78S40237 QS-F
By: Hartnett H.B. No. 3
A BILL TO BE ENTITLED
AN ACT
relating to trusts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 112.035, Property Code, is amended by
amending Subsection (e) and adding Subsection (f) to read as
follows:
(e) A beneficiary of the trust may not be considered a
settlor merely because of a lapse, waiver, or release of:
(1) a power described by Subsection (f); or
(2) the beneficiary's right to withdraw a part of the
trust property to the extent that [if] the value of the property
affected by the lapse, waiver, or release [that could have been
withdrawn by exercising the right of withdrawal] in any calendar
year does not exceed [at the time of the lapse, waiver, or release]
the greater of the amount specified in:
(A) [(1)] Section 2041(b)(2) or 2514(e),
Internal Revenue Code of 1986; or
(B) [(2)] Section 2503(b), Internal Revenue Code
of 1986.
(f) A beneficiary of the trust may not be considered to be a
settlor, to have made a voluntary or involuntary transfer of the
beneficiary's interest in the trust, or to have the power to make a
voluntary or involuntary transfer of the beneficiary's interest in
the trust solely because the beneficiary, in any capacity, holds or
exercises:
(1) a presently exercisable power to consume, invade,
appropriate, or distribute property to or for the benefit of the
beneficiary, if the power is:
(A) exercisable only on consent of another person
holding an interest adverse to the beneficiary's interest; or
(B) limited by an ascertainable standard, such as
health, education, support, or maintenance of the beneficiary;
(2) a presently exercisable power to appoint any
property of the trust to or for the benefit of a person other than
the beneficiary, a creditor of the beneficiary, the beneficiary's
estate, or a creditor of the beneficiary's estate;
(3) a testamentary power of appointment; or
(4) a presently exercisable power described by
Subsection (e)(2).
SECTION 2. Section 115.001(d), Property Code, is amended to
read as follows:
(d) The jurisdiction of the district court over proceedings
concerning trusts is exclusive except for jurisdiction conferred by
law on a statutory probate court, [or] a court that creates a trust
under Section 867, Texas Probate Code, or a court that creates a
trust under Section 142.005.
SECTION 3. Sections 116.172(c) and (d), Property Code, are
amended to read as follows:
(c) If no part of a payment is characterized as interest, a
dividend, or an equivalent payment, and all or part of the payment
is required to be made, a trustee shall allocate to income the part
of the payment that does not exceed an amount equal to:
(1) four percent of the fair market value of the future
payment asset on the date specified in [as determined under]
Subsection (d); less
(2) the total amount that the trustee has allocated to
income for all [a] previous payments [payment] received from the
future payment asset during the same accounting period in which the
payment is made [prescribed by Subsection (d)].
(d) For purposes of Subsection (c)(1), the determination of
the fair market value of a future payment asset is made on the later
of:
(1) the date on which the future payment asset [right]
first becomes subject to the trust; or
(2) the first day of the trust's accounting period
during which a [the future] payment from the asset is received.
SECTION 4. Section 142.005, Property Code, is amended by
adding Subsection (a-1) and amending Subsection (d) to read as
follows:
(a-1) A court of record with jurisdiction to hear a suit
described by Subsection (a) may create a trust on the court's own
initiative under this section.
(d) A court that creates a trust under this section has
continuing jurisdiction and supervisory power over the trust,
including the power to construe, amend, revoke, modify, or
terminate the trust. A trust created under this section [may be
amended, modified, or revoked by the court at any time before its
termination, but] is not subject to revocation by the beneficiary
or a guardian of the beneficiary's estate. If the trust is revoked
by the court before the beneficiary is 18 years old, the court may
provide for the management of the trust principal and any
undistributed income as authorized by this chapter. If the trust is
revoked by the court after the beneficiary is 18 years old, the
trust principal and any undistributed income shall be delivered to
the beneficiary after the payment of all proper and necessary
expenses.
SECTION 5. Section 5(e), Texas Probate Code, is amended to
read as follows:
(e) A statutory probate court has concurrent jurisdiction
with the district court in all personal injury, survival, or
wrongful death actions by or against a person in the person's
capacity as a personal representative, in all actions involving an
inter vivos trust, in all actions involving a charitable trust, in
all actions involving a testamentary trust, and in all actions
involving a personal representative of an estate in which each
other party aligned with the personal representative is not an
interested person in that estate.
SECTION 6. (a) Sections 1 and 2 of this Act are intended to
clarify the law, but only as expressly provided by those sections.
An inference may not be drawn from the amendments made by those
sections for situations not specifically described by those
sections.
(b) This Act applies to a trust existing on or created on or
after the effective date of this Act.
SECTION 7. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect on the 91st day after the last day of the
legislative session.