By Naishtat                                            H.B. No. 628
         77R259 CLG-F                           
                                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)  On application
 1-8     by the guardian of a ward or by a ward's attorney ad litem or an
 1-9     incapacitated person's guardian ad litem at any time after the date
1-10     of the ad litem's [attorney's] appointment under Section 646 or
1-11     another provision of this code, the court in which the guardianship
1-12     proceeding is pending may enter an order that creates for the
1-13     ward's or incapacitated person's benefit a trust for the management
1-14     of guardianship funds or funds of the incapacitated person's estate
1-15     if the court finds that the creation of the trust is in the ward's
1-16     or incapacitated person's best interests.  Except as provided by
1-17     Subsections (b) and (c) of this section, the court shall appoint a
1-18     trust company or a state or national bank that has trust powers in
1-19     this state to serve as trustee of the trust.
1-20           (b)  If the value of the trust's principal is $100,000 or
1-21     less, the court may appoint a person other than a trust company or
1-22     bank described by Subsection (a) of this section to serve as
1-23     trustee of the trust only if the court determines the appointment
1-24     to be in the ward's best interests.
 2-1           (c)  If the value of the trust's principal is more than
 2-2     $100,000, the court may appoint a person other than a trust company
 2-3     or bank described by Subsection (a) of this section to serve as
 2-4     trustee of the trust only if:
 2-5                 (1)  no trust company or bank described by Subsection
 2-6     (a) of this section is willing to serve as trustee; and
 2-7                 (2)  the court determines the appointment to be in the
 2-8     ward's best interests.
 2-9           (d)  The order shall direct the guardian or another person to
2-10     deliver all or part of the assets of the guardianship to a person
2-11     or corporate fiduciary appointed by the court as trustee of the
2-12     trust [company or a state or national bank that has trust powers in
2-13     this state].  The order shall include terms, conditions, and
2-14     limitations placed on the trust.  The court shall maintain the
2-15     trust under the same cause number as the guardianship proceeding.
2-16           SECTION 2.  Section 868(a), Texas Probate Code, is amended to
2-17     read as follows:
2-18           (a)  Except as provided by Subsection (d) of this section, a
2-19     trust created under Section 867 of this code must provide that:
2-20                 (1)  the ward is the sole beneficiary of the trust;
2-21                 (2)  the trustee may disburse an amount of the trust's
2-22     principal or income as the trustee determines is necessary to
2-23     expend for the health, education, support, or maintenance of the
2-24     ward;
2-25                 (3)  the income of the trust that the trustee does not
2-26     disburse under Subdivision (2) of this subsection must be added to
2-27     the principal of the trust;
 3-1                 (4)  if[] the trustee is a corporate fiduciary, the
 3-2     trustee serves without giving a bond; and
 3-3                 (5)  the trustee, on annual application to the court
 3-4     and subject to the court's approval, is entitled to receive
 3-5     reasonable compensation for services that the trustee provided to
 3-6     the ward as the ward's trustee that is:
 3-7                       (A)  to be paid from the trust's income,
 3-8     principal, or both; and
 3-9                       (B)  determined in the same manner as
3-10     compensation of a guardian of an estate under Section 665 of this
3-11     code.
3-12           SECTION 3.  Subpart N, Part 4, Chapter XIII, Texas Probate
3-13     Code, is amended by adding Section 868B to read as follows:
3-14           Sec. 868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  The court
3-15     shall require a person, other than a corporate fiduciary, serving
3-16     as trustee to file with the county clerk a bond in an amount equal
3-17     to the value of the trust's principal and projected annual income
3-18     and with the conditions the court determines are necessary.
3-19           SECTION 4.  Section 869A, Texas Probate Code, is amended to
3-20     read as follows:
3-21           Sec. 869A.  SUCCESSOR TRUSTEE.  The court may appoint a
3-22     [corporate fiduciary as] successor trustee if the trustee resigns,
3-23     becomes ineligible, or is removed.
3-24           SECTION 5. This Act takes effect September 1, 2001, and
3-25     applies only to an application for the creation of a trust filed on
3-26     or after that date.  An application for the creation of a trust
3-27     filed before the effective date of this Act is governed by the law
 4-1     in effect when the application was filed, and the former law is
 4-2     continued in effect for that purpose.