1-1     By:  Naishtat (Senate Sponsor - Moncrief)              H.B. No. 628
 1-2           (In the Senate - Received from the House April 30, 2001;
 1-3     May 1, 2001, read first time and referred to Committee on
 1-4     Jurisprudence; May 10, 2001, reported favorably by the following
 1-5     vote:  Yeas 6, Nays 0; May 10, 2001, sent to printer.)
 1-6                            A BILL TO BE ENTITLED
 1-7                                   AN ACT
 1-8     relating to authorizing a person other than a corporate fiduciary
 1-9     to serve as trustee of certain trusts.
1-10           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11           SECTION 1. Section 867, Texas Probate Code, is amended to
1-12     read as follows:
1-13           Sec. 867.  CREATION OF MANAGEMENT TRUST.  (a)  In this
1-14     section, "financial institution" means a financial institution, as
1-15     defined by Section 201.101, Finance Code, that has trust powers and
1-16     exists and does business under the laws of this or another state or
1-17     the United States.
1-18           (b)  On application by the guardian of a ward or by a ward's
1-19     attorney ad litem or an incapacitated person's guardian ad litem at
1-20     any time after the date of the ad litem's [attorney's] appointment
1-21     under Section 646 or another provision of this code, the court in
1-22     which the guardianship proceeding is pending may enter an order
1-23     that creates for the ward's or incapacitated person's benefit a
1-24     trust for the management of guardianship funds or funds of the
1-25     incapacitated person's estate  if the court finds that the creation
1-26     of the trust is in the ward's or incapacitated person's best
1-27     interests.  Except as provided by Subsections (c) and (d) of this
1-28     section, the court shall appoint a financial institution to serve
1-29     as trustee of the trust.
1-30           (c)  If the value of the trust's principal is $50,000 or
1-31     less, the court may appoint a person other than a financial
1-32     institution to serve as trustee of the trust only if the court
1-33     finds the appointment to be in the ward's best interests.
1-34           (d)  If the value of the trust's principal is more than
1-35     $50,000, the court may appoint a person other than a financial
1-36     institution to serve as trustee of the trust only if the court
1-37     finds that:
1-38                 (1)  no financial institution is willing to serve as
1-39     trustee; and
1-40                 (2)  the appointment is in the ward's best interests.
1-41           (e)  Before making a finding that there is no financial
1-42     institution willing to serve as trustee under Subsection (d)(1) of
1-43     this section, the court must check any list of corporate
1-44     fiduciaries located in this state that is maintained at the office
1-45     of the presiding judge of the statutory probate courts or at the
1-46     principal office of the Texas Bankers Association.
1-47           (f)  The order shall direct the guardian or another person to
1-48     deliver all or part of the assets of the guardianship to a person
1-49     or corporate fiduciary appointed by the court as trustee of the
1-50     trust [company or a state or national bank that has trust powers in
1-51     this state].  The order shall include terms, conditions, and
1-52     limitations placed on the trust.  The court shall maintain the
1-53     trust under the same cause number as the guardianship proceeding.
1-54           SECTION 2.  Section 868(a), Texas Probate Code, is amended to
1-55     read as follows:
1-56           (a)  Except as provided by Subsection (d) of this section, a
1-57     trust created under Section 867 of this code must provide that:
1-58                 (1)  the ward is the sole beneficiary of the trust;
1-59                 (2)  the trustee may disburse an amount of the trust's
1-60     principal or income as the trustee determines is necessary to
1-61     expend for the health, education, support, or maintenance of the
1-62     ward;
1-63                 (3)  the income of the trust that the trustee does not
1-64     disburse under Subdivision (2) of this subsection must be added to
 2-1     the principal of the trust;
 2-2                 (4)  if[] the trustee is a corporate fiduciary, the
 2-3     trustee serves without giving a bond; and
 2-4                 (5)  the trustee, on annual application to the court
 2-5     and subject to the court's approval, is entitled to receive
 2-6     reasonable compensation for services that the trustee provided to
 2-7     the ward as the ward's trustee that is:
 2-8                       (A)  to be paid from the trust's income,
 2-9     principal, or both; and
2-10                       (B)  determined in the same manner as
2-11     compensation of a guardian of an estate under Section 665 of this
2-12     code.
2-13           SECTION 3.  Subpart N, Part 4, Chapter XIII, Texas Probate
2-14     Code, is amended by adding Section 868B to read as follows:
2-15           Sec. 868B.  BOND REQUIREMENT FOR CERTAIN TRUSTEES.  The court
2-16     shall require a person, other than a corporate fiduciary, serving
2-17     as trustee to file with the county clerk a bond in an amount equal
2-18     to the value of the trust's principal and projected annual income
2-19     and with the conditions the court determines are necessary.
2-20           SECTION 4.  Section 869A, Texas Probate Code, is amended to
2-21     read as follows:
2-22           Sec. 869A.  SUCCESSOR TRUSTEE.  The court may appoint a
2-23     [corporate fiduciary as] successor trustee if the trustee resigns,
2-24     becomes ineligible, or is removed.
2-25           SECTION 5. This Act takes effect September 1, 2001, and
2-26     applies only to an application for the creation of a trust filed on
2-27     or after that date.  An application for the creation of a trust
2-28     filed before the effective date of this Act is governed by the law
2-29     in effect when the application was filed, and the former law is
2-30     continued in effect for that purpose.
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