SRC-JLB C.S.H.B. 1471 78(R)BILL ANALYSIS


Senate Research CenterC.S.H.B. 1471
78R14143 KCR-DBy: Hartnett (Harris)
Jurisprudence
5/1/2003
Committee Report (Substituted)


DIGEST AND PURPOSE 

Current law specifies that a trustee may be removed under certain
conditions in accordance with the terms of the trust instrument or by a
court.  Issues have arisen regarding the failure of trustees to make an
accounting as required by law or by the terms of the trust.  A beneficiary
may demand a written statement of accounts, and current law gives a
trustee a reasonable time to comply. 

C.S.H.B. 1471 authorizes a trustee to make certain adjustments to a trust;
allows a court to remove a trustee for failure to make the required
accounting;  specifies the time by which a trustee must deliver financial
statements;  and allows a beneficiary to collect attorney's fees and court
costs in certain circumstances. 

RULEMAKING AUTHORITY

This bill does not expressly grant any additional rulemaking authority to
a state officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter A, Chapter 113, Property Code, by adding
Section 113.0211, as follows: 

Sec.  113.0211.  ADJUSTMENT OF CHARITABLE TRUST.  (a)  Defines "charitable
entity" and "charitable trust." 

(b)  Authorizes the trustee of a charitable trust to acquire, exchange,
sell, supervise, manage, or retain any type of investment, subject to
restrictions and procedures established by the trustee and in an amount
considered appropriate by the trustee, that a prudent investor, exercising
reasonable skill, care and caution, would acquire or retain in light of
the purposes, terms, distribution requirements, and other circumstances of
the trust.  Provides that the prudence of a trustee's actions under this
subsection is judged with reference to the investment of all of the trust
assets rather than with reference to a single trust investment. 

(c)  Authorizes the trustee of a charitable trust to make one or more
adjustments between the principal and the income portions of a trust to
the extent that the trustee considers the adjustment necessary for certain
purposes. 

(d)  Provides that the authority to make adjustments under Subsection (c)
includes the authority to allocate all or part of a capital gain to trust
income.  

(e)  Requires the trustee, in making adjustments under Subsection (c), to
consider certain factors. 

SECTION 2.  Amends Section 113.082, Property Code, by amending Subsection
(a) and adding Subsection (c), as follows: 

(a)  Authorizes a trustee to be removed in accordance with the terms of
the trust instrument or, on the petition of an interested person and after
hearing, a court to, in its  discretion, remove a trustee and deny part or
all of the trustee's compensation if certain conditions exist, including
that the trustee fails to make an accounting that is required by law or by
the terms of the trust. 

(c)  Prohibits a trustee of a charitable trust from being removed solely
on the grounds that the trustee exercised the trustee's power to adjust
between principal and income under Section 113.0211. 

SECTION 3.  Amends Section 113.151(a), Property Code, to authorize any
beneficiary of the trust, if the trustee fails or refuses to deliver the
statement on or before the 90th day after the date the trustee receives
the demand or after a longer period ordered by a court, rather than within
a reasonable time after the demand is made, to file suit to compel the
trustee to deliver the statement to all beneficiaries of the trust.
Authorizes the court, if a beneficiary is successful in the suit to compel
a statement under this section, to, in its discretion, award all or part
of the costs of court and all of the suing beneficiary's reasonable and
necessary attorney's fees and costs against the trustee in the trustee's
individual capacity or in the trustee's capacity as trustee.  

SECTION 4.  Effective date:  September 1, 2003.  Makes application of this
Act prospective.