By Averitt                                            H.B. No. 1608
         77R5412 CAS-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the applicability of the rule against perpetuities to
 1-3     trusts.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Section 5.042(a), Property Code, is amended to
 1-6     read as follows:
 1-7           (a)  The following common-law rules or doctrines do not apply
 1-8     in this state:
 1-9                 (1)  [known as] the rule in Shelley's case;
1-10                 (2)  [,] the rule forbidding a remainder to the
1-11     grantor's heirs;
1-12                 (3)  [,] the doctrine of worthier title;
1-13                 (4)  the rule against perpetuities or remoteness in
1-14     vesting as that rule relates to trusts; and
1-15                 (5)  [, and] the doctrine or rule prohibiting an
1-16     existing lien upon part of a homestead from extending to another
1-17     part of the homestead not charged with the debts secured by the
1-18     existing lien upon part of the homestead [do not apply in this
1-19     state].
1-20           SECTION 2.  Section 112.036, Property Code, is amended to
1-21     read as follows:
1-22           Sec. 112.036.  RULE AGAINST PERPETUITIES; REMOTENESS IN
1-23     VESTING.  (a)  Except as provided by Section 121.004, this section
1-24     governs the applicability of any rule against perpetuities or
 2-1     remoteness of vesting as that rule relates to trusts.
 2-2           (b)  The rule against perpetuities does not apply [applies]
 2-3     to trusts [other than charitable trusts].
 2-4           (c)  An [Accordingly, an] interest in a trust is not good
 2-5     unless it must vest, if at all, not later than 1,000 [21] years
 2-6     after some life in being at the time of the creation of the
 2-7     interest[, plus a period of gestation.  Any interest in a trust
 2-8     may, however, be reformed or construed to the extent and as
 2-9     provided by Section 5.043].
2-10           SECTION 3.  Section 121.004, Property Code, is amended to
2-11     read as follows:
2-12           Sec. 121.004.  CONTINUATION OF PENSION TRUSTS [RULE AGAINST
2-13     PERPETUITIES].  A pension trust may continue for as long as is
2-14     necessary to accomplish the purposes of the trust and is not
2-15     invalid under [the rule against perpetuities or] any [other] law
2-16     restricting or limiting the duration of a trust.
2-17           SECTION 4.  (a)  This Act takes effect January 1, 2002, but
2-18     only if the constitutional amendment proposed by the 77th
2-19     Legislature, Regular Session, 2001, removing the prohibition
2-20     against perpetual trusts is approved by the voters.  If that
2-21     amendment is not approved by the voters, this Act has no effect.
2-22           (b)  The change in law made by this Act applies only to a
2-23     trust that becomes irrevocable or is judicially modified or
2-24     reformed  on or after the effective date of this Act.  A trust that
2-25     does not become irrevocable or is not judicially modified or
2-26     reformed on or after the effective date of this Act is governed by
2-27     the law in effect when the trust was created, and the former law is
 3-1     continued in effect for that purpose.