78(R) HB 1471 - Senate Committee Report version


                                                                                


By:  Hartnett (Senate Sponsor - Harris)                           H.B. No. 1471
	(In the Senate - Received from the House April 3, 2003; 
April 7, 2003, read first time and referred to Committee on 
Jurisprudence; May 5, 2003, reported adversely, with favorable 
Committee Substitute by the following vote:  Yeas 5, Nays 0; 
May 5, 2003, sent to printer.)


COMMITTEE SUBSTITUTE FOR H.B. No. 1471                                   By:  Harris


A BILL TO BE ENTITLED

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.



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