian of an estate under Section 665 of this
3-19     code.
3-20           SECTION 3.  Subpart N, Part 4, Chapter XIII, Texas Probate
3-21     Code, is amended by adding Section 868B to read as follows:
3-22           Sec. 868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  The court
3-23     shall require a person, other than a corporate fiduciary, serving
3-24     as trustee to file with the county clerk a bond in an amount equal
3-25     to the value of the trust's principal and projected annual income
3-26     and with the conditions the court determines are necessary.
3-27           SECTION 4.  Section 869A, Texas Probate Code, is amended to
 4-1     read as follows:
 4-2           Sec. 869A.  SUCCESSOR TRUSTEE.  The court may appoint a
 4-3     [corporate fiduciary as] successor trustee if the trustee resigns,
 4-4     becomes ineligible, or is removed.
 4-5           SECTION 5. This Act takes effect September 1, 2001, and
 4-6     applies only to an application for the creation of a trust filed on
 4-7     or after that date.  An application for the creation of a trust
 4-8     filed before the effective date of this Act is governed by the law
 4-9     in effect when the application was filed, and the former law is
4-10     continued in effect for that purpose.