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H.B. No. 1471
AN ACT
relating to the duties and removal of a trustee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter A, Chapter 113, Property Code, is
amended by adding Section 113.0211 to read as follows:
Sec. 113.0211. ADJUSTMENT OF CHARITABLE TRUST. (a) In this
section:
(1) "Charitable entity" has the meaning assigned by
Section 123.001(1).
(2) "Charitable trust" means a trust:
(A) the stated purpose of which is to benefit
only one or more charitable entities; and
(B) that qualifies as a charitable entity.
(b) The trustee of a charitable trust may 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. 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) The trustee of a charitable trust may make one or more
adjustments between the principal and the income portions of a
trust to the extent that the trustee considers the adjustments
necessary:
(1) to comply with the terms of the trust, if any, that
describe the amount that may or must be distributed to a charitable
entity beneficiary by referring to the income portion of the trust;
and
(2) to administer the trust in order to carry out the
purposes of the charitable trust.
(d) The authority to make adjustments under Subsection (c)
includes the authority to allocate all or part of a capital gain to
trust income.
(e) In making adjustments under Subsection (c), the trustee
shall consider:
(1) except to the extent that the terms of the trust
clearly manifest an intention that the trustee shall or may favor
one or more charitable entity beneficiaries, the needs of a
charitable entity beneficiary, based on what is fair and reasonable
to all other charitable entity beneficiaries of the trust, if any;
and
(2) the need of the trust to maintain the purchasing
power of the trust's investments over time.
SECTION 2. Section 113.082, Property Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) A trustee may be removed in accordance with the terms of
the trust instrument, or, on the petition of an interested person
and after hearing, a court may, in its discretion, remove a trustee
and deny part or all of the trustee's compensation if:
(1) the trustee materially violated or attempted to
violate the terms of the trust and the violation or attempted
violation results in a material financial loss to the trust;
(2) the trustee becomes incompetent or insolvent; [or]
(3) the trustee fails to make an accounting that is
required by law or by the terms of the trust; or
(4) in the discretion of the court, for other cause.
(c) A trustee of a charitable trust may not be 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. Section 113.151(a), Property Code, is amended to
read as follows:
(a) A beneficiary by written demand may request the trustee
to deliver to each beneficiary of the trust a written statement of
accounts covering all transactions since the last accounting or
since the creation of the trust, whichever is later. 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 [within a reasonable time after the demand
is made], any beneficiary of the trust may file suit to compel the
trustee to deliver the statement to all beneficiaries of the trust.
The court may require the trustee to deliver a written statement of
account to all beneficiaries on finding that the nature of the
beneficiary's interest in the trust or the effect of the
administration of the trust on the beneficiary's interest is
sufficient to require an accounting by the trustee. However, the
trustee is not obligated or required to account to the
beneficiaries of a trust more frequently than once every 12 months
unless a more frequent accounting is required by the court. If a
beneficiary is successful in the suit to compel a statement under
this section, the court may, 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. This Act takes effect September 1, 2003, and
applies only to a demand for an accounting made on or after that
date.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1471 was passed by the House on April
2, 2003, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 1471 on May 22, 2003, by a non-record
vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 1471 was passed by the Senate, with
amendments, on May 20, 2003, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor